TOM Group Limited - Proxy Solicitation & Information Statement 2004

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

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

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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(Stock code: 2383)

MAJOR TRANSACTION

Acquisition of the entire issued share capital of Treasure Base Investments Limited

21 October 2004

for identification purpose

		Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		6
A.	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
B.	THE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
	1. Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
	2. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
	3. Assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
	4. WFOE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
	5. Transfer of equity interest in LingXun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
	6. Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
	7. Payment terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
	8. Structure chart of TBIL Group as at the date of the Agreement . . . . . . . . . . . . . . . . . .	11
	9. Structure chart of the TBIL Group immediately after Completion . . . . . . . . . . . . . . . .	12
	10. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
	11. Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
	12. Contractual Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
C.	INFORMATION ON TREASURE BASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
D.	INFORMATION ON LINGXUN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
E.	REASONS FOR ENTERING INTO THE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . .	17
F.	LIQUIDITY AND FINANCIAL RESOURCES OF THE TOM GROUP. . . . . . . . . . . . . .	17
G.	GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
APPENDIX I – FINANCIAL INFORMATION ON TOM GROUP . . . . . . . . . . . . . . . . . . . .		19
APPENDIX II – ACCOUNTANTS’ REPORT ON LINGXUN . . . . . . . . . . . . . . . . . . . . . . . . .		87
APPENDIX III – ACCOUNTANTS’ REPORT ON TREASURE BASE. . . . . . . . . . . . . . . . . .		104
APPENDIX IV – FINANCIAL INFORMATION ON THE ENLARGED TOM GROUP. . .		112
APPENDIX V – FINANCIAL INFORMATION OF ACQUISITIONS
	SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS . . . . . . . .	121
	A. FINANCIAL INFORMATION ON CHINA SCIENCE
	MEDIA GROUP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	122
	B. FINANCIAL INFORMATION ON JOINT VENTURE. . . . . . . . . .	159
APPENDIX VI – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		160

DEFINITIONS

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

“Acquisition”	the acquisition by TOM Online Media of the entire issued share
	capital of Treasure Base from the Vendors in accordance with the
	terms and conditions of the Agreement
“Agreement”	a conditional sale and purchase agreement entered into on 11
	August 2004 between TOM Online Media, TOM Online, the
	Vendors, Mr. Li, Mr. Sun and Ms. Yan in respect of the Acquisition
“Aosta”	Aosta Holdings Corp., a company incorporated in the BVI and is
	wholly-owned by Mr. Sun, whose principal business is investment
	holding. Aosta is independent of and not connected with any of
	the Directors, chief executives, substantial shareholders of the
	Company or any of their respective associates and not a connected
	person (as defined in the Listing Rules) of the Company
“associates”	has the same meaning as ascribed to it under the Listing Rules
“Board”	the board of directors of the Company
“Business Day”	a day (excluding Saturday) on which banks are generally open for
	business in the PRC
“BHM”	the Islands of the Bahamas
“BVI”	the British Virgin Islands
“Company”	TOM Group Limited, a company incorporated in the Cayman
	Islands with limited liability and whose shares are listed on the
	Main Board of the Stock Exchange
“Completion”	completion of the Acquisition upon the terms and subject to the
	conditions set out in the Agreement
“Consideration”	the Initial Consideration and the Earn-out Consideration
“Cranwood”	Cranwood Company Limited, a company incorporated in the
	Republic of Liberia with limited liability and wholly-owned by
	Ms. Chau Hoi Shuen, which owns approximately 0.63% of the
	issued share capital of the Company as at the Latest Practicable
	Date
“Director(s)”	the director(s) of the Company

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DEFINITIONS

“Earn-out Consideration” the additional amount of consideration for the Acquisition as set out in paragraph 6.3 in the section headed “Consideration” in Part B of the letter from the Board set out in this circular
“Easterhouse” Easterhouse Limited, a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of Hutchison Whampoa Limited, which owns approximately 24.49% of the issued share capital of the Company as at the Latest Practicable Date
“Enlarged TOM Group” TOM Group, its investments in 重慶中科普傳媒發展股份有限公司 (Chongqing Zhongkepu Media Development Joint Stock Company Limited) and 重慶電腦報經營有限責任公司 (China Popular Computer Week Management Company Limited) as disclosed in the circular of the Company dated 10 September 2004, and its investments in LingXun and Treasure Base
“GEM” the Growth Enterprise Market of the Stock Exchange

“Group” or “TOM Group” the Company and its subsidiaries “Handel” Handel International Limited, a company incorporated in the BVI with limited liability, owned as to 90% by Cranwood, which owns approximately 8.95% of the issued share capital of the Company as at the Latest Practicable Date “HK$” Hong Kong dollars, the lawful currency of Hong Kong “HK GAAP” the generally accepted accounting principles in Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Initial Consideration” has the meaning ascribed to it in paragraph 6.2 in the section headed “Consideration” in Part B of the letter from the Board set out in this circular

“Latest Practicable Date” 19 October 2004, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein “LingXun” 北京靈訊互動科技發展有限公司 (Beijing LingXun Interactive Science Technology and Development Company Limited), a domestic company established in Beijing, the PRC. As at the date of the Agreement, Mr. Li and Mr. Sun beneficially own 51% and 49% of the equity interest in LingXun, respectively. As at the Latest Practicable Date, LingXun is owned by the Two Nominees (as to 49% by Mr. Sheng Yong and as to 51% by Ms. Du Ying Shuang) “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

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DEFINITIONS

“MMS” multimedia messaging services, a technology that allows users to receive and transmit multimedia messages such as text, audio and video messages using their mobile phones
“Monit” Monit Holdings Corp., a company incorporated in the BVI and is wholly-owned by Mr. Li, whose principal business is investment holding. Monit is independent of and not connected with any of the Directors, chief executives, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company
“Mr. Li” Mr. Li Chuan Dong (李傳東), who holds 51% of the equity interest in LingXun (as at the date of the Agreement) and is the sole beneficial owner of Monit. Mr. Li is independent of and not connected with any of the Directors, chief executives, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company
“Mr. Sun” Mr. Sun Jian Ying（孫劍英）, who holds 49% of the equity interest in LingXun (as at the date of the Agreement) and is the sole beneficial owner of Aosta. Mr. Sun is independent of and not connected with any of the Directors, chief executives, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company
“Ms. Yan” Ms. Yan Shan（嚴珊）, who is the sole beneficial owner of Windstorm. Ms. Yan is independent of and not connected with any of the Directors, chief executives, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company
“NASDAQ” National Market of National Automated Systems Dealership and Quotation
“PRC” the People’s Republic of China
“PRC GAAP” the generally accepted accounting principles in the PRC
“Pre-IPO Share Option Plan” the pre-IPO share option plan adopted by the Company on 11 February 2000
“RMB” Renminbi, the lawful currency of the PRC

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DEFINITIONS

“Romefield” Romefield Limited, a company incorporated in the BVI with limited liability and a wholly-owned subsidiary of Cheung Kong (Holdings) Limited, which owns approximately 12.25% of the issued share capital of the Company as at the Latest Practicable Date
“Sale Shares” the entire issued share capital of Treasure Base as at the date of the Agreement and as at Completion
“Schumann” Schumann International Limited, a company incorporated in the BVI with limited liability and is owned as to 90% by Cranwood, which owns approximately 14.91% of the issued share capital of the Company as at the Latest Practicable Date
“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Shares” shares of HK$0.10 each in the capital of the Company “Share Option Scheme” the share option scheme adopted by the Company on 11 February 2000 (as amended)
“Shareholders” the shareholders of the Company “Stock Exchange” The Stock Exchange of Hong Kong Limited “SMS” short messaging services, a technology that allows users to receive and sometimes transmit short text messages using their mobile phones
“TOM Online” TOM Online Inc., a company incorporated in the Cayman Islands with limited liability and whose shares are listed on GEM and NASDAQ
“TOM Online Group” TOM Online and its subsidiaries “TOM Online Media” TOM Online Media Group Limited, a company incorporated in the BVI with limited liability, which is a subsidiary of the Company
“Treasure Base” Treasure Base Investments Limited, a company incorporated in the BVI and whose principal business is investment holding, which is independent from the Directors, chief executive, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company. As at the date of the Agreement, Treasure Base is

– 4 –

DEFINITIONS

owned as to 49% by Monit, 47% by Aosta and 4% by Windstorm. As at the Latest Practicable Date, the entire issued share capital of Treasure Base has been transferred to TOM Online Media pursuant to the Agreement

“Treasure Base Group” Treasure Base, WFOE and LingXun or “TBIL Group”
“Two Nominees” Mr. Sheng Yong（盛勇）and Ms. Du Ying Shuang（杜英爽）, the individual nominees designated by TOM Online Media to acquire the entire equity interest in LingXun from Mr. Li and Mr. Sun. Mr. Sheng is a consultant of TOM Online and a connected person (as defined in the Listing Rules) of the Company by virtue of his being a substantial shareholder of certain subsidiaries of the Company, namely, Shenzhen Freenet Information Technology Company Limited, Shenzhen Freenet Super Channel Advertising Company Limited, Shenzhen New ECLink Network Information Technology Company Limited, Guangdong Yangcheng Press Sports Development Limited, Guangdong Yangcheng Advertising Company Limited, Beijing TOM International Advertising Limited, Kunming Fench Enterprise Management Consultancy Company Limited, China Travel Network Company Limited and Beijing Redsail Netlegend Data Network Technology Company Limited prior to Completion. Ms. Du is an employee of TOM Online and not a connected person (as defined in the Listing Rules) of the Company prior to Completion
“US$” United States dollars, the lawful currency of the United States of America
“US GAAP” the accounting principles generally accepted in the United States of America
“Vendors” Monit, Asota and Windstorm
“WAP” wireless application protocol, a global standard for developing applications over wireless communications networks
“WFOE” 森棟乙（北京）科技有限公司(Ceng Dong Yi (Beijing) Technology Company Limited), a wholly foreign owned enterprise established by Treasure Base in Beijing, the PRC
“Windstorm” Windstorm Limited, a company incorporated in the BHM and is wholly-owned by Ms. Yan, whose principal business is investment holding. Windstorm is independent of and not connected with any of the Directors, chief executives, substantial shareholders of the Company or any of their respective associates and not a connected person (as defined in the Listing Rules) of the Company
“WVAS” wireless value-added services, a collection of services provided by Internet portal to their mobile phone users. Such services allow users to download and transmit information to their services providers’ Internet portals through SMS, MMS and WAP

HK$1 = RMB1.065 US$1 = HK$7.8

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LETTER FROM THE BOARD

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(Stock code: 2383)

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

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

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

Non-executive Directors
# Independent non-executive Directors

21 October 2004

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION

Acquisition of the entire issued share capital of Treasure Base Investments Limited

A. INTRODUCTION

On 11 August 2004, the Company announced that TOM Online, TOM Online Media, the Vendors, Mr. Li, Mr. Sun and Ms. Yan had entered into the Agreement, under which, among other things, TOM

for identification purpose

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LETTER FROM THE BOARD

Online Media conditionally agreed to acquire the Sale Shares (representing the entire issued share capital of Treasure Base as at the date of the Agreement and as at Completion) at a consideration comprising the Initial Consideration and the Earn-Out Consideration, the aggregate amount of which will not be more than RMB550 million (approximately HK$516.43 million).

In respect of the Initial Consideration:
(i) in the event that the amount of the 2004 Combined After-tax Profit (as defined below) is equal to or more than RMB40 million (approximately HK$37.56 million), it will be an amount equal to 4.5 times the amount of the 2004 Combined After-tax Profit; or
(ii) in the event that the amount of the 2004 Combined After-tax Profit is less than RMB40 million (approximately HK$37.56 million), it will be an amount equal to 3.5 times the amount of the 2004 Combined After-tax Profit.

In respect of the Earn-out Consideration:

(i) in the event that the amount of the 2005 Combined After-tax Profit (as defined below) is less than RMB40 million (approximately HK$37.56 million), it will be an amount equal to the amount of the 2005 Combined After-tax Profit; or
(ii) in the event that the amount of the 2005 Combined After-tax Profit is equal to or more than RMB40 million (approximately HK$37.56 million) but less than (or equal to) RMB75 million (approximately HK$70.42 million), it will be an amount equal to 1.5 times the amount of the 2005 Combined After-tax Profit; or
(iii) in the event that the amount of the 2005 Combined After-tax Profit is more than RMB75 million (approximately HK$70.42 million), it will be an amount equal to 1.75 times the amount of the 2005 Combined After-tax Profit.

The Acquisition constitutes a major transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to approval of the Shareholders. Under Rule 14.44 of the Listing Rules, as no Shareholder is required to abstain from voting if the Company were to convene a general meeting for approving the Acquisition, therefore in lieu of holding such a general meeting, Shareholders’ written approval has been obtained from Easterhouse, Romefield, Schumann, Handel and Cranwood, who are a closely allied group of Shareholders collectively holding approximately 61.24% in nominal value of the Shares in issue as at the date of the Agreement giving the right to attend and vote at a general meeting of the Company (if the Company were to convene one).

The Acquisition also constitutes a discloseable transaction of TOM Online under the Rules Governing the Listing of Securities on GEM. A circular containing details of the Acquisition has been despatched to the shareholders of TOM Online on 1 September 2004.

Completion of the Acquisition took place on 2 September 2004. Treasure Base becomes a whollyowned subsidiary of TOM Online and a non wholly-owned subsidiary of the Company.

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

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LETTER FROM THE BOARD

B. THE AGREEMENT

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

1. Date

11 August 2004

2. Parties

Purchaser: TOM Online Media Vendors: (1) Monit (2) Aosta (3) Windstorm Other parties: (1) Mr. Li (2) Mr. Sun (3) Ms. Yan (4) TOM Online

3. Assets acquired

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

WFOE is a wholly-owned subsidiary of Treasure Base.

Under the Contractual Arrangements (as described below), Treasure Base and WFOE will be able to enjoy the economic interest in LingXun. LingXun will be accounted for as a whollyowned subsidiary of TOM Online and a non wholly-owned subsidiary of the Company.

4. WFOE

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

(a) Company name: 森棟乙（北京）科技有限公司 (Ceng Dong Yi (Beijing) Technology Company Limited) (b) Registered capital: US$150,000 (approximately HK$1,170,000) (all of which have been fully paid up) (c) Shareholder: Treasure Base (100%)

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LETTER FROM THE BOARD

(d) Scope of business:

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

(e) Date of establishment: 5 July 2004

5. Transfer of equity interest in LingXun

Prior to Completion, Mr. Li and Mr. Sun will transfer all of their respective equity interest in LingXun to the Two Nominees at an aggregate consideration of RMB10 million (approximately HK$9.39 million) (being part of the Consideration). As at the Latest Practicable Date, the aforesaid transfers of equity interest in LingXun have been completed and LingXun is owned as to 49% by Mr. Sheng Yong and as to 51% by Ms. Du Ying Shuang.

6. Consideration

6.1. The Consideration comprises the Initial Consideration and the Earn-Out Consideration, the aggregate amount of which will not be more than RMB550 million (approximately HK$516.43 million).
6.2. In respect of the initial consideration for the Acquisition (“Initial Consideration”):
(i) in the event that the amount of the audited combined after-tax profit of the TBIL Group prepared in accordance with US GAAP for the year ending 31 December 2004 (“2004 Combined After-tax Profit”) is equal to or more than RMB40 million (approximately HK$37.56 million), it will be an amount equal to 4.5 times the amount of the 2004 Combined After-tax Profit; or
(ii) in the event that the amount of the 2004 Combined After-tax Profit is less than RMB40 million (approximately HK$37.56 million), it will be an amount equal to 3.5 times the amount of the 2004 Combined After-tax Profit.
6.3. In respect of the earn-out consideration (“Earn-out Consideration”):
(i) in the event that the amount of the audited combined after-tax profit of the TBIL Group prepared in accordance with US GAAP for the year ending 31 December 2005 (“2005 Combined After-tax Profit”) is less than RMB40 million (approximately HK$37.56 million), it will be an amount equal to the amount of the 2005 Combined After-tax Profit; or
(ii) in the event that the amount of the 2005 Combined After-tax Profit is equal to or more than RMB40 million (approximately HK$37.56 million) but less than (or equal to) RMB75 million (approximately HK$70.42 million), it will be an amount equal to 1.5 times the amount of the 2005 Combined After-tax Profit; or

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LETTER FROM THE BOARD

(iii) in the event that the amount of the 2005 Combined After-tax Profit is more than RMB75 million (approximately HK$70.42 million), it will be an amount equal to 1.75 times the amount of the 2005 Combined After-tax Profit.

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

7. Payment terms

The Consideration has been/will be paid by TOM Online Media in the following manner:

(i) a sum of RMB150 million (approximately HK$140.85 million) has been paid in cash (the “First Instalment”) in September 2004. A sum of RMB10 million (approximately HK$9.39 million) of the First Instalment has been allocated as the consideration paid by the Two Nominees to Mr. Li and Mr. Sun for the transfer of equity interest in LingXun;
(ii) a sum equals to the Initial Consideration minus the First Instalment of RMB150 million (approximately HK$140.85 million) will be paid in cash within 15 Business Days after the date on which the auditors of the TBIL Group deliver the audited accounts of the TBIL Group for the year ending 31 December 2004 to TOM Online Media, Monit, Aosta and Windstorm; and
(iii) a sum equals to the Earn-out Consideration which will be paid in cash within 15 Business Days after the date on which the auditors of the TBIL Group deliver the audited accounts of the TBIL Group for the year ending 31 December 2005 to TOM Online Media, Monit, Aosta and Windstorm.

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

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LETTER FROM THE BOARD

8. Structure chart of TBIL Group as at the date of the Agreement

==> picture [440 x 337] intentionally omitted <==

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

Mr. Li Ms. Yan Mr. Sun
100% 100% 100%
Monit Windstorm Aosta
49% 4% 47%
51% 49%
Treasure Base
100%
WFOE
LingXun
----- End of picture text -----

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LETTER FROM THE BOARD

9. Structure chart of the TBIL Group immediately after Completion

==> picture [329 x 399] intentionally omitted <==

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

Company
71.86%
TOM Online
100%
TOM Online
Media
100%
Treasure Base
100%
WFOE
Contractual
Arrangements
Two Contractual
Nominees (Note) Arrangements
100%
LingXun
100%
----- End of picture text -----

Note: Upon Completion, the Two Nominees and their associates (which, for this purpose, do not include LingXun as it will be accounted for as a wholly-owned subsidiary of TOM Online and a non wholly-owned subsidiary of the Company) will be deemed as connected persons of the Company but only for the purposes of transactions between any of them or their associates as aforesaid, on the one hand, and any member of the Company, on the other hand, which do not form part of the transactions arising from the Contractual Arrangements to which they are a party; and such transactions (if any) will be deemed connected transactions of the Company and subject to the requirements of Chapter 14 of the Listing Rules.

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LETTER FROM THE BOARD

10. Conditions Precedent

Completion is conditional upon, among other things, the following conditions (“Conditions”) having been fulfilled or waived on or before 31 March 2005 (or such other date as the parties to the Agreement may agree):

a PRC legal opinion opining on the legality of the establishment of WFOE, the Agreement and the transactions contemplated under the Agreement (including the Contractual Arrangements) having been issued by such PRC legal counsel approved by TOM Online Media;
an employment contract in such form and substance satisfactory to TOM Online Media having been duly executed between WFOE and each member of the management team and other essential staff members (including Mr. Li) of WFOE;
the Contractual Arrangements in such form and substance satisfactory to TOM Online Media having been duly entered into by the relevant parties;
a local telecommunications value-added services license for Beijing, the PRC and a national license for value-added services issued by the Ministry of Information and Industry of the PRC having been obtained by LingXun;
the Board and/or the Shareholders (if required under the Listing Rules) having approved on the terms of the Agreement and the transactions contemplated thereunder;
TOM Online Media having been satisfied with the result of the due diligence exercise carried out by it on the assets and liabilities, business and prospects of the TBIL Group;
all of the equity interest in LingXun owned by each of Mr. Li and Mr. Sun respectively having been duly transferred to the Two Nominees in accordance with all applicable laws, rules and regulations;
satisfactory proof having been given to TOM Online Media by the Vendors, Mr. Li, Mr. Sun and Ms. Yan evidencing that outstanding accounts receivable in the amount of RMB2 million owed to LingXun have been fully repaid to LingXun; and
satisfactory proof having been given to TOM Online Media by Mr. Li and Mr. Sun evidencing that all tax and related payment relating to (i) LingXun’s profit for the year ended 31 December 2003 and (ii) the increase of the registered capital of LingXun have been fully settled.

All the above Conditions have been fulfilled by 2 September 2004.

11. Completion

As all the Conditions have been fulfilled, Completion took place on 2 September 2004.

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LETTER FROM THE BOARD

12. Contractual Arrangements

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

(a) an exclusive technical and consultancy services agreement entered into between WFOE and LingXun, under which WFOE will provide certain technical and consultancy services to LingXun. LingXun will pay WFOE service fees on a monthly basis, which fees will be an amount equal to 65% of the total number of subscribers of the month multiplied by the net average charge per subscriber for that month (after deduction of business tax);
(b) a business operation agreement entered into between WFOE, LingXun and the shareholders of LingXun (before Completion, it refers to Mr. Li and Mr. Sun; after Completion, it refers to the Two Nominees), under which WFOE agreed to act as a guarantor for any obligations undertaken by LingXun and in return for which, LingXun will pledge to WFOE their accounts receivable and assets. No consideration is payable under the aforesaid business operation agreement;
(c) an exclusive option agreement entered into between Treasure Base and each of the shareholders of LingXun (before Completion, it refers to Mr. Li and Mr. Sun; after Completion, it refers to the Two Nominees), pursuant to which the shareholders of LingXun will grant an exclusive right to Treasure Base to purchase all or part of the shareholders’ equity interest in LingXun at an aggregate exercise price of RMB10,000,000. The option is exercisable at the discretion of Treasure Base;
(d) an equity pledge agreement entered into between WFOE and each of the shareholders of LingXun (before Completion, it refers to Mr. Li and Mr. Sun; after Completion, it refers to the Two Nominees), pursuant to which the shareholders of LingXun will pledge their respective interest in LingXun to WFOE for the performance of LingXun’s payment obligations under the aforesaid exclusive technical and consultancy services agreement. No consideration is payable under the aforesaid equity pledge agreement;
(e) a transfer agreement of the equity interest in LingXun entered into between Mr. Li, Mr. Sun and the Two Nominees whereby Mr. Li and Mr. Sun will transfer their respective equity interests in LingXun to the Two Nominees at an aggregate consideration of RMB10 million (approximately HK$9.39 million);

– 14 –

LETTER FROM THE BOARD

(f) an irrevocable power of attorney entered into between the shareholders of LingXun (before Completion, it refers to Mr. Li and Mr. Sun; after Completion, it refers to the Two Nominees) in favour of the Two Nominees so that the Two Nominees have full power and authority to exercise all of the shareholder’s rights with respect to the shareholders’ interests in LingXun; and
(g) a loan agreement entered into between Treasure Base and each of the shareholders of LingXun (before Completion, it refers to Mr. Li and Mr. Sun; after Completion, it refers to the Two Nominees) so that loans (the aggregate amount of which will be equal to the amount of the registered capital of LingXun (i.e. RMB10 million) will be provided by Treasure Base to the Two Nominees for the exclusive purpose of investment in the registered capital of LingXun.

As a result of the Contractual Arrangements, the TOM Online Group will be able to govern the financial and operating policies of LingXun and enjoy all of the economic interest of the TBIL Group.

C. INFORMATION ON TREASURE BASE

Treasure Base is a company incorporated in the BVI with limited liability on 12 May 2004. As at the date of the Agreement, Treasure Base is owned as to 49% by Monit, 47% by Aosta and 4% by Windstorm. TOM Online Media has acquired the entire issued share capital of Treasure Base upon the terms and subject to the conditions set out in the Agreement. Treasure Base has established WFOE in Beijing, the PRC on 5 July 2004. Under the Contractual Arrangements, Treasure Base and WFOE will be able to enjoy the economic interest in LingXun. LingXun will be accounted for as a wholly-owned subsidiary of TOM Online and a non wholly-owned subsidiary of the Company. Treasure Base is inactive since its incorporation. There is no turnover and the loss attributable to shareholders is minimal for the period from 12 May 2004 (date of incorporation) to 30 June 2004 (detailed financial information is shown in Appendix III of this circular). WFOE was established in July 2004 and is dormant since its establishment incorporation, therefore no financial information is available.

D. INFORMATION ON LINGXUN

1. Principal activities

LingXun is a domestic company established in the PRC on 11 September 2002 by Mr. Li and Mr. Sun with the registered capital of RMB10 million (approximately HK$9.39 million) (which has been fully paid up). LingXun is primarily engaged in the telecommunications valueadded services and the research and development on calculators software. LingXun is a wireless internet service provider focusing on providing entertainment, sports and lifestyle content via SMS, MMS and WAP in cooperation with major TV broadcasters in the PRC. Before Completion and at the date of the Agreement, the equity interest of LingXun was held as to 51% by Mr. Li and 49% by Mr. Sun. Prior to Completion, Mr. Li and Mr. Sun have transferred their respective equity interest in LingXun to the Two Nominees.

– 15 –

LETTER FROM THE BOARD

2. Business and financial review and prospect

LingXun has a strong TV media distribution channel with a leading market share in the WVAS and TV media segment. It has entered into exclusive contracts with key TV media players such as CCTV Sports and thus has a strong TV media promotion platform and distribution channel for WVAS products.

The audited financial information of LingXun prepared in accordance with HK GAAP for the period from 11 September 2002 (date of establishment) to 31 December 2002, for the year ended 31 December 2003 and for the six months ended 30 June 2004, as extracted from Appendix II of this circular, were as follows:

	Period	from
	11 September 2002
	(date of establishment) to		Year	ended	Six months ended
	31 December 2002		31 December 2003		30 June 2004
	RMB	HK$	RMB	HK$	RMB		HK$
		equivalent		equivalent		equivalent
	(in million)	(in million)	(in million)	(in million)	(in million)	(in million)
Turnover	–	–	76.3	71.7	63.8		59.9
(Loss)/profit
before taxation	(0.1)	(0.1)	36.1	33.9	33.0		30.9
(Loss)/profit
after taxation	(0.1)	(0.1)	35.1	33.0	21.6		20.3
	As at 31 December 2002		As at 31 December 2003		As at 30 June 2004
	RMB	HK$	RMB	HK$	RMB		HK$
		equivalent		equivalent		equivalent
	(in million)	(in million)	(in million)	(in million)	(in million)	(in million)
Net assets	0.9	0.9	15.3	14.3	36.9		34.6

– 16 –

LETTER FROM THE BOARD

Ling Xun generally finances its operation and capital expenditure through funds generated internally and from contribution from owners. As at 30 June 2004, LingXun did not have any material contingent liabilities and material capital commitments. As for the foreign exchange risk exposure, since all revenues and costs are denominated in RMB and there is no significant remittance in Hong Kong dollars or other currencies, the exposure to foreign exchange rates fluctuations is considered to be low.

Based on the audited financial information of LingXun during the relevant periods and unaudited pro forma assets and liabilities of the Enlarged TOM Group as disclosed in Appendices II and IV to this circular, the Board does not expect the Acquisition will have any immediate material impact on either the earnings or the assets and liabilities of the Group, upon Completion.

E. REASONS FOR ENTERING INTO THE AGREEMENT

LingXun is a wireless internet service provider focusing on providing entertainment, sports and lifestyle content via SMS, MMS and WAP in cooperation with major TV broadcasters in the PRC. Through the Acquisition, TOM Online intends to further strengthen its leading market position in the wireless internet sector in terms of market share, distribution channels such as online, TV, radio or print, product portfolio and national SMS numbers. Besides, LingXun also has a strong TV media distribution channel with leading market share in WVAS and TV media segment. It has entered into exclusive contracts with key TV media players and thus, providing the TOM Online Group a strong TV media promotion platform and distribution channel for WVAS products.

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

F. LIQUIDITY AND FINANCIAL RESOURCES OF THE TOM GROUP

On 10 and 11 March 2004, TOM Online was spin-off and listed on NASDAQ in the United States and GEM in Hong Kong, respectively by issuing 1,000,000,000 shares in total at HK$1.50 each, raising net proceeds of approximately HK$1,334 million. During the first six months of the year, the Group utilised HK$1,109 million to finance its operations and investment projects, including purchase of debt securities. As at 30 June 2004, the Group’s unaudited bank and cash balance was at HK$1,088 million.

The Group had unaudited bank and other borrowings totaling HK$2,063 million and cash-toborrowing ratio was 53% as at 30 June 2004.

As mentioned in the listing document of the Company dated 29 June 2004, the Group has determined to fully repay the shareholders’ loans of HK$850 million to its substantial shareholders prior to 4 August 2004, the date on which the listing of the Company’s shares migrates to the Main Board of the Stock Exchange. On 29 July 2004, the Group fully repaid the shareholders’ loans by drawn down of a secured bank loan of the same amount.

G. GENERAL

It is not proposed to make any changes to the Board and there is no appointment of representatives from the Vendors to the Board as a result of the Acquisition. Upon Completion, the Company does not intend to make any changes to the existing senior management of the Company.

– 17 –

LETTER FROM THE BOARD

The Company (HKSE stock code: 2383) is listed on the Main Board of the Stock Exchange. A leading Chinese-language media group in the Greater China region, TOM Group has diverse business interests in five key areas: Internet (TOM Online) (Hong Kong GEM stock code: 8282, NASDAQ stock symbol: TOMO), outdoor media, publishing, sports, television and entertainment across markets in Mainland China, Taiwan and Hong Kong.

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

Yours faithfully, By Order of the Board TOM GROUP LIMITED Sing Wang

Chief Executive Officer and Executive Director

– 18 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

1. SHARE CAPITAL

(i) Shares

The authorised and issued share capital of the Company as at the Latest Practicable Date are as follows:

Authorised: HK$ 5,000,000,000 Shares 500,000,000.00 Issued: 3,889,997,150 Shares (Note) 388,999,715.00

Note: The Group has entered into a sale and purchase agreement in relation to the following acquisition, which involve issuance of new Shares and such Shares have not been issued as at the Latest Practicable Date.

Number of new Shares may be Date of the issued (subject agreement Transaction to adjustments) 28 January 2002 Acquisition of an aggregate of 70% of the 8,593,295 (as amended) equity interest in Qingdao Chunyu Advertising Chuanbo Company Limited (“Chunyu Acquisition”)

Pursuant to the relevant agreement in respect of the Chunyu Acquisition, the Company may be required to allot and issue up to a maximum of 8,593,295 new Shares (subject to the adjustments as described in the circular dated 10 January 2003 of the Company) (credited as fully paid) at HK$5.51 per Share to the vendor to satisfy the balance of the consideration for the Chunyu Acquisition. The aforesaid new Shares will be allotted and issued to the vendor within 30 days from the date of issue of the accounts of Qingdao Chunyu Advertising Chuanbo Company Limited for the year ended 31 December 2002 reviewed by the auditors approved by the parties (such accounts have not yet been finalised as at the Latest Practicable Date).

As at the Latest Practicable Date, all the existing Shares rank pari passu in all respects including as to dividends, voting and interests in capital.

(ii) Convertible bonds

On 28 November 2003, TOM Holdings Limited, a wholly-owned subsidiary of the Company, issued convertible bonds (“Convertible Bonds”) in the aggregate principal amount of US$150,000,000. The Convertible Bonds, bearing interest at the rate of 0.50% per annum, are convertible into Shares at an initial conversion price of HK$3.315 per Share (subject to adjustment) from and including 8 January 2004 up to the close of business on 14 November 2008. The Convertible Bonds were listed on the Luxembourg Stock Exchange on 28 November 2003.

As at the Latest Practicable Date, no Convertible Bonds have been converted into Shares. Based on the initial conversion price of HK$3.315 per Share, the Convertible Bonds are convertible into a maximum of 352,941,176 Shares.

(iii) Options

As at the Latest Practicable Date, options to subscribe for an aggregate of 199,307,000 Shares granted pursuant to the Pre-IPO Share Option Plan and the Share Option Scheme were outstanding, details of which are set out in Appendix VI of this circular.

– 19 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Save as disclosed herein, except for the options granted under the pre-IPO share option plan and the share option scheme of the Company which are outstanding, the Company has no outstanding securities convertible into Shares, and no other share or loan capital of the Company has been put under option or agreed conditionally or unconditionally to be put under option.

– 20 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

2. UNAUDITED INTERIM RESULTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 JUNE 2004

Set out below is an extract of the financial information of the Group from its interim report for the six months ended 30 June 2004.

Unaudited Consolidated Profit and Loss Account

For the three months and six months ended 30 June 2004

Note
Turnover
2
Cost of sales
2
Interest income
Selling and marketing expenses
Administrative expenses
Other operating expenses
Operating profit/(loss)
4
Finance costs
Deemed disposal gain
5
Provision for impairment of assets
6
Provision for contracts termination
7
Provision for other receivables
Listing expenses for migration to the
Main Board of Stock Exchange
Share of losses of jointly
controlled entities
Share of profits less losses of
associated companies
Profit/(loss) before taxation
Taxation
8
Profit/(loss) after taxation
Minority interests
Profit/(loss) attributable to
shareholders
Earnings/(loss) per share
10
Basic
Diluted

Three months
Six months
ended 30 June
ended 30 June
As restated
As restated
2004
2003
2004
2003
HK$’000
HK$’000
HK$’000
HK$’000
683,841
483,674
1,198,375
911,968
(395,017)
(278,987)
(677,533)
(555,062)
21,087
588
37,059
1,214
(67,556)
(43,708)
(120,351)
(87,983)
(46,126)
(55,336)
(107,448)
(102,735)
(86,812)
(86,972)
(184,623)
(179,822)
109,417
19,259
145,479
(12,420)
(7,801)
(4,631)
(15,369)
(9,611)
–
–
873,367
–
–
–
(82,731)
–
–
–
(134,315)
–
–
–
(22,476)
–
(19,812)
–
(19,812)
–
(51)
(2,400)
(346)
(4,998)
733
424
853
732
82,486
12,652
744,650
(26,297)
(13,881)
2,072
(23,272)
(1,854)
68,605
14,724
721,378
(28,151)
(38,393)
(4,541)
(37,273)
(4,523)
30,212
10,183
684,105
(32,674)
HK0.78 cent
HK0.30 cent HK17.62 cents HK(0.98) cent
N/A
HK0.30 cent HK16.38 cents
N/A

– 21 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Consolidated Balance Sheet

As at 30 June 2004

Note
ASSETS
Non-current assets
Fixed assets
11
Other non-current assets
12
Goodwill
13
Interests in jointly controlled entities
Interests in associated companies
Investment securities
Current assets
Inventories
Trade and other receivables
14
Bank balances and cash
Current liabilities
Consideration payables – current
Trade and other payables
15
Taxation payable
Long-term bank loans – current
Short-term loans
Net current assets/(liabilities)
Total assets less current liabilities
Non-current liabilities
Consideration payables – non-current
Other non-current liabilities
16
Deferred tax liabilities
Minority interests
Net assets
CAPITAL AND RESERVES
Share capital
17
Reserves
19
Own shares held
20
Shareholders’ funds

Unaudited
Audited
30 June
31 December
2004
2003
HK$’000
HK$’000
209,993
245,006
256,828
253,377
965,458
1,088,466
14,672
15,018
4,041
4,586
2,471,131
1,594,636
3,922,123
3,201,089
101,092
102,236
970,797
1,069,908
1,088,088
884,563
2,159,977
2,056,707
228,227
367,211
788,068
903,235
59,725
52,607
40
610
887,314
882,762
1,963,374
2,206,425
196,603
(149,718)
4,118,726
3,051,371
7,800
11,560
1,232,569
1,239,471
12,695
17,882
1,253,064
1,268,913
593,565
163,083
2,272,097
1,619,375
388,942
387,827
1,889,240
1,237,633
(6,085)
(6,085)
2,272,097
1,619,375

– 22 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

For the six months ended 30 June 2004

At beginning of the period Revaluation deficit on investment securities Exchange translation differences Net gains and losses not recognised in the profit and loss account Profit/(loss) for the period Issuance of shares for acquisition of subsidiaries, net of issuing expenses Elimination of own shares held At end of the period	Unaudited Six months ended 30 June 2004 2003 HK$’000 HK$’000 1,619,375 272,271 (46,996) – (222) 683 (47,218) 683 684,105 (32,674) 15,835 92,987 – (857) 2,272,097 332,410

– 23 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Condensed Consolidated Cash Flow Statement

For the six months ended 30 June 2004

Net cash used in operating activities Net cash from/(used in) investing activities Net cash from financing activities Increase in bank balances and cash Bank balances and cash at 1 January Bank balances and cash at 30 June	Unaudited Six months ended 30 June 2004 2003 HK$’000 HK$’000 (60,161) (19,629) 263,410 (32,567) 276 64,165 203,525 11,969 884,563 329,893 1,088,088 341,862

– 24 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Condensed Interim Accounts

1. Basis of preparation and accounting policies

The unaudited condensed consolidated interim accounts (“interim accounts”) are prepared in accordance with Hong Kong Statement of Standard Accounting Practice (“SSAP”) 2.125 “Interim Financial Reporting” issued by the Hong Kong Society of Accountants, and Chapter 18 of the Listing Rules of GEM. The interim accounts should be read in conjunction with the 2003 annual accounts.

The accounting policies and methods of computation used in the preparation of the interim accounts are consistent with those used in the annual accounts for the year ended 31 December 2003.

2. Restatement of turnover and cost of sales

The Group’s wireless value-added services are delivered to users through the wireless data platforms of the mobile telecommunications operators pursuant to revenue sharing agreements. In prior years, the Group reported these wireless value-added services revenues net of the revenues shared with the mobile telecommunications operators. In 2003, the Directors are of the opinion that it is more appropriate to adopt the gross basis of recognition of wireless value-added services revenues commencing from 1 January 2003. This change in recognition basis has no overall effect on the Group’s results. To facilitate better comparison of year-on-year results, both turnover and cost of sales for the three months and six months ended 30 June 2003 have been restated and increased by HK$28,136,000 and HK$45,026,000, respectively.

3. Segment information

An analysis of the Group’s turnover and results for the period by business segments is as follows:

Turnover Segment profit/(loss) before amortisation and depreciation Amortisation and depreciation Segment profit/(loss) Unallocated costs Operating profit Finance costs Deemed disposal gain Provision for impairment of assets Provision for contracts termination Provision for other receivables Listing expenses for migration to the Main Board of Stock Exchange Share of losses of jointly controlled entities Share of profits of associated companies Profit before taxation Taxation Profit after taxation Minority interests Profit attributable to shareholders	Internet Group HK$’000 458,732 181,778 (22,437) 159,341 873,367 (23,752) – – (346) 87	Six months ended 30 June 2004 Television and Outdoor Entertain- Media Publishing Sports ment Group Group Group Group HK$’000 HK$’000 HK$’000 HK$’000 159,460 441,452 127,333 11,398 38,582 55,929 19,274 (32,771) (17,964) (21,708) (2,443) (12,103) 20,618 34,221 16,831 (44,874) – – – – (12,141) – – (46,838) (25,600) – – (108,715) (17,831) – – (4,645) – – – – – 766 – –	Group HK$’000 1,198,375 262,792 (76,655) 186,137 (40,658) 145,479 (15,369) 873,367 (82,731) (134,315) (22,476) (19,812) (346) 853 744,650 (23,272) 721,378 (37,273) 684,105

– 25 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Turnover_(As restated, Note 2)_ Segment profit before amortisation and depreciation Amortisation and depreciation Segment profit/(loss) Unallocated costs Operating loss Finance costs Share of losses of jointly controlled entities Share of profits less losses of associated companies Loss before taxation Taxation Loss after taxation Minority interests Loss attributable to shareholders	Internet Group HK$’000 263,544 74,324 (29,885) 44,439 (4,998) (69)	Six months ended 30 June 2003 Television and Outdoor Entertain- Media Publishing Sports ment Group Group Group Group HK$’000 HK$’000 HK$’000 HK$’000 141,455 360,237 60,349 86,383 36,855 25,533 1,331 7,847 (21,206) (19,599) (1,859) (10,883) 15,649 5,934 (528) (3,036) – – – – – 801 – –	Group HK$’000 911,968 145,890 (83,432) 62,458 (74,878) (12,420) (9,611) (4,998) 732 (26,297) (1,854) (28,151) (4,523) (32,674)

There are no significant sales or other transactions between the business segments.

An analysis of the Group’s turnover and results for the period by geographical segments is as follows:

	Turnover	Turnover		Segment profit/(loss)	Segment profit/(loss)	Segment profit/(loss)
	Six months ended		30 June	Six months	ended 30 June
		As restated
	2004		2003	2004		2003
	HK$’000	HK$’000		HK$’000		HK$’000
Hong Kong	50,616		37,346	(4,866)		(19,338)
Mainland China	738,089		539,507	199,850		125,003
Taiwan	409,670		335,115	67,808		40,225
	1,198,375		911,968	262,792		145,890

Amortisation and depreciation				(76,655)		(83,432)
Unallocated costs				(40,658)		(74,878)
Operating profit/(loss)				145,479		(12,420)

There are no significant sales between the geographical segments.

– 26 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

4. Operating profit/(loss)

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

	Three months	ended 30 June	Six months	ended 30 June
	2004	2003	2004	2003
	HK$’000	HK$’000	HK$’000	HK$’000
Depreciation	17,895	26,741	41,046	54,690
Amortisation
– Goodwill	13,753	13,420	24,805	26,177
– Other non-current assets	7,323	8,592	15,140	12,853

5. Deemed disposal gain

On 10 March and 11 March 2004, the shares of TOM Online, previously a wholly-owned subsidiary of the Company, were listed and traded on the NASDAQ in the United States and GEM in Hong Kong (the “Global Offering”). As a result of the Global Offering, the Company’s shareholding in TOM Online has been diluted to 71.86%, which resulted in a gain of HK$873,367,000 arising from this deemed disposal.

The change in assets and liabilities to the Group in respect of the Global Offering is set out in Note 21(ii).

6. Provision for impairment of assets

This represents provision for impairment of fixed assets and goodwill as a result of certain internal restructuring initiatives in connection with the Group’s operations. Among which, a provision of approximately HK$47 million has been made for impairment of goodwill arising from the acquisition of a subsidiary engaged in the audio and video products distribution business.

In addition, the subsidiary has been excluded from consolidation since 1 January 2004 as the Group has ceased to have the ability to control or significantly influence the subsidiary’s operations.

7. Provision for contracts termination

In preparation for digitalising CETV’s transmission and distribution platform later in the year, CETV entered into a digital service contract in March 2004. Included in the provision for contracts termination is a one-time charge of approximately HK$109 million for the early termination of CETV’s analogue transponder agreement.

8. Taxation

Hong Kong profits tax has been provided at the rate of 17.5% (2003: 17.5%) 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/(credited) to the consolidated profit and loss account represents:

	Three months ended 30 June Six months	Three months ended 30 June Six months	Three months ended 30 June Six months	ended 30 June
	2004	2003	2004	2003
	HK$’000	HK$’000	HK$’000	HK$’000
Hong Kong profits tax	1	–	101	–
Overseas taxation	18,786	8,765	27,277	11,680
Under/(over)-provision in prior years	769	(1,637)	769	(1,637)
Deferred taxation	(5,675)	(9,200)	(4,875)	(8,189)
	13,881	(2,072)	23,272	1,854

9. Dividend

No dividend had been paid or declared by the Company during the period (2003: Nil).

– 27 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

10. Earnings/(loss) per share

(a) Basic

The calculation of the basic earnings/(loss) per share for the three months and six months ended 30 June 2004 is based on the respective unaudited consolidated profit attributable to shareholders of HK$30,212,000 and HK$684,105,000 (2003: HK$10,183,000 and loss of HK$32,674,000) and the weighted average of 3,887,207,564 and 3,882,734,691 (2003: 3,339,621,837 and 3,335,208,470) ordinary shares in issue during the respective periods.

(b) Diluted

No diluted earnings per share is presented for the three months ended 30 June 2004 as the exercise prices of the outstanding share options granted by the Company were higher than the average market price of shares of the Company and the conversion of the convertible bonds would have an anti-dilutive effect during the period.

The calculation of diluted earnings per share for the six months ended 30 June 2004 is based on the unaudited adjusted consolidated profit attributable to shareholders of HK$694,329,000, after adding back the borrowing costs of the convertible bonds, and the weighted average of 4,237,629,238 ordinary shares, after adjusting for the effects of all dilutive potential shares, as if all the outstanding share options and convertible bonds issued by the Group had been exercised and converted into ordinary shares at the date of issuance.

The calculation of the diluted earnings per share for the three months ended 30 June 2003 is based on the unaudited consolidated profit attributable to shareholders of HK$10,183,000 and the weighted average of 3,401,368,137 ordinary shares, after adjusting the effects of all dilutive potential ordinary shares, as if all the outstanding share options and consideration shares for acquisition of subsidiaries had been exercised and issued by the Company at the date of issuance.

The exercise of share options granted and the issuance of consideration shares by the Company would have an anti-dilutive effect on the loss per share for the six months ended 30 June 2003.

11. Fixed assets

At beginning of the period Additions Acquisition of subsidiaries Disposals Deconsolidation/disposal of a subsidiary_(Note 21(i))_ Depreciation charge Impairment charge Exchange adjustment At end of the period	30 June 31 December 2004 2003 HK$’000 HK$’000 245,006 250,868 40,242 91,747 – 21,105 (3,525) (11,305) (1,729) (1,038) (41,046) (106,622) (29,432) – 477 251 209,993 245,006

– 28 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

12. Other non-current assets

Concession rights_(Note) Copyrights(Note) Licence rights and royalties(Note) Publishing rights(Note) Purchased programme and film rights(Note) Software(Note) Long-term receivable(Note 14)_ Deferred expenses Pension assets Deferred tax assets	30 June 31 December 2004 2003 HK$’000 HK$’000 38,824 40,164 – 18,634 34,929 27,300 13,107 1,119 7,081 1,987 6,430 – 97,500 101,400 31,001 34,539 440 440 27,516 27,794 256,828 253,377	30 June 31 December 2004 2003 HK$’000 HK$’000 38,824 40,164 – 18,634 34,929 27,300 13,107 1,119 7,081 1,987 6,430 – 97,500 101,400 31,001 34,539 440 440 27,516 27,794 256,828 253,377
		253,377

Note:

At beginning of the period Additions Acquisition of subsidiaries Disposal Deconsolidation of a subsidiary (Note 21(i)) Amortisation charge Exchange adjustment At end of the period	Concession rights HK$’000 40,164 2,961 – – – (4,301) – 38,824	Copyrights HK$’000 18,634 – – – (18,634 ) – – –	Licence rights and royalties HK$’000 27,300 8,147 – – – (518 ) – 34,929	Publishing rights HK$’000 1,119 13,240 – – – (1,279) 27 13,107	Purchased programme and film rights HK$’000 1,987 13,798 – – – (8,704) – 7,081	Software HK$’000 – 6,768 – – – (338 ) – 6,430	30 June 31 December 2004 2003 Total Total HK$’000 HK$’000 89,204 84,782 44,914 37,327 – 3,975 – (5,103) (18,634) – (15,140) (31,802 ) 27 25 100,371 89,204
							100,371

13. Goodwill

At beginning of the period Additions Consideration adjustments for acquisition of subsidiaries Amortisation charge Impairment charge Exchange adjustment At end of the period Represented by: Goodwill Negative goodwill	30 June 31 December 2004 2003 HK$’000 HK$’000 1,088,466 953,899 – 135,603 (44,917) 49,726 (24,805) (50,775) (53,299) – 13 13 965,458 1,088,466 977,463 1,100,471 (12,005) (12,005) 965,458 1,088,466	30 June 31 December 2004 2003 HK$’000 HK$’000 1,088,466 953,899 – 135,603 (44,917) 49,726 (24,805) (50,775) (53,299) – 13 13 965,458 1,088,466 977,463 1,100,471 (12,005) (12,005) 965,458 1,088,466
		1,088,466

		1,100,471 (12,005)
		1,088,466

– 29 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

14. Trade and other receivables

Trade receivables Less: Amount due after one year_(Note 12)_ Amount receivable within one year Prepayments, deposits and other receivables	30 June 31 December 2004 2003 HK$’000 HK$’000 667,844 662,626 (97,500) (101,400) 570,344 561,226 400,453 508,682 970,797 1,069,908	30 June 31 December 2004 2003 HK$’000 HK$’000 667,844 662,626 (97,500) (101,400) 570,344 561,226 400,453 508,682 970,797 1,069,908
		561,226 508,682
		1,069,908

The ageing analysis of the Group’s trade receivables at end of the period is as follows:

Current 31-60 days 61-90 days Over 90 days Represented by: Receivables from related companies Receivables from third parties	30 June 31 December 2004 2003 HK$’000 HK$’000 373,214 364,306 116,265 125,121 84,808 82,197 93,557 91,002 667,844 662,626 4,639 87,735 663,205 574,891 667,844 662,626	30 June 31 December 2004 2003 HK$’000 HK$’000 373,214 364,306 116,265 125,121 84,808 82,197 93,557 91,002 667,844 662,626 4,639 87,735 663,205 574,891 667,844 662,626
		662,626

		87,735 574,891
		662,626

Majority of the Group’s turnover is on open account terms and in accordance with terms specified in the contracts governing the relevant transactions.

15. Trade and other payables

Trade payables Less: Amount due after one year_(Note 16)_ Amount payable within one year Other payables and accruals	30 June 31 December 2004 2003 HK$’000 HK$’000 273,755 290,451 (35,100) (46,800) 238,655 243,651 549,413 659,584 788,068 903,235	30 June 31 December 2004 2003 HK$’000 HK$’000 273,755 290,451 (35,100) (46,800) 238,655 243,651 549,413 659,584 788,068 903,235
		243,651 659,584
		903,235

– 30 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

The ageing analysis of the Group’s trade payables at end of the period is as follows:

Current 31-60 days 61-90 days Over 90 days 16. Other non-current liabilities Long-term bank loans Convertible bonds Long-term payables_(Note 15)_ Pension obligations	30 June 31 December 2004 2003 HK$’000 HK$’000 187,308 156,576 24,922 43,324 13,934 26,188 47,591 64,363 273,755 290,451 30 June 31 December 2004 2003 HK$’000 HK$’000 530 1,675 1,175,269 1,170,753 35,100 46,800 21,670 20,243 1,232,569 1,239,471	30 June 31 December 2004 2003 HK$’000 HK$’000 187,308 156,576 24,922 43,324 13,934 26,188 47,591 64,363 273,755 290,451 30 June 31 December 2004 2003 HK$’000 HK$’000 530 1,675 1,175,269 1,170,753 35,100 46,800 21,670 20,243 1,232,569 1,239,471
		1,239,471

17. Share capital

Authorised Ordinary shares of HK$0.1 each Issued and fully paid At beginning of the period Issuance of shares At end of the period	30 June 2004 No. of shares HK$’000 5,000,000,000 500,000 3,878,261,817 387,827 11,151,548 1,115 3,889,413,365 388,942	31 December No. of shares 5,000,000,000 3,321,865,958 556,395,859 3,878,261,817	2003 HK$’000 500,000

			332,187 55,640
			387,827

On 19 April 2004, 11,151,548 ordinary shares were allotted and booked at HK$1.42 per share, which was the fair value calculated based on the closing price quoted on the Stock Exchange at the date of acquisition as part of the considerations for the acquisition of a subsidiary.

18. Share option schemes

(i) Details of share options granted by the Company as at 30 June 2004 are as follows:

	Number of share options	Number of share options
	Pre-IPO Share	Share Option
	Option Plan	Scheme
As at 1 January 2004	16,196,000	186,279,000
Granted	–	10,000,000
Lapsed	–	(1,840,000)
Cancelled	–	(1,818,000)
Outstanding at 30 June 2004	16,196,000	192,621,000

– 31 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Details of share options granted under the Share Option Scheme during the six months ended 30 June 2004:

Number of options granted 10,000,000 Expiry date 15 February 2014 Subscription price per share HK$2.55 Terms of the share options outstanding at 30 June 2004 are: Expiry date Subscription price 10 February – 14 November 2010 HK$1.78 – HK$11.30 6 February 2012 HK$3.76 8 October 2013 HK$2.505 15 February 2014 HK$2.55 (ii) Details of TOM Online’s Pre-IPO share Option Plan as at 30 June 2004 are as follows: Date of grant and as at 16 February 2004 Lapsed Outstanding at 30 June 2004 Terms of the share options outstanding at 30 June 2004 are: Expiry date Subscription price 15 February 2014 HK$1.50	56,626,000 37,334,000 104,857,000 10,000,000
	208,817,000

	280,000,000 (2,616,669)
	277,383,331

	277,383,331

19. Reserves

At beginning of the period Issuance of shares for acquisition of subsidiaries, net of issuing expenses Placement of shares, net of issuing expenses Investment revaluation (deficit)/surplus Profit for the period Transfer to general reserve Exchange difference At end of the period	Share premium account HK$’000 3,605,986 14,720 – – – –	Capital Capital redemption reserve reserve HK$’000 HK$’000 (377 ) 776 – – – – – – – – – – (377 ) 776	General reserve HK$’000 15,579 – – – 63,235 49	30 June 31 December Revaluation Exchange Accumulated 2004 2003 reserve difference losses Total Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 5,610 1,206 (2,391,147 ) 1,237,633 (54,688 ) – – – 14,720 321,025 – – – – 951,045 (46,996) – – (46,996) 5,611 684,105 684,105 12,598 – – (63,235 ) – – (44 ) (227 ) – (222) 2,042 (41,430) 979 (1,770,277 ) 1,889,240 1,237,633	30 June 31 December Revaluation Exchange Accumulated 2004 2003 reserve difference losses Total Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 5,610 1,206 (2,391,147 ) 1,237,633 (54,688 ) – – – 14,720 321,025 – – – – 951,045 (46,996) – – (46,996) 5,611 684,105 684,105 12,598 – – (63,235 ) – – (44 ) (227 ) – (222) 2,042 (41,430) 979 (1,770,277 ) 1,889,240 1,237,633
	3,620,706		78,863		1,237,633

20. Own shares held

Own shares held represent the cost of 2,928,564 (31 December 2003: 2,928,564) ordinary shares in the Company held by certain subsidiaries and are deducted in arriving at the shareholders’ funds.

– 32 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

21. Deconsolidation and deemed disposal of subsidiaries

(i) Deconsolidation of a subsidiary

The assets and liabilities deconsolidated are as follows:

Fixed assets Copyrights Inventories Trade and other receivables Bank balances and cash Trade and other payables Taxation payable Minority interests Net assets deconsolidated and reclassified as investment securities	HK$’000 1,729 18,634 11,171 107,921 219 (99,028) (5,658) (14,508)
	20,480

(ii) Deemed disposal of subsidiaries

The change in assets and liabilities to the Group in respect of the Global Offering are as follows:

Increase in bank balances and cash Increase in trade and other payables Increase in minority interests Deemed disposal gain	HK$’000 1,334,364 (43,775) (417,222)
	873,367

22. Pledge of assets

At 30 June 2004, bank deposits and cash totalling approximately HK$13,764,000 (31 December 2003: HK$21,636,000) were pledged to banks for securing banking facilities granted to certain subsidiaries of the Company and an investee company.

At 30 June 2004, concession rights and a property at net book value of HK$3,096,000 (31 December 2003: HK$5,614,000) and HK$809,000 (31 December 2003: HK$814,000) respectively were pledged to banks for securing banking facilities granted to certain subsidiaries of the Company.

23. Contingent liabilities

At 30 June 2004, the Group had contingent liabilities amounting to approximately HK$9,400,000 (31 December 2003: HK$9,400,000) in respect of provision of fixed deposits as securities for bank loans granted to an investee company in which the Group has 50% equity interest.

24. Commitments

(a) Capital commitments

Acquisition of fixed assets and other non-current assets – Contracted but not provided for – Authorised but not contracted for	30 June 31 December 2004 2003 HK$’000 HK$’000 27,053 82,652 214,505 1,715 241,558 84,367	30 June 31 December 2004 2003 HK$’000 HK$’000 27,053 82,652 214,505 1,715 241,558 84,367
		84,367

(b) At 30 June 2004, the Group had commitments in respect of contributions to registered capital of certain investments in Mainland China amounted to approximately HK$23,030,000 (31 December 2003: HK$23,923,000).

– 33 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

(c) Other commitments

At 30 June 2004, the Group had other capital commitment in respect of the acquisition of 100% beneficial interest in LTWJi through the acquisition of the entire share capital of Puccini International Limited (“Puccini”) subject to a maximum amount of US$150 million (approximately HK$1,170 million). According to the sale and purchase agreement entered into between the Group and Cranwood, the consideration for the acquisition of Puccini should equal the valuation of the Puccini and its subsidiaries (the “Puccini Group”), which is determined based on 7.7 times the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004; or in the event that the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004 is less than an amount equal to 1.2 times of audited consolidated net profit of the Puccini Group for the year ended 31 December 2003, an amount equal to 6 times the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004.

As the consideration for the acquisition of Puccini is contingent on the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004, the Group has not recorded any consideration as cost of investments as of 30 June 2004, and therefore, no goodwill amortisation expenses in relation to the aforesaid acquisition has been charged to the consolidated profit and loss account for the three months and six months ended 30 June 2004.

In accordance with the sale and purchase agreement, the consideration for the acquisition of Puccini, when finalised, will be paid partly in cash and partly by way of issuance and allotment of TOM Online Shares. An initial consideration of US$18,500,000 worth of TOM Online Shares as held in escow were issued at the initial public offer price of TOM Online Shares on 10 March 2004. The issuance of TOM Online Shares will result in a dilution of the Company’s shareholding in TOM Online. The effect of the dilution will be accounted for when the TOM Online Shares are issued.

25. Related party transactions

In the opinion of the directors of the Company, the following is a summary of significant related party transactions, in addition to those disclosed in notes 14 and 24(c) to the interim accounts.

Note Sales to (i) – HWL and its subsidiaries – Metro Broadcast Corporation Limited (“Metro”), an associated company of HWL and CKH – CKH and its subsidiaries – a jointly controlled entity – minority shareholders of subsidiaries and their subsidiaries Cost of sales payable to (ii) – minority shareholders of subsidiaries and their subsidiaries – Cranwood and its related companies Office rental receivable from Metro Office and warehouse rental and service fees payable to (iii) – an associated company of CKH – a subsidiary of CKH – minority shareholders of subsidiaries and their associates Service fees payable to (iv) – a subsidiary of HWL Service fees payable to (v) – HWL and its subsidiaries – subsidiaries of minority shareholders Interest expenses payable to (vi) – a subsidiary of HWL – a subsidiary of CKH – Cranwood	30 June 2004 HK$’000 2,251 – 926 2,838 428 12,633 309 – 5,313 3,624 663 2,003 921 14,720 1,292 646 1,292	30 June 2003 HK$’000 368 690 128 4,308 62,614 19,332 – 472 2,039 6,156 814 2,003 921 4,463 3,169 1,584 3,169

– 34 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes:

(i) Sales to related companies are principally at terms no less favourable than those sales to third party customers of the Group.
(ii) Cost of sales were payable to related companies at market rates.
(iii) The rentals and service fees were payable to the related companies for office premises and warehouses leased to the Group. The office premises and warehouses were leased to the Group at market rates.
(iv) The service fees were recharged by a subsidiary of HWL on cost reimbursement basis for the provision of administrative, information technology and consultancy services.
(v) The service fees were payable to related companies for the provision of goods and services rendered at market rates.
(vi) Interests for loans from shareholders were calculated at 50 basis points over 3 months Hong Kong Interbank Offered Rate per annum over the outstanding balances.

26. Subsequent events

(a) On 29 July 2004, the Group fully repaid the shareholders’ loans of HK$850,000,000 by drawn down of a secured bank loan of the same amount.
(b) On 5 July 2004, the Company, through its wholly-owned subsidiary, TOM.COM INTERNATIONAL LIMITED signed a co-operation framework agreement to acquire a 48.5% registered capital of China Popular Computer Week Management Company Limited (“CPCWM”) and 0.97% of the enlarged share capital of Chongqing Zhongkepu Media Development Joint Stock Company Limited at cash consideration of RMB209,475,000 (equivalent to approximately HK$196,912,000). Subsequent to the completion of the aforementioned acquisition and subscription, the Group will effectively hold approximately 49% beneficial interest in CPCWM.
(c) On 4 August 2004, the Company’s shares were migrated and listed on the Main Board of the Stock Exchange by way of introduction.

– 35 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

3. AUDITED CONSOLIDATED RESULTS FOR THE GROUP

(i) Consolidated Profit & Loss Account

Set out below are the audited consolidated profit and loss accounts of the Group for the years ended 31 December 2001, 2002 and 2003 extracted from the audited financial statements of the Group for the relevant years.

Turnover Cost of sales Interest income Selling and marketing expenses Administrative expenses Other operating expenses Operating profit/(loss) Finance costs Provision for impairment of goodwill Provision for impairment of fixed assets Restructuring costs Share of losses of jointly controlled entities Share of profits less losses of associated companies Profit/(loss) before taxation Taxation Profit/(loss) after taxation Minority interests Profit/(loss) attributable to shareholders Earnings/(loss) per share Basic Diluted	2003 HK$’000 2,089,234 (1,202,730) 14,097 (191,394) (216,552) (400,306) 92,349 (19,919) – – – (6,387) 1,823 67,866 (12,399) 55,467 (42,869) 12,598 HK0.35 cent HK0.35 cent	2002 HK$’000 1,624,126 (1,008,400) 5,867 (170,205) (235,174) (322,406) (106,192) (19,079) (197,108) – – (29,585) 20 (351,944) (29,080) (381,024) (28,555) (409,579) HK(12.41) cents N/A	2001 HK$’000 626,624 (479,292) 23,069 (86,890) (127,186) (186,917) (230,592) (1,395) (280,936) (49,540) (8,527) (35,856) (3,164) (610,010) (18,692) (628,702) (7,185) (635,887) HK(19.78) cents N/A

– 36 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

(ii) Audited Accounts

Set out below is a summary of the audited consolidated profit and loss accounts of the Group for the two years ended 31 December 2002 and 2003, the audited consolidated balance sheets of the Group as at 31 December 2002 and 2003, the audited balance sheets of the Company as at 31 December 2002 and 2003 and the audited consolidated cash flow statement of the Group for the two years ended 31 December 2002 and 2003, together with the relevant notes to the accounts as extracted from the audited financial statements of the Group for the year ended 31 December 2003.

Consolidated Profit & Loss Account

Note
Turnover
2
Cost of sales
Interest income
2
Selling and marketing expenses
Administrative expenses
Other operating expenses
Operating profit/(loss)
3
Finance costs
4
Provision for impairment of goodwill
Share of losses of jointly controlled entities
Share of profits less losses of
associated companies
Profit/(loss) before taxation
Taxation
5
Profit/(loss) after taxation
Minority interests
Profit/(loss) attributable to shareholders
Earnings/(loss) per share
8
Basic
Diluted

2003
2002
HK$’000
HK$’000
2,089,234
1,624,126
(1,202,730)
(1,008,400)
14,097
5,867
(191,394)
(170,205)
(216,552)
(235,174)
(400,306)
(322,406)
92,349
(106,192)
(19,919)
(19,079)
–
(197,108)
(6,387)
(29,585)
1,823
20
67,866
(351,944)
(12,399)
(29,080)
55,467
(381,024)
(42,869)
(28,555)
12,598
(409,579)
HK0.35 cent
HK(12.41) cents
HK0.35 cent
N/A

– 37 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Consolidated Balance Sheet

Note ASSETS Non-current assets Fixed assets 11 Other non-current assets 12 Goodwill 13 Interests in jointly controlled entities 15 Interests in associated companies 16 Investment securities 17 Current assets Inventories 18 Trade and other receivables 19 Bank balances and cash Current liabilities Consideration payables – current 20 Trade and other payables 21 Taxation payable Long-term bank loans – current 23(a) Short-term loans 22 Net current liabilities Total assets less current liabilities Non-current liabilities Consideration payables – non-current 20 Other non-current liabilities 23 Deferred tax liabilities 25(b) Minority interests Net assets CAPITAL AND RESERVES Share capital 26 Reserves 28 Own shares held 29 Shareholders’ funds	2003 HK$’000 245,006 253,377 1,088,466 15,018 4,586 1,594,636 3,201,089 102,236 1,069,908 884,563 2,056,707 367,211 903,235 52,607 610 882,762 2,206,425 149,718 3,051,371 11,560 1,239,471 17,882 1,268,913 163,083 1,619,375 387,827 1,237,633 (6,085) 1,619,375	2002 HK$’000 250,868 98,781 953,899 35,510 4,601 126,406 1,470,065 108,260 645,145 329,893 1,083,298 431,478 598,038 68,417 561 14,338 1,112,832 29,534 1,440,531 130,670 874,659 9,147 1,014,476 153,784 272,271 332,187 (54,688) (5,228) 272,271

– 38 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Balance Sheet

Note ASSETS Non-current assets Interests in subsidiaries 14 Current assets Other receivables 19 Bank balances and cash Current liabilities Consideration payables – current 20 Other payables 21 Short-term loans 22 Net current liabilities Total assets less current liabilities Non-current liabilities Consideration payables – non-current 20 Other non-current liabilities 23 Net assets CAPITAL AND RESERVES Share capital 26 Reserves 28 Own shares held 29 Shareholders’ funds	2003 HK$’000 3,201,908 29,313 351,391 380,704 367,211 8,993 850,000 1,226,204 845,500 2,356,408 11,560 – 11,560 2,344,848 387,827 1,963,106 (6,085) 2,344,848	2002 HK$’000 2,421,694 20,961 14,433 35,394 431,478 5,487 – 436,965 401,571 2,020,123 130,670 850,000 980,670 1,039,453 332,187 712,494 (5,228) 1,039,453

– 39 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

At 1 January Revaluation surplus on investment securities Exchange translation differences Net gains and losses not recognised in the profit and loss account Profit/(loss) for the year Issuance of shares for acquisition of subsidiaries, net of issuing expenses Placement of shares, net of issuing expenses Exercise of share options, net of issuing expenses Own shares held At 31 December	2003 HK$’000 272,271 5,611 2,042 7,653 12,598 331,665 996,045 – (857) 1,619,375	2002 HK$’000 579,003 – (255) (255) (409,579) 87,597 – 19,642 (4,137) 272,271

– 40 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Consolidated Cash Flow Statement

Note Net cash inflow/(outflow) from operations 30(a) Interest paid Hong Kong profits tax paid Overseas taxation paid Net cash from/(used in) operating activities Investing activities Interest received Capital expenditure Sale of fixed assets Settlement of consideration payable for acquisition of subsidiaries in prior years Acquisition of subsidiaries 30(c) Disposal/deconsolidation of a subsidiary 30(d) Purchase of debt securities Purchase and sale of other investments, net Loans to related companies Loan repayment from related companies Dividends received Net cash used in investing activities Net cash used before financing activities Financing activities Issuance of ordinary shares, net of issuing expenses 30(e) New bank and other loans 30(e) Loan repayments 30(e) Proceeds from issuance of convertible bonds 30(e) Expenses on issuance of convertible bonds and arrangement of syndicated loan facilities Contribution from minority shareholders 30(e) Dividends paid to minority shareholders Net cash from financing activities Increase in bank balances and cash Bank balances and cash at 1 January Bank balances and cash at 31 December	2003 HK$’000 69,375 (17,397) (2,595) (31,254) 18,129 13,455 (96,916) 1,262 (27,421) (20,841) 135 (1,481,549) – – – 4,988 (1,606,887) (1,588,758) 995,921 103,062 (85,162) 1,170,000 (35,779) 1,786 (6,400) 2,143,428 554,670 329,893 884,563	2002 HK$’000 (75,203) (19,205) (2,003) (26,613) (123,024) 22,631 (166,698) 1,423 (42,639) (312,047) (7,962) – (219) (500) 3,760 130 (502,121) (625,145) 19,292 767,364 (63,737) – – 1,410 (3,176) 721,153 96,008 233,885 329,893

– 41 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts

1. Principal accounting policies

The principal accounting policies adopted in the preparation of these accounts are set out below:

(a) Basis of preparation

The accounts have been prepared in accordance with accounting principles generally accepted in Hong Kong and comply with accounting standards issued by the Hong Kong Society of Accountants (“HKSA”). They have been prepared under the historical cost convention except that, as set out in note (e) below, certain investment securities are stated at fair value.

In the current year, the Group adopted the revised Statement of Standard Accounting Practice (“SSAP”) 2.112 “Income Taxes” (revised) issued by the HKSA which is effective for accounting periods commencing on or after 1 January 2003. The adoption of this revised SSAP has no material effect on the Group’s results.

Certain comparative figures have been reclassified to conform with the current year’s presentation.

(b) Consolidation

The consolidated accounts include the accounts of the Company and its subsidiaries made up to 31 December. Subsidiaries are those entities in which the Group, directly or indirectly, controls more than one half of the voting power; has the power to govern the financial and operating policies; to appoint or remove the majority of the members of the board of directors; or to cast majority of votes at the meetings of the board of directors.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss account from the effective date of acquisition or up to the effective date of disposal, as appropriate.

All significant intercompany transactions and balances within the Group are eliminated on consolidation.

The gain or loss on the disposal of a subsidiary represents the difference between the proceeds of the sale and the Group’s share of its net assets together with any unamortised goodwill or goodwill taken to reserves and which was not previously charged or recognised in the consolidated profit and loss account.

Minority interests represent the interests of outside shareholders in the operating results and net assets of subsidiaries.

In the Company’s balance sheet the interests in subsidiaries are stated at cost less provision for impairment losses. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

(c) Jointly controlled entities

A jointly controlled entity is a contractual arrangement whereby the Group and other parties undertake an economic activity which is subject to joint control and none of the participating parties has unilateral control over the economic activity.

The consolidated profit and loss account includes the Group’s share of the results of jointly controlled entities for the year, and the consolidated balance sheet includes the Group’s share of the net assets of the jointly controlled entities and goodwill on acquisition, net of accumulated amortisation and impairment losses, if any.

(d) Associated companies

An associated company is a company, not being a subsidiary and a jointly controlled entity, in which an equity interest is held for the long-term and significant influence is exercised in its management.

The consolidated profit and loss account includes the Group’s share of the results of associated companies for the year, and the consolidated balance sheet includes the Group’s share of the net assets of the associated companies and goodwill on acquisition, net of accumulated amortisation and impairment losses, if any.

– 42 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

1. Principal accounting policies (continued)

(e) Investment securities

Investment securities held for non-trading purpose are stated at fair value at the balance sheet date. Changes in the fair value of individual securities are credited or debited to the revaluation reserve until the security is sold, or is determined to be impaired. Upon disposal, the cumulative gain or loss representing the difference between the net sales proceeds and the carrying amount of the relevant security, together with any surplus/deficit transferred from the revaluation reserve, is dealt with in the profit and loss account.

Where there is objective evidence that individual investment securities are impaired, the cumulative loss recorded in the revaluation reserve is taken to the profit and loss account.

(f) Fixed assets

Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any.

Fixed assets are depreciated at rates sufficient to write-off their costs less accumulated impairment losses, if any, over their estimated useful lives on a straight-line basis. The principal annual rates are as follows:

Properties	over the lease terms
Leasehold improvements	15 – 30%
Computer equipment	20 – 331/3%
Outdoor media assets	5 – 20%
Office equipment, studio and broadcasting equipment,
furniture, fixtures and motor vehicles	10 – 331/3%

The gain or loss on disposal of a fixed asset is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in the profit and loss account.

(g) Other non-current assets

Concession rights, copyrights, licence rights, publishing rights, and purchased programmes and film rights are stated at cost less accumulated amortisation and impairment losses, if any, and are amortised on a systematic basis over the respective period of the right, subject to a maximum period of 20 years, whichever is shorter.

Deferred expenses represent costs incurred for issuing convertible bonds and arrangement of syndicated loan facilities and are amortised on a straight-line basis over the respective period of the loan.

(h) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary, jointly controlled entity or associated company at the date of acquisition.

Goodwill on acquisitions arising on or after 1 January 2001 is included in intangible assets and is amortised on a straight-line basis over its estimated useful life. Goodwill is amortised over a maximum period of 20 years.

Goodwill on acquisitions prior to 1 January 2001 was eliminated against reserves. Any impairment arising on such goodwill is accounted for in the consolidated profit and loss account.

Negative goodwill represents the excess of the fair value of the Group’s share of the net assets acquired over the cost of acquisition.

Negative goodwill is presented in the same balance sheet classification as goodwill and is recognised in the profit and loss account over the remaining weighted average useful life of those assets.

– 43 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

1. Principal accounting policies (continued)

(i) Asset impairment

At each balance sheet date, both internal and external sources of information are considered to assess whether there is any indication that intangible and tangible assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated and where relevant, an impairment loss is recognised to reduce the asset to its recoverable amount. Such impairment losses are recognised in the profit and loss account.

(j) Operating leases

Leases where substantially all the risks and rewards of ownership of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases net of any incentives received from the leasing company are charged to the profit and loss account on a straight-line basis over the lease periods.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Costs are calculated on the weighted average basis. Net realisable value is determined on the basis of anticipated sales proceeds less estimated selling expenses.

(l) Trade receivables

Provision is made against trade receivables to the extent that they are considered to be doubtful. Trade receivables in the balance sheet are stated net of such provision.

(m) Employee benefits
(i) Pension obligations

The Group operates a number of defined contribution and defined benefit plans and the assets of which are generally held in separate trustees administered funds. The pension plans are generally funded by payments from employees and by the relevant group companies, taking into account of the recommendations of independent qualified actuaries.

The Group’s contributions to the defined contribution plans are expensed as incurred.

For defined benefit plans, pension costs are assessed using the projected unit credit method: the cost of providing pensions is charged to the profit and loss account so as to spread the regular cost over the service lives of employees in accordance with the advice of the actuaries who carry out a full valuation of the plans. Actuarial gains and losses are recognised over the average remaining service lives of the employees. Past service costs are recognised as an expense on a straight-line basis over the average period until the benefits become vested.

The Group’s contributions to defined benefit plans are charged to the profit and loss account in the period to which the contributions relate.

(ii) Equity compensation benefits

Pursuant to written resolutions of the shareholders of the Company dated 11 February 2000, two share option schemes, namely, the Pre-IPO Share Option Plan and the Employee Share Option Scheme (collectively referred to as the “Schemes”), were adopted by the Company. The options are granted and exercisable at the market price of the shares on the date of grant and no compensation cost is recognised. When the options are exercised, the proceeds received net of any transaction costs are credited to share capital (nominal value) and share premium account.

– 44 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

1. Principal accounting policies (continued)

(n) Convertible bonds

Convertible bonds are stated in the balance sheet at face value, plus the accrued redemption premium. The redemption premium is accrued on a straight-line basis over the period from the date of issuance to the date of maturity, redemption or conversion.

(o) Deferred taxation

Deferred taxation is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the accounts. Taxation rates enacted or substantively enacted by the balance sheet date are used to determine deferred taxation.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred taxation is provided on temporary differences arising on investment in subsidiaries, associated companies and jointly controlled entities except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

(p) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

(q) Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the accounts. When a change in the probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.

(r) Revenue recognition

Revenue from sale of services is recognised when the services are rendered.

Revenue from sale of goods is recognised on the transfer of risks and rewards of ownership, which generally coincides with the time when the goods are delivered to customers and title has passed.

Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

(s) Borrowing costs

Fees paid for the arrangement of convertible bonds and syndicated loan facilities are deferred and amortised on a straight-line basis over the respective period of the loan.

All other borrowing costs are charged to the profit and loss account in the year in which they are incurred.

– 45 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

1. Principal accounting policies (continued)

(t) Translation of foreign currencies

Transactions in foreign currencies are translated at exchange rates ruling at the transaction dates. Monetary assets and liabilities expressed in foreign currencies at the balance sheet date are translated at rates of exchange ruling at the balance sheet date. Exchange differences arising in these cases are dealt with in the profit and loss account.

The balance sheet of subsidiaries, jointly controlled entities and associated companies expressed in foreign currencies are translated at the rates of exchange ruling at the balance sheet date whilst the profit and loss account is translated at an average rate. Exchange differences are dealt with as a movement in reserves.

(u) Segment reporting

In accordance with the Group’s internal financial reporting, the Group has determined that business segments be presented as the primary reporting format and geographical segments as the secondary reporting format.

Unallocated costs represent corporate expenses, including depreciation and amortisation, net of interest income. Segment assets consist primarily of fixed assets, other non-current assets, goodwill, inventories, trade and other receivables and operating cash. Segment liabilities comprise operating liabilities and pension obligations and exclude items such as consideration payables, taxation and corporate borrowings. Capital expenditure comprises additions to fixed assets, concession rights, copyrights, licence rights, publishing rights and purchased programmes and film rights.

In respect of geographical segment reporting, sales are based on the country in which the business is operated. Total assets and capital expenditure are based on the location of the assets.

2. Turnover, revenue and segment information

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are set out on note 35.

Turnover and revenues recognised during the year are as follows:

Turnover Provision of wireless value-added services, online advertising, commercial enterprise solutions, and Internet access_(Note)_ Advertising sales of outdoor media assets and provision of outdoor media services Magazine and book circulation, sales of publication advertising and other related products Event organisation, advertising and sponsorship sales in relation to sports events and programmes Advertising sales in relation to satellite television channel operations and sales of audio-visual products Interest income Total revenues	2003 HK$’000 592,443 297,966 771,441 251,535 175,849 2,089,234 14,097 2,103,331	2002 HK$’000 255,800 247,895 741,258 316,547 62,626
		1,624,126 5,867
		1,629,993

– 46 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

2. Turnover, revenue and segment information (continued)

Note: The Group’s wireless value-added services are delivered to users through the wireless data platforms of the mobile telecommunications operators pursuant to revenue sharing agreements. In prior years, the Group reported these wireless value-added services revenues net of the revenues shared with the mobile telecommunications operators. In the current year, the Directors are of the opinion that it is more appropriate to adopt the gross basis of recognition of wireless value-added services revenues commencing from 1 January 2003. This change in recognition basis has no overall effect on the Group’s results. If wireless value-added services revenues for 2002 were shown on a gross basis, both turnover and costs of sales for the year ended 31 December 2002 would increase by approximately HK$19,640,000, with no overall effect on the Group’s results.

Primary reporting format – business segments

The Group is organised into five main business segments:

Internet Group – provision of wireless value-added services, online advertising, commercial enterprise solutions, and Internet access.
Outdoor Media Group – advertising sales of outdoor media assets and provision of outdoor media services.
Publishing Group – magazine and book circulation, sales of publication advertising and other related products.
Sports Group – event organisation, advertising and sponsorship sales in relation to sports events and programmes.
Television and Entertainment Group – advertising sales in relation to satellite television channel operations and sales of audio-visual products.

There are no significant sales or other transactions between the business segments.

Secondary reporting format – geographical segments

The Group’s five business segments are operated in three main geographical areas:

Hong Kong – Internet Group, Publishing Group, Sports Group, and Television and Entertainment Group

Mainland China – Internet Group, Outdoor Media Group, Publishing Group, Sports Group, and Television and Entertainment Group

Taiwan – Publishing Group

There are no significant sales between the geographical segments.

– 47 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

2. Turnover, revenue and segment information (continued)

Primary reporting format – business segments

Internet Group HK$’000 Turnover 592,443 Segment profit/(loss) before amortisation and depreciation 191,590 Amortisation and depreciation (58,140) Segment profit/(loss) 133,450 Unallocated costs Operating profit Finance costs Share of losses of jointly controlled entities (6,387) Share of profits of associated companies 29 Profit before taxation Taxation Profit after taxation Minority interests Profit attributable to shareholders Segment assets 576,067 Interests in jointly controlled entities 15,018 Interests in associated companies 1,500 Investment securities 61,525 Unallocated assets Total assets Segment liabilities 220,788 Unallocated liabilities Minority interests Total liabilities Capital expenditure 41,929 Unallocated capital expenditure	Year ended 31 December 2003 Outdoor Television and Media Publishing Sports Entertainment Group Group Group Group HK$’000 HK$’000 HK$’000 HK$’000 297,966 771,441 251,535 175,849 67,197 70,890 76,747 (4,928) (40,434) (41,928) (3,776) (27,570) 26,763 28,962 72,971 (32,498) – – – – – 1,794 – – 764,349 1,121,202 399,873 290,141 – – – – – 3,086 – – 45,205 12,522 752 – 102,975 332,655 157,632 118,747 34,551 14,661 27,901 7,611	Group HK$’000 2,089,234

		401,496 (171,848)
		229,648 (137,299)
		92,349 (19,919) (6,387) 1,823
		67,866 (12,399)
		55,467 (42,869)
		12,598

		3,151,632 15,018 4,586 120,004 1,966,556
		5,257,796

		932,797 2,542,541 163,083
		3,638,421

		126,653 2,421
		129,074

– 48 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

2. Turnover, revenue and segment information (continued)

Primary reporting format – business segments (continued)

Turnover Segment profit/(loss) before amortisation and depreciation Amortisation and depreciation Segment profit/(loss) Unallocated costs Operating loss Finance costs Provision for impairment of goodwill Share of losses of jointly controlled entities Share of profits less losses of associated companies Loss before taxation Taxation Loss after taxation Minority interests Loss attributable to shareholders Segment assets Interests in jointly controlled entities Interests in associated companies Investment securities Unallocated assets Total assets Segment liabilities Unallocated liabilities Minority interests Total liabilities Capital expenditure Unallocated capital expenditure	Internet Group HK$’000 255,800 (22,804) (68,438) (91,242) (100,100) (29,585) (1,185) 277,277 35,510 1,470 61,292 75,019 60,847	Outdoor Media Group HK$’000 247,895 77,285 (33,236) 44,049 (67,008) – – 673,666 – – 45,205 99,861 52,368	Year ended 31 December 2002 Television and Publishing Sports Entertainment Group Group Group HK$’000 HK$’000 HK$’000 741,258 316,547 62,626 70,484 62,343 1,669 (40,779) (1,446) (2,163) 29,705 60,897 (494) (30,000) – – – – – 1,205 – – 998,821 174,364 131,598 – – – 3,131 – – 19,157 752 – 292,895 44,067 46,397 13,916 168 33,066	Group HK$’000 1,624,126

				188,977 (146,062)
				42,915 (149,107)
				(106,192) (19,079) (197,108) (29,585) 20
				(351,944) (29,080)
				(381,024) (28,555)
				(409,579)

				2,255,726 35,510 4,601 126,406 131,120
				2,553,363

				558,239 1,569,069 153,784
				2,281,092

				160,365 6,333
				166,698

– 49 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

2. Turnover, revenue and segment information (continued)

Secondary reporting format – geographical segments

Hong Kong Mainland China Taiwan Amortisation and depreciation Unallocated costs Operating profit/(loss) Hong Kong Mainland China Taiwan Total	Turnover 2003 2002 HK$’000 HK$’000 173,593 137,068 1,204,013 796,685 711,628 690,373 2,089,234 1,624,126 Total assets 2003 2002 HK$’000 HK$’000 2,288,560 253,390 1,891,392 1,312,496 1,077,844 987,477 5,257,796 2,553,363	Segment profit/(loss) 2003 2002 HK$’000 HK$’000 36,598 300 270,998 99,744 93,900 88,933 401,496 188,977 (171,848) (146,062) (137,299) (149,107) 92,349 (106,192) Capital expenditure 2003 2002 HK$’000 HK$’000 34,263 3,949 80,762 149,565 14,049 13,184 129,074 166,698	Segment profit/(loss) 2003 2002 HK$’000 HK$’000 36,598 300 270,998 99,744 93,900 88,933 401,496 188,977 (171,848) (146,062) (137,299) (149,107) 92,349 (106,192) Capital expenditure 2003 2002 HK$’000 HK$’000 34,263 3,949 80,762 149,565 14,049 13,184 129,074 166,698
			166,698

3. Operating profit/(loss)

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

	2003	2002
	HK$’000	HK$’000
Depreciation	106,622	104,851
Amortisation
– Goodwill	50,775	49,514
– Other non-current assets	31,802	5,832
Staff costs (including directors’ emoluments)(Note 9)	417,354	285,748
Cost of inventories	537,003	423,173
Operating leases
– Land & buildings	41,753	42,692
– Other assets	46,698	35,626
Auditors’ remuneration	5,000	4,900
Loss on disposal of fixed assets	10,043	1,390
Provision for contract termination	–	20,630
Provision for loan to a related company	–	13,260

– 50 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

4. Finance costs

Interest and borrowing costs on bank loans Interest and borrowing costs on convertible bonds Interest on other loans, wholly repayable within five years Total borrowing costs incurred	2003 HK$’000 2,810 1,718 15,391 19,919	2002 HK$’000 1,847 – 17,232
		19,079

5. Taxation

The amount of taxation charged to the consolidated profit and loss account represents:

Hong Kong profits tax Overseas taxation Over-provision in prior years Deferred taxation_(Note 25(c))_	2003 HK$’000 26 20,270 (1,661) (6,236) 12,399	2002 HK$’000 6,098 40,302 (11,081) (6,239)
		29,080

Hong Kong profits tax has been provided at the rate of 17.5% (2002: 16%) on the estimated assessable profits for the year.

Taxation on overseas profits has been calculated on the estimated assessable profits for the year at the rates of taxation prevailing in the countries in which the Group operates.

Taxation on the Group’s profit/(loss) before taxation differs from the theoretical amount that would arise using the taxation rate of the home country of the Group as follows:

Profit/(loss) before taxation Calculated at a taxation rate of 17.5% (2002: 16%) Effect of different taxation rates in other countries Income not subject to taxation Expenses not deductible for taxation purposes Utilisation of previously unrecognised tax losses Tax losses not recognised Withholding tax Over-provision in prior years Taxation charge	2003 HK$’000 67,866 11,877 (66,799) (21,919) 43,061 (3,793) 43,049 8,584 (1,661) 12,399	2002 HK$’000 (351,944)

		(56,311) 1,855 (3,274) 42,767 (137) 48,850 6,411 (11,081)
		29,080

6. Loss attributable to shareholders

The net loss of the Company is HK$21,458,000 (2002: HK$216,326,000) and is included in determining the profit/(loss) attributable to the shareholders in the consolidated profit and loss account. The loss of the Company included a provision for impairment in interests in subsidiaries amounting to HK$Nil (2002: HK$197,108,000).

7. Dividends

No dividends had been paid or declared by the Company during the year (2002: HK$Nil).

– 51 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

8. Earnings/(loss) per share

(a) Basic

The calculation of basic earnings/(loss) per share is based on the profit attributable to shareholders of HK$12,598,000 (2002: loss of HK$409,579,000) and the weighted average of 3,583,805,272 (2002: 3,301,115,146) ordinary shares in issue during the year.

(b) Diluted

The calculation of diluted earnings per share for the year ended 31 December 2003 is based on the profit attributable to shareholders of HK$12,598,000 and the weighted average of 3,606,757,274 ordinary shares after adjusting for the effects of all dilutive potential ordinary shares, as if all the outstanding share options granted by the Company had been exercised at the date of issuance and the consideration shares to be issued by the Company for the acquisition of subsidiaries had been issued at the date of acquisition. Since all potential ordinary shares arising from the convertible bonds, if converted into ordinary shares, would increase profit attributable to shareholders per share as a result of the savings on the interest and redemption premium payable and amortisation of borrowing costs, the effects of anti-dilutive potential ordinary shares have not been taken into account in calculating diluted earnings per share.

The exercise of share options granted by the Company would have an anti-dilutive effect on the loss per share for the year ended 31 December 2002.

(c) Reconciliations

Weighted average number of ordinary shares used in calculating basic earnings per share Ordinary shares payable for acquisition of subsidiaries Deemed issuance of ordinary shares for nil consideration upon exercise of the options granted under the Schemes Weighted average number of ordinary shares used in calculating diluted earnings per share Staff costs, including directors’ emoluments Wages and salaries Pension costs – defined contribution plans Pension costs – defined benefit plans_(Note 24(b))_	2003 Number of shares 3,583,805,272 19,744,843 3,207,159 3,606,757,274 2003 HK$’000 401,819 7,283 8,252 417,354	2002 Number of shares 3,301,115,146 N/A N/A	2002 Number of shares 3,301,115,146 N/A N/A
			N/A

			2002 HK$’000 274,778 5,808 5,162
			285,748

9. Staff costs, including directors’ emoluments

– 52 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

10. Directors’ and senior management’s emoluments

(a) Directors’ emoluments

The aggregate amounts of emoluments payable to directors of the Company during the year are as follows:

Fees Basic salaries, housing allowances, other allowances and benefits in kind Discretionary bonuses Contributions to retirement benefit schemes for directors (and past directors) of the Company	2003 HK$’000 585 8,034 23,038 528 32,185	2002 HK$’000 549 8,427 3,789 581
		13,346

The current executive directors, Mr. Sing Wang received emoluments of HK$20,636,818 (2002: HK$7,080,000) and Ms. Tong Mei Kuen, Tommei of HK$7,996,170 (2002: HK$Nil) for the year ended 31 December 2003.

The past executive directors, Mr. Lee Kwok Ming, Don received emoluments during directorship of HK$640,538 (2002: HK$2,855,752) and Ms. Leung Quan Yue, Michelle of HK$810,485 (2002: HK$2,702,000) for the year ended 31 December 2003.

The independent non-executive directors who are also the members of the Audit Committee, Mrs. Lee Pui Ling, Angelina, Mr. Cheong Ying Chew, Henry and Ms. Wu Hung Yuk, Anna received director’s fee of HK$100,000 (2002: HK$100,000), HK$100,000 (2002: HK$100,000) and HK$35,342 (2002: HK$Nil) respectively, for the year ended 31 December 2003.

Except for a non-executive director, Mr. Wang Lei Lei received director’s fee and other emoluments of HK$1,565,358 (2002: HK$162,359) and a past non-executive director, Mr. Feng Qi received director’s fee of HK$Nil (2002: HK$45,890), each of the non-executive directors, Mr. Frank John Sixt, Ms. Chang Pui Vee, Debbie, Mrs. Chow Woo Mo Fong, Susan, Mr. Ip Tak Chuen, Edmond, Mr. Holger Kluge and Mr. James Sha received director’s fee of HK$50,000 (2002: HK$50,000) for the year ended 31 December 2003.

All independent non-executive directors and non-executive directors, save as disclosed, did not receive any other emoluments.

During the year, no emoluments were paid by the Group to the directors as an inducement to join or upon joining the Group or as compensation for loss of office.

There has been no arrangement under which a director has waived or agreed to waive any emoluments for the year ended 31 December 2003.

– 53 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

10. Directors’ and senior management’s emoluments (continued)

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year include two (2002: three) directors whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining three (2002: two) individuals during the year are as follows:

Basic salaries, housing allowances, other allowances and benefits in kind Benefit from share options exercised Discretionary bonuses Contributions to retirement benefit schemes The emoluments fell within the following bands: Emolument bands HK$2,500,001 – HK$3,000,000 HK$3,500,001 – HK$4,000,000 HK$4,000,001 – HK$4,500,000 HK$4,500,001 – HK$5,000,000 HK$5,500,001 – HK$6,000,000	2003 2002 HK$’000 HK$’000 6,284 2,691 – 5,434 4,503 1,136 415 199 11,202 9,460 Number of individuals 2003 2002 1 – – 1 1 – 1 – – 1	2002 HK$’000 2,691 5,434 1,136 199
		9,460

– 54 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Notes to the Accounts (continued)

11. Fixed assets

Cost At 1 January 2003 Exchange adjustment Additions Acquisition of subsidiaries (Note 30(b)) Transfer upon completion Disposals Disposal of a subsidiary (Note 30(d)) At 31 December 2003 Accumulated depreciation and impairment losses At 1 January 2003 Exchange adjustment Acquisition of subsidiaries (Note 30(b)) Charge for the year Disposals Disposal of a subsidiary (Note 30(d)) At 31 December 2003 Net book value At 31 December 2003 At 31 December 2002	Properties HK$’000 12,919 (4) – – – – – 12,915 392 1 – 491 – – 884 12,031 12,527	Leasehold improve– ments HK$’000 44,513 123 10,864 744 – (3,562) (509) 52,173 26,126 21 108 9,637 (2,892) (506) 32,494 19,679 18,387	Computer equipment HK$’000 348,587 351 49,697 29,691 33 (5,366) (16,658) 406,335 243,290 233 14,158 74,710 (4,627) (15,677) 312,087 94,248 105,297	Group Outdoor media assets HK$’000 128,101 (24) 14,264 – 4,353 (18,983) – 127,711 40,237 – – 13,831 (9,854) – 44,214 83,497 87,864	Other Construction assets in progress HK$’000 HK$’000 55,169 1,673 266 – 7,964 8,958 9,168 – – (4,386) (1,735) (10) (116) – 70,716 6,235 30,049 – 206 – 4,232 – 7,953 – (978) – (62) – 41,400 – 29,316 6,235 25,120 1,673	Total HK$’000 590,962 712 91,747 39,603 – (29,656) (17,283)
						676,085

						340,094 461 18,498 106,622 (18,351) (16,245)
						431,079

						245,006

						250,868

The Group’s interests in properties at their net book values are analysed as follows:

Outside Hong Kong, held on Leases of over 50 years Leases of between 10 to 50 years	Group 2003 HK$’000 11,866 165 12,031	2002 HK$’000 12,340 187
		12,527

– 55 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Notes to the Accounts (continued)

12. Other non-current assets Concession rights_(Note) Copyrights(Note) Licence rights(Note) Publishing rights(Note) Purchased programmes and film rights(Note) Long-term receivable(Note 19(b)) Deferred expenses Pension assets(Note 24(a)) Deferred tax assets(Note 25(a))_	Group 2003 HK$’000 40,164 18,634 27,300 1,119 1,987 101,400 34,539 440 27,794 253,377	2002 HK$’000 43,348 39,523 – 1,911 – – – 1,349 12,650
		98,781

Note:

Concession rights Copyrights HK$’000 HK$’000 Cost At 1 January 2003 49,831 40,816 Exchange adjustment – – Additions 7,537 567 Acquisition of subsidiaries (Note 30(b)) – – Disposals (1,795) (3,550) At 31 December 2003 55,573 37,833 Accumulated amortisation At 1 January 2003 6,483 1,293 Exchange adjustment – – Acquisition of subsidiaries (Note 30(b)) – – Amortisation charge for the year 9,168 17,906 Disposals (242) – At 31 December 2003 15,409 19,199 Net book value At 31 December 2003 40,164 18,634 At 31 December 2002 43,348 39,523	Group Purchased Licence Publishing programmes rights rights and film rights HK$’000 HK$’000 HK$’000 – 2,733 – – 45 – 27,300 – 1,923 – – 85,578 – – – 27,300 2,778 87,501 – 822 – – 20 – – – 81,603 – 817 3,911 – – – – 1,659 85,514 27,300 1,119 1,987 – 1,911 –	Total HK$’000 93,380 45 37,327 85,578 (5,345)
		210,985

		8,598 20 81,603 31,802 (242)
		121,781

		89,204

		84,782

– 56 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Notes to the Accounts (continued)

13. Goodwill

Cost At 1 January 2003 Exchange adjustment Additions_(Note 30(b)) Consideration adjustment for acquisition of a subsidiary At 31 December 2003 Accumulated amortisation and impairment losses At 1 January 2003 Exchange adjustment Amortisation charge for the year At 31 December 2003 Net book value At 31 December 2003 At 31 December 2002 Represented by: Goodwill Negative goodwill(note)_	2003 HK$’000 1,100,471 (12,005) 1,088,466	Group HK$’000 1,516,346 21 135,603 49,726
		1,701,696

		562,447 8 50,775
		613,230

		1,088,466

		953,899

		2002 HK$’000 953,899 –
		953,899

Note:

On 19 November 2003, the Group completed the acquisition of 100% beneficial interest in Beijing Leitingwuji Network Technology Limited (“LTWJi”) through the acquisition of the entire share capital of Puccini International Limited (“Puccini”, and collectively referred to as the “Puccini Group”), subject to a maximum amount of US$150 million (approximately HK$1,170 million). According to the sale and purchase agreement entered into between the Group and Cranwood, the consideration for the acquisition of Puccini should equal the valuation of the Puccini Group, which is determined based on 7.7 times the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004; or in the event that the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004 is less than an amount equal to 1.2 times the audited consolidated net profit of the Puccini Group for the year ended 31 December 2003, an amount equal to 6 times the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004.

The Directors consider that it is impractical to estimate the acquisition consideration with reliability and as such have not recorded any consideration as cost of investment at 31 December 2003. The fair value of the Group’s share of the Puccini Group’s net assets as at the date of acquisition, net of the estimated acquisition expenses, has been recorded as negative goodwill. Once the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004 is concluded and the consideration for the acquisition of Puccini is determined, the goodwill will be adjusted accordingly.

– 57 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Notes to the Accounts (continued)

14. Interests in subsidiaries

Investments at cost – unlisted shares Amounts due from subsidiaries Amounts due to subsidiaries Less: provisions	Company 2003 2002 HK$’000 HK$’000 234,001 1 6,340,491 4,610,042 (1,185,510) (1,275) (2,187,074) (2,187,074) 3,201,908 2,421,694	Company 2003 2002 HK$’000 HK$’000 234,001 1 6,340,491 4,610,042 (1,185,510) (1,275) (2,187,074) (2,187,074) 3,201,908 2,421,694
		2,421,694

The amounts due from and to subsidiaries are unsecured, interest free and with no fixed terms of repayment.

The list of the principal subsidiaries of the Group at 31 December 2003 is set out on Note 35.

15. Interests in jointly controlled entities

Share of net assets – unlisted shares	Group 2003 2002 HK$’000 HK$’000 15,018 35,510

The list of the principal jointly controlled entities of the Group at 31 December 2003 is set out on Note 35.

16. Interests in associated companies

Share of net assets – unlisted shares	Group 2003 2002 HK$’000 HK$’000 4,586 4,601

The list of the principal associated companies of the Group at 31 December 2003 is set out on Note 35.

17. Investment securities

Listed debt securities outside Hong Kong, at market value Unlisted equity securities outside Hong Kong, at fair value Loans and advances to investee companies	Group 2003 HK$’000 1,474,632 28,860 91,144 1,594,636	2002 HK$’000 – 35,265 91,141
		126,406

The loans and advances to investee companies are unsecured, of which amounts totalling HK$30,069,000 (2002: HK$30,069,000) are interest bearing at rates ranging from 6% to 6.5% per annum and are repayable on or before 30 April 2011, and the remaining balances are interest free and repayable on demand.

The list of the principal investment securities of the Group at 31 December 2003 is set out on Note 35.

– 58 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Notes to the Accounts (continued)

18. Inventories Merchandise Finished goods Raw materials Work in progress	Group 2003 HK$’000 6,106 80,092 4,932 11,106 102,236	2002 HK$’000 10,503 82,566 5,597 9,594
		108,260

19. Trade and other receivables Group 2003 2002 HK$’000 HK$’000 Trade receivables_(Note a) 662,626 380,954 Less: Amount due after one year (Note 12 and Note b) (101,400) – Amount receivable within one year 561,226 380,954 Prepayments, deposits and other receivables (Note c)_ 508,682 264,191 1,069,908 645,145	Company 2003 2002 HK$’000 HK$’000 – – – – – – 29,313 20,961 29,313 20,961

Note:

(a) Majority of the Group’s turnover is on open account terms and in accordance with terms specified in the contracts governing the relevant transactions.

As at 31 December 2003, the ageing analysis of the Group’s trade receivables is as follows:

Current 31-60 days 61-90 days Over 90 days Represented by: Receivables from related companies_(Note)_ Receivables from third parties	Group 2003 HK$’000 364,306 125,121 82,197 91,002 662,626 87,735 574,891 662,626	2002 HK$’000 201,788 75,721 37,548 65,897
		380,954

		41,752 339,202
		380,954

– 59 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

19. Trade and other receivables (continued)

(a) (continued)

Note:

Total trade receivable from related companies beneficially owned by substantial shareholders of the Company, Hutchison Whampoa Limited (“HWL”) and Cheung Kong (Holdings) Limited (“CKH”), amounted to HK$1,556,000 (2002: HK$674,000). Trade receivable from minority shareholders of subsidiaries of the Group, shareholders of investee companies, an associated company and an investee company amounted to HK$85,866,000 (2002: HK$33,245,000), HK$Nil (2002: HK$7,833,000), HK$244,000 (2002: HK$Nil) and HK$69,000 (2002: HK$Nil) respectively.

(b) The balance represents trade receivable which is due between 2005 and 2008.
(c) The Group balances include amounts due from jointly controlled entities, associated companies and related companies of HK$1,835,000 (2002: HK$1,706,000), HK$189,000 (2002: HK$68,000) and HK$51,963,000 (2002: HK$43,174,000) respectively. The total balances due from related companies beneficially owned by the substantial shareholders of the Company, HWL and CKH, amounted to HK$476,000 (2002: HK$3,546,000). The balances due from minority shareholders of subsidiaries of the Group and shareholders of investee companies amounted to HK$43,654,000 (2002: HK$39,628,000) and HK$7,833,000 (2002: HK$Nil) respectively.

The balances due from jointly controlled entities, associated companies and related companies represent expenses paid on behalf of these companies and are unsecured, interest free and repayable on demand.

20. Consideration payables

Acquisition of subsidiaries_(Note a) Acquisition of an investment security(Note b)_ Represented by: – current – non-current	Group and Company 2003 2002 HK$’000 HK$’000 183,771 367,148 195,000 195,000 378,771 562,148 367,211 431,478 11,560 130,670 378,771 562,148	Group and Company 2003 2002 HK$’000 HK$’000 183,771 367,148 195,000 195,000 378,771 562,148 367,211 431,478 11,560 130,670 378,771 562,148
		562,148

		431,478 130,670
		562,148

Note:

(a) This represents consideration payables with respect to the acquisition of subsidiaries that will be satisfied by cash and/or the issuance of shares of the Company pursuant to the terms of the respective acquisition agreements.
(b) This represents the balance of the consideration payable with respect to the acquisition of a 50% equity interest of Shanghai Maya Online Broadband Network Company Limited. The directors of the Company intend to issue equity shares to settle the consideration payable, subject to further negotiation in respect of share price and time schedule.

– 60 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Notes to the Accounts (continued)

21. Trade and other payables

Trade payables_(Note a) Less: Amount due after one year (Note b and Note 23) Amount payable within one year Other payables and accruals(Note c)_	Group 2003 2002 HK$’000 HK$’000 290,451 207,069 (46,800) – 243,651 207,069 659,584 390,969 903,235 598,038	Company 2003 2002 HK$’000 HK$’000 – – – – – – 8,993 5,487 8,993 5,487

Note:

(a) As at 31 December 2003, the ageing analysis of the Group’s trade payables is as follows:

Current 31-60 days 61-90 days Over 90 days	Group 2003 HK$’000 156,576 43,324 26,188 64,363 290,451	2002 HK$’000 86,554 31,278 26,382 62,855
		207,069

(b) The balance represents trade payables which are due between 2005 and 2008.

(c) The Group balances include amounts due to a jointly controlled entity and related companies of HK$2,912,000 (2002: HK$Nil) and HK$60,110,000 (2002: HK$56,672,000) respectively. The total balance due to related companies beneficially owned by the substantial shareholders of the Company, HWL, CKH and Cranwood Company Limited (“Cranwood”), amounted to HK$1,612,000 (2002: HK$6,414,000). The balance due to minority shareholders of subsidiaries of the Group amounted to HK$58,498,000 (2002: HK$50,258,000).

The amounts due to a jointly controlled entity and related companies represent expenses paid on behalf of the Group by a jointly controlled entity and related companies and are unsecured, interest free and repayable on demand.

– 61 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

22. Short-term loans

Bank loans Secured Unsecured Other loans Secured Unsecured Loans from shareholders_(Note)_	Group 2003 2002 HK$’000 HK$’000 1,692 3,164 31,070 9,400 32,762 12,564 – 876 – 898 – 1,774 850,000 – 882,762 14,338	Company 2003 2002 HK$’000 HK$’000 – – – – – – – – – – – – 850,000 – 850,000 –	Company 2003 2002 HK$’000 HK$’000 – – – – – – – – – – – – 850,000 – 850,000 –
			–
			– –
			–
			–
			–

Note:

These represented unsecured loans from the substantial shareholders of the Company, HWL, CKH and Cranwood, in the amounts of HK$340,000,000 (2002: HK$340,000,000), HK$170,000,000 (2002: HK$170,000,000) and HK$340,000,000 (2002: HK$340,000,000) respectively. In accordance with the Facility Letters dated 10 December 2001 and Supplemental Facility Letters dated 12 March 2003, the Group was granted unsecured loan facilities of up to an aggregate of HK$850,000,000 at interest rate of 50 basis points over 3 months Hong Kong Interbank Offered Rate per annum. The loans are repayable on or before 10 December 2004.

23. Other non-current liabilities

Long-term bank loans_(Note a) Convertible bonds(Note b) Loans from shareholders(Note 22) Loans from minority shareholders Long-term payables(Note 21(b)) Pension obligations(Note 24(a))_	Group 2003 2002 HK$’000 HK$’000 1,675 2,243 1,170,753 – – 850,000 – 3,850 46,800 – 20,243 18,566 1,239,471 874,659	Company 2003 2002 HK$’000 HK$’000 – – – – – 850,000 – – – – – – – 850,000	Company 2003 2002 HK$’000 HK$’000 – – – – – 850,000 – – – – – – – 850,000
			850,000

– 62 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

23. Other non-current liabilities (continued)

(a) Long-term bank loans

Secured Unsecured Less: current portion of long-term bank loans The bank loans are repayable as follows: Within one year In the second year In the third to fifth year After the fifth year	Group 2003 HK$’000 575 1,710 2,285 (610) 1,675 610 610 610 455 2,285	2002 HK$’000 559 2,245
		2,804 (561)
		2,243
		561 40 1,804 399
		2,804

(b) Convertible bonds

On 28 November 2003, a wholly-owned subsidiary of the Company issued the convertible bonds (the “Convertible Bonds”) in the aggregate principal amount of US$150 million (approximately HK$1,170 million), which are unconditionally and irrevocably guaranteed by, and convertible into ordinary shares of par value HK$0.10 each (the “Shares”) of the Company. The Convertible Bonds bear interest at the rate of 0.5% per annum on the principal amount of each Convertible Bond, payable semi-annually in arrear from 28 November 2003 up to but excluding 28 November 2008.

The Convertible Bonds are convertible at any time on and after 8 January 2004 up to the close of business on 14 November 2008 into the Shares at an initial conversion price of HK$3.315 per share, subject to adjustment.

The subsidiary may, subject to certain conditions, on or at any time after 13 December 2006 and prior to 28 November 2008, redeem all, or from time to time, redeem some of the Convertible Bonds, at principal plus a fixed return of 1.25% per annum from 28 November 2003 to the redemption date.

Unless previously redeemed, converted or purchased and cancelled, the Convertible Bonds will be redeemed at 103.86% of the principal amount, plus any accrued interest on 28 November 2008.

During the year, no Convertible Bonds were converted nor redeemed.

– 63 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

24. Pension assets and obligations

The Group operates certain defined benefit pension plans in Hong Kong and Taiwan. These pension plans are either final salary defined benefit plans or with minimum guaranteed return rate on plan assets. The assets of the funded plans are generally held independently of the Group assets in separate trustee administered funds. The Group’s major plans are valued by qualified actuaries annually using the projected unit credit method. Defined benefit plans in Hong Kong and Taiwan are valued by Watson Wyatt Hong Kong Limited and KPMG Business Advisory Services Company Limited, respectively.

(a) The pension assets/obligations recognised in the balance sheet are determined as follows:

Present value of funded obligations Fair value of plan assets Deficits Unrecognised actuarial gains/(losses) Recognised in the balance sheet Represented by: Pension assets_(Note 12 and Note c) Pension obligations(Note 23 and Note d)_	Group 2003 HK$’000 35,152 (15,937) 19,215 588 19,803 (440) 20,243 19,803	2002 HK$’000 29,805 (9,536)
		20,269 (3,052)
		17,217

		(1,349) 18,566
		17,217

(b) The amounts recognised in the profit and loss account are as follows:

Current service cost Interest cost Expected return on plan assets Net actuarial losses recognised Recognition of transitional liability Total, included in staff costs_(Note 9) Represented by: Pension assets(Note c) Pension obligations(Note d)_	Group 2003 HK$’000 7,666 1,213 (762) 135 – 8,252 2,856 5,396 8,252	2002 HK$’000 5,860 984 (596) 48 (1,134)
		5,162

		913 4,249
		5,162

The actual return on plan assets recognised as a liability were HK$803,000 (2002: HK$407,000).

– 64 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Notes to the Accounts (continued)

24. Pension assets and obligations (continued)

At 1 January Total expenses_(Note b)_ Contributions paid At 31 December	Group 2003 HK$’000 (1,349) 2,856 (1,947) (440)	2002 HK$’000 – 913 (2,262)
		(1,349)

(d) Movements in the pension obligations recognised in the balance sheet are as follows:

At 1 January Acquisition of subsidiaries Total expenses_(Note b) Contributions paid At 31 December (e) The principal actuarial assumptions used are as follows: Discount rate Expected rate of return on plan assets Expected rate of future salary increases 25. Deferred taxation (a) _Deferred tax assets At 1 January Exchange adjustment Credited to profit and loss account_(Note c)_ At 31 December Amount to be recovered after more than one year	Group 2003 HK$’000 18,566 – 5,396 (3,719) 20,243 Group 2003 HK$’000 3.5% – 4.75% 3.5% – 8% 2.5% – 3% Group 2003 HK$’000 12,650 324 14,820 27,794 300	Group 2003 HK$’000 18,566 – 5,396 (3,719) 20,243 Group 2003 HK$’000 3.5% – 4.75% 3.5% – 8% 2.5% – 3% Group 2003 HK$’000 12,650 324 14,820 27,794 300	2002 HK$’000 10,653 4,795 4,249 (1,131)
			18,566

			2002 HK$’000 4% – 5% 3.25% – 8% 3% – 5%

			2002 HK$’000 – – 12,650
			12,650

			–

– 65 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

25. Deferred taxation(continued) (b) Deferred tax liabilities At 1 January Exchange adjustment Charged to profit and loss account_(Note c) At 31 December Amount to be payable after more than one year (c) _Deferred taxation (credited)/charged to profit and loss acco Deferred tax assets_(Note a) Deferred tax liabilities(Note b) Deferred taxation credited to profit and loss account(Note 5)_	Group 2003 HK$’000 9,147 151 8,584 17,882 17,882 unt Group 2003 HK$’000 (14,820) 8,584 (6,236)	2002 HK$’000 2,721 15 6,411
		9,147

		9,147

		2002 HK$’000 (12,650 6,411
		(6,239

(d) Movements in deferred tax assets and liabilities (prior to offsetting of balances within the same jurisdiction) during the year.

Deferred tax assets

Tax losses 2003 2002 HK$’000 HK$’000 At 1 January 1,488 8,952 Exchange adjustment 24 – Credited /(charged) to profit and loss account 728 (7,464) At 31 December 2,240 1,488	Group Others 2003 2002 HK$’000 HK$’000 12,650 – 300 – 12,604 12,650 25,554 12,650	Total 2003 HK$’000 14,138 324 13,332 27,794	2002 HK$’000 8,952 – 5,186
			14,138

Deferred income tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefit through the future taxable profits is probable. The Group has unrecognised tax losses as at 31 December 2003 of HK$2,230,268,000 (2002: HK$1,224,543,000) to carry forward against future taxable income. The tax losses will expire according to the prevailing tax laws and regulations in the countries in which the Group operates.

– 66 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

25. Deferred taxation (continued)

(d) (continued)

Deferred tax liabilities

Accelerated tax depreciation 2003 2002 HK$’000 HK$’000 At 1 January 1,488 8,952 Exchange adjustment – – (Credited)/charged to profit and loss account (1,488) (7,464) At 31 December – 1,488	Group Others 2003 2002 HK$’000 HK$’000 9,147 2,721 151 15 8,584 6,411 17,882 9,147	Total 2003 HK$’000 10,635 151 7,096 17,882	2002 HK$’000 11,673 15 (1,053)
			10,635

Deferred income tax liabilities as at 31 December 2003 of HK$69,389,000 (2002: HK$24,121,000) have not been established for the withholding and other taxation that would be payable on the undistributed earnings of certain subsidiaries since the Group has determined that the earnings of the subsidiaries will not be distributed in the foreseeable future. Such undistributed earnings as at 31 December 2003 totalled HK$346,945,000 (2002: HK$120,603,000).

Deferred income tax assets and liabilities are offset when there is a legally enforcement right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The following amounts, determined after appropriate offsetting, are shown in the consolidated balance sheet:

Deferred tax assets Deferred tax liabilities 26. Share capital Company – Authorised At 31 December 2003 and 2002 Company – Issued and fully paid At 1 January 2002 Issuance of shares At 31 December 2002 At 1 January 2003 Issuance of shares_(Note (a) and (b))_ At 31 December 2003	2003 HK$’000 27,794 (17,882) 9,912 Ordinary shares No. of shares 5,000,000,000 Ordinary shares No. of shares 3,277,645,808 44,220,150 3,321,865,958 3,321,865,958 556,395,859 3,878,261,817	2002 HK$’000 12,650 (9,147) 3,503 of HK$0.1 each HK$’000 500,000	2002 HK$’000 12,650 (9,147)
			3,503


		of HK$0.1 each HK$’000 327,765 4,422
		332,187

		332,187 55,640
		387,827

– 67 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

26. Share capital (continued)

Note:

(a) On 30 January, 14 May, 30 May, 24 July, 31 July, 15 September, 16 September, 14 November and 28 November 2003, 13,101,798, 4,332,312, 6,736,576, 28,346,808, 1,319,998, 21,250,000, 9,736,888, 18,432,542 and 3,138,937 ordinary shares were allotted and booked at prices ranging between HK$2.1 and HK$4.039 per share, which were the fair value calculated based on the average closing price quoted on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) for the calendar month immediately prior to the date of acquisition or the closing price quoted on the Stock Exchange at the date of acquisition, where applicable, as part of the considerations for the acquisition of subsidiaries, respectively.
(b) On 8 July 2003, 450,000,000 shares were allotted and issued to independent third parties at a price of HK$2.3 each pursuant to a placing and subscription agreement.

27. Share option schemes

Pursuant to the written resolutions of the shareholders of the Company dated 11 February 2000, two share option schemes namely, the Pre-IPO Share Option Plan (the “Pre-IPO Share Option Plan”) and the Employee Share Option Scheme (as amended by an addendum on 24 April 2002) (the “Share Option Scheme”) were adopted by the Company.

Pursuant to the Pre-IPO Share Option Plan, the Company may grant options to any full-time employee of the Company or of its subsidiaries or of HWL or any subsidiary of HWL to subscribe for shares in the Company. However, save for the options which have been granted on 11 February 2000, no further options may be granted upon the listing of the shares of the Company on the Growth Enterprise Market of the Stock Exchange on 1 March 2000. The subscription price per share under the Pre-IPO Share Option Plan is HK$1.78 and the options have vested in three tranches in the proportion of 20%:30%:50% on 11 February 2001, 2002 and 2003, respectively.

Pursuant to the Share Option Scheme, the Board may, at its discretion, invite any participant (including any employee and director of the Group and of any company in which the Group owns or controls 20% or more of its voting rights and/or issued share capital, business associate and trustee) to take up options to subscribe for shares in the Company. The options granted under the Share Option Scheme can be exercised at prices ranging from HK$2.505 to HK$11.3 per share at any time within the option period of ten years from the respective dates of grant, provided that the options have been vested. Generally, the options are vested in different tranches and may be exercised within the option period unless they are cancelled.

The maximum number of shares in respect of which options may be granted under the Schemes shall not exceed 329,254,980 shares, being 10% of the issued share capital of the Company at the date of approval of the Share Option Scheme.

Movements in share options are as follows:

		2003	2003	2002	2002
		Number of share options		Number of share options
		Pre-IPO Share	Share Option	Pre-IPO Share	Share Option
		Option Plan	Scheme	Option Plan		Scheme
Outstanding at	1 January	16,196,000	109,504,000	36,330,000		121,824,000
Granted		–	106,541,000	–		64,230,000
Exercised		–	–	(7,422,000)		–
Lapsed		–	(4,694,000)	(12,712,000)		(12,926,000)
Cancelled		–	(25,072,000)	–		(63,624,000)
Outstanding at	31 December	16,196,000	186,279,000	16,196,000		109,504,000

– 68 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

27. Share option schemes (continued)

Details of share options granted under the Share Option Scheme during 2003:
Number of options granted
106,541,000
Expiry date
8 October 2013
Subscription price per share
HK$2.505
Terms of the share options outstanding at 31 December 2003 are:
Expiry date
Subscription price
2003
10 February –
14 November 2010
HK$1.78 – HK$11.30
58,424,000
6 February 2012
HK$3.76
37,810,000
8 October 2013
HK$2.505
106,241,000
202,475,000

2002
62,476,000
63,224,000
–

125,700,000

28. Reserves

Share premium account HK$’000 At 1 January 2002 2,231,099 Issuance of shares for acquisition of subsidiaries, net of issuing expenses 84,280 Exercise of share options, net of issuing expenses 18,537 Loss for the year – Transfer to general reserve – Exchange difference – At 31 December 2002 2,333,916 Analysed by: Company and subsidiaries 2,333,916 Jointly controlled entities – Associated companies – At 31 December 2002 2,333,916	Capital reserve HK$’000 (377) – – – – – (377) (377) – – (377)	Capital redemption reserve HK$’000 776 – – – – – 776 776 – – 776	Group General reserve HK$’000 139 – – – 204 – 343 343 – – 343	Exchange Accumulated difference losses HK$’000 HK$’000 (547) (1,978,761) – – – – – (409,579) – (204) (255) – (802) (2,388,544) (802) (2,374,464) – (9,652) – (4,428) (802) (2,388,544)	Total HK$’000 252,329 84,280 18,537 (409,579) – (255)
					(54,688)

					(40,608) (9,652) (4,428)
					(54,688)

– 69 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

28. Reserves (continued)

Share premium Capital account reserve HK$’000 HK$’000 At 1 January 2003 2,333,916 (377) Issuance of shares for acquisition of subsidiaries, net of issuing expenses 321,025 – Placement of shares, net of issuing expenses 951,045 – Investment revaluation surplus – – Profit for the year – – Transfer to general reserve – – Exchange difference – – At 31 December 2003 3,605,986 (377) Analysed by: Company and subsidiaries 3,605,986 (377) Jointly controlled entities – – Associated companies – – At 31 December 2003 3,605,986 (377) Share premium account HK$’000 At 1 January 2002 2,705,593 Issuance of shares for acquisition of subsidiaries, net of issuing expenses 84,280 Exercise of share options, net of issuing expenses 18,537 Loss for the year – At 31 December 2002 2,808,410 At 1 January 2003 2,808,410 Issuance of shares for acquisition of subsidiaries, net of issuing expenses 321,025 Placement of shares, net of issuing expenses 951,045 Loss for the year – At 31 December 2003 4,080,480	Group Capital redemption General Revaluation reserve reserve reserve HK$’000 HK$’000 HK$’000 776 343 – – – – – – – – – 5,611 – – – – 15,201 – – 35 (1) 776 15,579 5,610 776 15,579 5,610 – – – – – – 776 15,579 5,610 Company Capital Contribution redemption surplus reserve HK$’000 HK$’000 23,565 776 – – – – – – 23,565 776 23,565 776 – – – – – – 23,565 776	Exchange Accumulated difference losses HK$’000 HK$’000 (802) (2,388,544) – – – – – – – 12,598 – (15,201) 2,008 – 1,206 (2,391,147) 1,206 (2,380,582) – (7,960) – (2,605) 1,206 (2,391,147) Accumulated losses HK$’000 (1,903,931) – – (216,326) (2,120,257) (2,120,257) – – (21,458) (2,141,715)	Exchange Accumulated difference losses HK$’000 HK$’000 (802) (2,388,544) – – – – – – – 12,598 – (15,201) 2,008 – 1,206 (2,391,147) 1,206 (2,380,582) – (7,960) – (2,605) 1,206 (2,391,147) Accumulated losses HK$’000 (1,903,931) – – (216,326) (2,120,257) (2,120,257) – – (21,458) (2,141,715)	Total HK$’000 (54,688) 321,025 951,045 5,611 12,598 – 2,042
				1,237,633

				1,248,198 (7,960) (2,605)
				1,237,633

				Total HK$’000 826,003 84,280 18,537 (216,326)
				712,494

				712,494 321,025 951,045 (21,458)
				1,963,106

– 70 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

28. Reserves (continued)

Note:

The Company’s reserves available for distribution calculated under the Companies Law of the Cayman Islands comprise the share premium account, contributed surplus and accumulated losses totalling HK$1,962,330,000 (2002: HK$711,718,000). In the opinion of the directors of the Company, the net reserves of the Company available for distribution to shareholders amounted to HK$1,425,846,000 (2002: HK$175,234,000).

29. Own shares held

Own shares held represented the cost of 2,928,564 (2002: 2,681,373) ordinary shares in the Company held by certain subsidiaries and are deducted in arriving at the shareholders’ funds.

30. Notes to the consolidated cash flow statement

(a) Reconciliation of operating profit/(loss) to net cash inflow/(outflow) from operations

Operating profit/(loss) Provision for impairment of investment securities Provision for loan to a related company Amortisation and depreciation Loss on disposal of fixed assets Gain on disposal of a subsidiary_(Note 30(d))_ Gain on disposal of other investments Operating profit before working capital changes Increase in long-term receivable Decrease/(increase) in pension assets Decrease in inventories Increase in trade and other receivables Increase/(decrease) in trade and other payables Increase in long-term payables Increase in pension obligations Interest income Exchange adjustment Net cash inflow/(outflow) from operations	2003 HK$’000 92,349 1,498 – 189,199 10,043 (856) – 292,233 (101,400) 909 7,517 (388,497) 222,056 46,800 1,372 (14,097) 2,482 69,375	2002 HK$’000 (106,192) – 13,260 160,197 1,390 – (30)
		68,625 – (1,349) 7,027 (129,447) (14,920) – 3,218 (5,867) (2,490)
		(75,203)

– 71 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

30. Notes to the consolidated cash flow statement (continued)

(b) Acquisition of subsidiaries

Net assets acquired: Fixed assets Other non-current assets Interests in associated companies Investment securities Inventories Trade and other receivables Bank balances and cash Trade and other payables Taxation payable Loans from minority shareholders Pension obligations Minority interests Goodwill_(Note 13)_ Satisfied by: Cash Allotment of shares Consideration payables Interests in jointly controlled entities held prior to acquisitions Investment securities held prior to acquisitions	2003 HK$’000 21,105 3,975 – – 43 13,736 52,123 (47,913) (3,115) – – 36,857 76,811 135,603 212,414 72,964 125,345 – 14,105 – 212,414	2002 HK$’000 66,207 32,136 1,620 10,698 21,766 98,956 124,027 (175,714) (12,131) (2,350) (4,795) (57,398)
		103,022 749,049
		852,071

		436,074 58,091 344,913 1,104 11,889
		852,071

The subsidiaries acquired during the year contributed HK$3,315,000 (2002: HK$63,405,000) to the Group’s net operating cash flows, paid HK$Nil (2002: HK$913,000) in respect of the net returns on investments and servicing of finance and utilised HK$496,000 (2002: HK$93,742,000) for investing activities.

The financial position as at 31 December 2003 and post acquisition (loss)/profit in respect of subsidiaries acquired during the year amounted to HK$62,645,000 (2002: HK$152,887,000) and loss of HK$14,142,000 (2002: profit of HK$50,389,000) respectively.

Cash consideration Bank balances and cash acquired Net cash outflow in respect of acquisition of subsidiaries	2003 HK$’000 (72,964) 52,123 (20,841)	2002 HK$’000 (436,074) 124,027
		(312,047)

– 72 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

30. Notes to the consolidated cash flow statement (continued)

(d) Disposal/deconsolidation of a subsidiary Net assets disposed / deconsolidated of: Fixed assets Investment securities Trade and other receivables Bank balances and cash Trade and other payables Taxation payable Loans from minority shareholders Minority interests Gain on disposal Satisfied by: Reclassification as investment securities Consideration receivable Cash	2003 HK$’000 1,038 – 2,199 1,798 (2,615) – (4,350) 3,705 1,775 856 2,631 231 467 1,933 2,631	2002 HK$’000 20,529 122 37,884 7,962 (36,954) (7,291) – (11,126)
		11,126 –
		11,126

		11,126 – –
		11,126

Analysis of the net cash inflow/(outflow) in respect of the disposal/deconsolidation of a subsidiary is as follows:

Cash consideration Bank balances and cash disposed/deconsolidated Net cash inflow/(outflow) in respect of disposal/ deconsolidation of a subsidiary	2003 HK$’000 1,933 (1,798) 135	2002 HK$’000 – (7,962)
		(7,962)

– 73 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

30. Notes to the consolidated cash flow statement (continued)

(e) Analysis of changes in financing during the year

Share capital including premium and capital reserve HK$’000 At 1 January 2002 2,557,396 Issuance of ordinary shares, net of issuing expenses 19,292 New bank and other loans – Loan repayments – Contribution from minority shareholders – Net cash from/(used in) financing activities 19,292 Shares issued for acquisition of subsidiaries 87,947 Minority’s share of profits of subsidiaries – Acquisition of subsidiaries_(Note 30(b)) – Deconsolidation of a subsidiary(Note 30(d))_ – Elimination of own shares held (4,137) Dividends payable to minority shareholders – Exchange adjustment – 83,810 At 31 December 2002 2,660,498	Loans from Bank Loans from minority loans shareholders shareholders HK$’000 HK$’000 HK$’000 46,952 100,000 1,866 – – – 14,966 750,000 1,500 (46,692) – (1,866) – – – (31,726) 750,000 (366) – – – – – – – – 2,350 – – – – – – – – – 142 – – 142 – 2,350 15,368 850,000 3,850	Other loans HK$’000 15,904 – 898 (15,179) – (14,281) – – – – – – 151 151 1,774	Minority interests HK$’000 84,158 – – – 1,410 1,410 – 28,555 57,398 (11,126) – (7,076) 465 68,216 153,784	Total HK$’000 2,806,276 19,292 767,364 (63,737) 1,410
				724,329
				87,947 28,555 59,748 (11,126) (4,137) (7,076) 758
				154,669
				3,685,274

– 74 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

30. Notes to the consolidated cash flow statement (continued)

(e) Analysis of changes in financing during the year (continued)

Share capital including premium and capital reserve HK$’000 At 1 January 2003 2,660,498 Issuance of ordinary shares, net of issuing expenses 995,921 New bank and other loans – Loan repayments – Proceeds from issuance of convertible bonds – Contribution from minority shareholders – Net cash from/(used in) financing activities 995,921 Shares issued for acquisition of subsidiaries 331,789 Accrual of redemption premium – Minority’s share of profits of subsidiaries – Minority interests in revaluation reserve – Minority interests in other reserve – Acquisition of subsidiaries_(Note 30(b)) – Disposal of a subsidiary(Note 30(d))_ – Elimination of own shares held (857) Dividends payable to minority shareholders – Exchange adjustment – 330,932 At 31 December 2003 3,987,351	Bank loans HK$’000 15,368 – 102,562 (83,366) – – 19,196 – – – – – – – – – 483 483 35,047	Loans from Convertible Loans from minority bonds shareholders shareholders HK$’000 HK$’000 HK$’000 – 850,000 3,850 – – – – – 500 – – – 1,170,000 – – – – – 1,170,000 – 500 – – – 753 – – – – – – – – – – – – – – – – (4,350) – – – – – – – – – 753 – (4,350) 1,170,753 850,000 –	Other loans HK$’000 1,774 – – (1,796) – – (1,796) – – – – – – – – – 22 22 –	Minority interests HK$’000 153,784 – – – – 1,786 1,786 – – 42,869 (453) (26) (36,857) 3,705 – (2,500) 775 7,513 163,083	Total HK$’000 3,685,274 995,921 103,062 (85,162) 1,170,000 1,786
					2,185,607
					331,789 753 42,869 (453) (26) (36,857) (645) (857) (2,500) 1,280
					335,353
					6,206,234

31. Pledge of assets

(a) At 31 December 2003, bank deposits and cash totalling approximately HK$21,636,000 (2002: HK$10,981,000) were pledged to banks for securing banking facilities granted to certain subsidiaries of the Company and an investee company.
(b) At 31 December 2003, concession rights and a property at net book value of HK$5,614,000 (2002: HK$2,347,000) and HK$814,000 (2002: HK$844,000) respectively, were pledged to banks for securing banking facilities granted to the certain subsidiaries of the Company.

– 75 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

32. Contingent liabilities

(a) As at 31 December 2003, the Group had contingent liabilities amounting to approximately HK$9,400,000 (2002: HK$9,400,000) in respect of the provision of fixed deposits as securities for bank loans granted to an investee company in which the Group has a 50% equity interest.
(b) Save as disclosed in note 23(b), the Company did not have any contingent liability at 31 December 2003 (2002: HK$Nil).

33. Commitments

(a) Capital commitments

Acquisition of new investments – Contracted but not provided for Acquisition of fixed assets and other non-current assets – Contracted but not provided for – Authorised but not contracted for	Group 2003 HK$’000 – 82,652 1,715 84,367	2002 HK$’000 52,006 19,349 7,757
		79,112

(b) As at 31 December 2003, the Group had commitments in respect of contributions to registered capital of certain investments in Mainland China amounted to approximately HK$23,923,000 (2002: HK$Nil).

At 31 December 2003, the Group had other capital commitment in respect of the acquisition of 100% beneficial interest in LTWJi through the acquisition of the entire share capital of Puccini subject to a maximum amount of US$150 million (approximately HK$1,170 million). According to the sale and purchase agreement entered into between the Group and Cranwood, the consideration for the acquisition of Puccini should equal the valuation of the Puccini Group, which is determined based on 7.7 times the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004; or in the event that the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004 is less than an amount equal to 1.2 times of audited consolidated net profit of the Puccini Group for the year ended 31 December 2003, an amount equal to 6 times the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004. The other capital commitment will be 50% paid in cash and 50% paid by the issuance and allotment of TOM Online Inc. (“TOM Online”) shares. An initial consideration of US$18,500,000 worth of TOM Online shares as held in escow were issued at the initial public offer price of TOM Online shares on 11 March 2004.

(d) Commitments under operating leases

At 31 December 2003, the Group had future aggregate minimum lease payments under noncancellable operating leases as follows:

Not later than one year Later than one year and not later than five years Later than five years	2003 Land and Other buildings assets HK$’000 HK$’000 23,860 29,288 16,287 172,591 – 41,879 40,147 243,758	2002 Land and Other buildings assets HK$’000 HK$’000 34,273 30,300 39,506 79,681 747 66,308 74,526 176,289

(e) The Company did not have any commitment at 31 December 2003 (2002: HK$Nil).

– 76 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

34. Related party transactions

In the opinion of the directors of the Company, the following is a summary of significant related party transactions, in addition to those disclosed in notes 17, 19, 21, 22 and 33(c) to the accounts.


		2003	2002
	Note	HK$’000	HK$’000
Sales to	(i)
– HWL and its subsidiaries		1,594	1,354
– a joint venture of HWL		–	32
– Metro Broadcast Corporation Limited (“Metro”),
an associated company of HWL and CKH		750	547
– CKH and its subsidiaries		746	867
– a jointly controlled entity		8,313	1,676
– minority shareholders of subsidiaries
and their subsidiaries		144,058	72,859
Cost of sales payable to	(ii)
– minority shareholders of subsidiaries and their
subsidiaries		26,637	51,296
Internet content supply, event air-time and
advertising expenses payable to Metro		–	3,435
Office rental receivable from Metro	(iii)	770	1,580
Office and warehouse rental payable to	(iv)
– an associated company of CKH		6,937	3,607
– a subsidiary of CKH		10,356	10,356
– minority shareholders of subsidiaries and their
subsidiaries		1,920	921
Service fees payable to	(v)
– a subsidiary of HWL		7,646	5,712
Service fees payable to	(vi)
– HWL and its subsidiaries		2,403	3,414
– an investee company		–	6,821
– minority shareholders of subsidiaries
and their subsidiaries		17,019	6,391
– a company owned by a past
non-executive director		–	468
Interest income receivable from loans to	(vii)
– an investee company		1,886	1,886
– a minority shareholder of a subsidiary		–	677
Interest expenses payable to	22
– a subsidiary of HWL		5,796	6,145
– a subsidiary of CKH		2,898	3,073
– Cranwood		5,796	6,145

– 77 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

34. Related party transactions (continued)

Note:

(i) Sales to related companies were principally at terms no less favourable than those sales to third party customers of the Group.
(ii) Cost of sales were payable to the minority shareholders of subsidiaries and their subsidiaries at market rates.
(iii) Rental of office premises was charged to Metro based on the floor areas occupied.
(iv) The rentals were payable to the related companies for office premises and warehouses leased to the Group. The office premises and warehouses were leased to the Group at market rates.
(v) The service fees were recharged by a subsidiary of HWL on cost reimbursement basis for the provision of administrative, information technology and consultancy services.
(vi) The service fees were payable to related companies for the provision of goods and services rendered at market rates.
(vii) Interests on loans to related companies were calculated at interest rates comparable to market.

– 78 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Notes to the Accounts (continued)

35. Principal subsidiaries, jointly controlled entities, associated companies and investment securities

	Place of
	incorporation	Principal activities	Particular of	Effective
	and kind of	and place of	issued/registered	interest
Name	legal entity	operation	capital	held
tom.com enterprises limited	British Virgin	Holds the domain	1 ordinary share of	100%
	Islands(“BVI”),	name of	US$1
	limited liability	www.tom.com
	company
TOM.COM INTERNATIONAL	Hong Kong,	Operates tom.com	10 ordinary shares of	100%
LIMITED	limited liability	portal and manages	HK$1 each
	company	strategic investments
		of the Group in Hong
		Kong and Mainland
		China
TOM Holdings Limited	Cayman Islands	Issuer of guaranteed	2 ordinary shares of	100%
	(“CI”), limited	convertible bonds	US$1 each
	liability company
INTERNET GROUP
Advanced Internet Services	Hong Kong,	Investment holding in	10,000,000 ordinary	100%
Limited	limited liability	Mainland China	shares of US$0.01
	company		each
Beijing GreaTom United	Mainland China,	Development of	Registered capital	90%
Technology Company Limited,	limited liability	operating platform for	RMB25,000,000
20% acquired on 31 October 2003	company	broadband Internet
		value-added services
		in Mainland China

– 79 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

35. Principal subsidiaries, jointly controlled entities, associated companies and investment securities (continued)

		Place of
		incorporation	Principal activities	Particular of	Effective
		and kind of	and place of	issued/registered	interest
	Name	legal entity	operation	capital	held
	INTERNET GROUP
@	Beijing Lei Ting Wan Jun	Mainland China,	Provision of Internet	Registered capital	100%
	Network Technology Limited	limited liability	content services	RMB11,000,000
		company	and wireless
			value-added services
			in Mainland China
@	Beijing Leitingwuji Network	Mainland China,	Provision of wireless	Registered capital	100%
	Technology Limited, acquired	limited liability	interactive voice	RMB1,000,000
	on 19 November 2003	company	response services in
			Mainland China
@	Beijing Redsail Netlegend Data	Mainland China,	Provision of interactive	Registered capital	100%
	Network Technology Company	limited liability	call center services	RMB62,800,000
	Limited, 60% acquired	company	in Mainland China
	on 25 June 2003
	Beijing Super Channel	Mainland China,	Development of	Registered capital	100%
	Network Limited	limited liability	software information	US$13,000,000
		company	system, computer
			network and website
			products in Mainland
			China
	Cernet Information Technology	Mainland China,	Provision of system	Registered capital	51%
	Company Limited	limited liability	integration and	RMB60,000,000
		company	consultancy services
			in Mainland China
*	Cernet Online Company	Mainland China,	Acts as primary	Registered capital	37%
	Limited	limited liability	Internet services	RMB10,000,000
		company	provider in Mainland
			China

– 80 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

35. Principal subsidiaries, jointly controlled entities, associated companies and investment securities (continued)

		Place of
		incorporation	Principal activities	Particular of	Effective
		and kind of	and place of	issued/registered	interest
	Name	legal entity	operation	capital	held
	INTERNET GROUP
*	ChinaPlus(Beijing)Company	Mainland China,	Provision of interactive	Registered capital	50%
	Limited	limited liability	online marketing	US$3,500,000
		company	services in Mainland
			China and Taiwan
	ECLink Electronic Network	Mainland China,	Software, electronics	Registered capital	100%
	Systems(Shenzhen)Company	limited liability	and computer network	US$3,000,000
	Limited	company	system development
			in Mainland China
^	Shanghai Maya Online	Mainland China,	Operates a website	Registered capital	50%
	Broadband Network Company	limited liability	and engages in	RMB50,000,000
	Limited	company	content provision and
			development in
			Mainland China
#	She Communications Limited	Hong Kong,	Operates a fashion	2 ordinary shares of	33.3%
		limited liability	website in Hong Kong	HK$10 each
		company
@	Shenzhen Freenet Information	Mainland China,	Operates 163.net and	Registered capital	100%
	Technology Company Limited	limited liability	e-mails service	RMB23,000,000
		company	provider in Mainland
			China
	TOM.COM(China)Investment	Mainland China,	Investment holding in	Registered capital	100%
	Limited	limited liability	Mainland China	US$30,000,000
		company
	TOM Online Inc.(formerly	CI, limited liability	Investment holding in	4,000,000,000	100%
	known as PC Rock Industry	company	Mainland China	ordinary shares of
	Limited)			HK$0.01 each

– 81 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

35. Principal subsidiaries, jointly controlled entities, associated companies and investment securities (continued)

		Place of
		incorporation	Principal activities	Particular of	Effective
		and kind of	and place of	issued/registered	interest
	Name	legal entity	operation	capital	held
	OUTDOOR MEDIA GROUP
@	Beijing TOM International	Mainland China,	Advertising sales in	Registered capital	100%
	Advertising Limited(formerly	limited liability	Mainland China	RMB1,000,000
	known as Beijing Lu Jing Ling	company
	Advertising Limited)
@	Fujian Seeout Guangming	Mainland China,	Advertising sales in	Registered capital	70%
	Media Advertising Company	limited liability	Mainland China	RMB5,000,000
	Limited	company
@	Henan New Tianming	Mainland China,	Advertising sales in	Registered capital	50%
	Advertising and Information	limited liability	Mainland China	RMB6,000,000
	Chuanbo Company Limited	company
@	Kunming Fench Media	Mainland China,	Advertising sales in	Registered capital	100%
	Co. Ltd.	limited liability	Mainland China	RMB11,000,000
		company
@	Kunming Fench Star	Mainland China,	Advertising sales in	Registered capital	100%
	Information Industry	limited liability	Mainland China	RMB11,000,000
	Limited	company
@	Liaoning New Star	Mainland China,	Advertising sales in	Registered capital	60%
	Guangming Media Assets	limited liability	Mainland China	RMB10,000,000
	Company Limited	company
	Perfect Team Limited	BVI, limited	Advertising sales in	4,000,000 ordinary	65%
		liability company	Mainland China	shares of US$1 each
@	Qingdao Chunyu Advertising	Mainland China,	Advertising sales in	Registered capital	70%
	Chuanbo Company Limited	limited liability	Mainland China	RMB1,500,000
		company

– 82 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

35. Principal subsidiaries, jointly controlled entities, associated companies and investment securities (continued)

		Place of
		incorporation	Principal activities	Particular of	Effective
		and kind of	and place of	issued/registered	interest
	Name	legal entity	operation	capital	held
	OUTDOOR MEDIA GROUP
@	Shandong Qilu International	Mainland China,	Advertising sales in	Registered capital	60%
	Outdoor Media Company Limited	limited liability	Mainland China	RMB11,000,000
		company
^	Shanghai Maya Cultural	Mainland China,	Provision of	Registered capital	50%
	Transmission Company Limited	limited liability	advertising and	RMB20,000,000
		company	marketing services in
			Mainland China
@	Shenyang Sano Global Media	Mainland China,	Advertising sales in	Registered capital	60%
	Company Limited	limited liability	Mainland China	RMB3,000,000
		company
@	Sichuan Southwest Outdoor	Mainland China,	Advertising sales in	Registered capital	70%
	Media Company Limited	limited liability	Mainland China	RMB3,000,000
		company
	TOM Outdoor Media Group	BVI, limited	Investment holding in	1 ordinary share of	100%
	Limited	liability company	Mainland China	US$1
@	Xiamen Bomei Lianhe	Mainland China,	Advertising sales in	Registered capital	60%
	Advertising Company Limited	limited liability	Mainland China	RMB2,500,000
		company
	PUBLISHING GROUP
	Business Weekly Publishing Inc.	Taiwan, limited	Publishing of	169,120 ordinary	83.17%
		liability company	magazines in Taiwan	shares of NT$10 each
	Cité Publishing Holding Limited	BVI, limited	Investment holding in	4,999,563 ordinary	83.19%
		liability company	Taiwan	shares of US$0.01
				each
	Cité Publishing Limited	Taiwan, limited	Publishing of books in	28,171,506 ordinary	83.17%
		liability company	Taiwan	shares of NT$10 each

– 83 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Notes to the Accounts (continued)

35. Principal subsidiaries, jointly controlled entities, associated companies and investment securities (continued)

	Place of
	incorporation	Principal activities	Particular of	Effective
	and kind of	and place of	issued/registered	interest
Name	legal entity	operation	capital	held
PUBLISHING GROUP
Home Media Group Limited	CI, limited liability	Investment holding in	986,922,602 ordinary	83.17%
	company	Taiwan	shares of US$0.00001
			each
Nong Nong Magazine Co. Ltd.	Taiwan, limited	Publishing of	2,500,000 ordinary	66.54%
	liability company	magazines in Taiwan	shares of NT$10 each
PC Home Publications Inc.	Taiwan, limited	Publishing of	18,310,000 ordinary	83.17%
	liability company	magazines which	shares of NT$10 each
		focus on information
		technology in Taiwan
Sharp Point Publishing Co. Ltd.	Taiwan, limited	Publishing of youth	10,296,000 ordinary	83.17%
	liability company	magazines and books	shares of NT$10 each
		in Taiwan
TOM(Cup Magazine)Publishing	Hong Kong,	Publishing of	2 ordinary shares of	100%
Limited	limited liability	magazines in Hong Kong	HK$1 each
	company
Yazhou Zhoukan Limited	Hong Kong,	Publishing of regional	9,500 ordinary shares	50%
	limited liability	news magazines in	of HK$1 each
	company	Asia
SPORTS GROUP
Media Serv Asia Pacific Limited	BVI, limited	Advertising and	1 ordinary share of	60%
	liability company	sponsorship sales in	US$1
		relation to sports
		events and
		programmes in
		Thailand

– 84 –

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

Notes to the Accounts (continued)

35. Principal subsidiaries, jointly controlled entities, associated companies and investment securities (continued)

		Place of
		incorporation	Principal activities	Particular of	Effective
		and kind of	and place of	issued/registered	interest
	Name	legal entity	operation	capital	held
	SPORTS GROUP
	Media Serv Limited	BVI, limited	Advertising and	200 ordinary shares of	60%
		liability company	sponsorship sales in	US$1 each
			relation to sports
			events and
			programmes in
			Hong Kong
	YCP Advertising Limited	Hong Kong,	Sports advertising and	10 ordinary shares of	70%
		limited liability	event management in	HK$1 each
		company	Mainland China and
			Hong Kong
@	廣東羊城報業體育發展有限公司	Mainland China,	Manages sponsorships	Registered capital	80%
	10% acquired on 1 December	limited liability	and marketing of	RMB5,000,000
	2003	company	sports events and
			production of TV
			sports programmes in
			Mainland China
@	廣東羊城廣告有限公司	Mainland China,	Advertising, corporate	Registered capital	80%
	10% acquired on 3 December	limited liability	image design and sale	RMB5,000,000
	2003	company	of products in
			Mainland China
	TELEVISION AND ENTERTAINMENT GROUP
	China Entertainment Television	Hong Kong,	Operations of satellite	30,000 ordinary	64.07%
	Broadcast Limited, acquired on 15	limited liability	television channels	shares of HK$0.3 each
	September 2003	company	and provision of
			content and television
			programme to various
			platforms including
			satellite television and
			syndication network

– 85 –

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

Notes to the Accounts (continued)

35. Principal subsidiaries, jointly controlled entities, associated companies and investment securities (continued)

Place of incorporation Principal activities Particular of Effective and kind of and place of issued/registered interest Name legal entity operation capital held TELEVISION AND ENTERTAINMENT GROUP TOM Digital Media Center Limited Hong Kong, Provision of television 2 ordinary shares of 100% limited liability channel organisation HK$1 each company and satellite television transmission services @ 廣州市鴻翔音像製作有限公司 Mainland China, Sales of audio-visual Registered capital 50% limited liability products in Mainland RMB800,000 company China

Jointly controlled entity
Associated company
@ The equity interest is held by individual nominees on behalf of the Group
^ Investment security

The above table lists the principal subsidiaries, jointly controlled entities, associated companies and investment securities of the Group at 31 December 2003 which, in the opinion of the directors of the Company, principally affect the results and net assets of the Group. To give full details of subsidiaries, jointly controlled entities and associated companies would, in the opinion of the directors of the Company, result in particulars of excessive length.

Except for tom.com enterprises limited, TOM.COM INTERNATIONAL LIMITED, TOM Online Inc. and TOM Outdoor Media Group Limited which are directly held by the Company, the interests in the remaining subsidiaries, jointly controlled entities, associated companies and investment securities are held indirectly.

36. Subsequent events

On 10 March and 11 March 2004, the shares of TOM Online, previously a wholly-owned subsidiary of the Company, were listed and traded on the National Market of National Automated Systems Dealership and Quotation, United States of America and the Growth Enterprise Market of the Stock Exchange (the “Global Offering”). As a result of the Global Offering, the Company’s shareholding in TOM Online, before the exercise of the over-allotment option, has been diluted to 71.87%, which resulted in a gain arising from this deemed disposal (the “Deemed Disposal”). The directors have estimated that the gain arising from the Deemed Disposal amounted to approximately HK$0.8 billion, which will be included as part of the 2004 first quarter consolidated results of the Group.

37. Approval of accounts

The accounts were approved by the board of directors on 17 March 2004.

– 86 –

APPENDIX II

ACCOUNTANTS’ REPORT ON LINGXUN

==> picture [92 x 46] intentionally omitted <==

21 October 2004

The Directors TOM Group Limited

Dear Sirs,

We set out our report on the financial information relating to 北京靈訊互動科技發展有限公司 (Beijing LingXun Interactive Science Technology and Development Company Limited) (“LingXun”) for the period from 11 September 2002 (date of establishment) to 31 December 2002, for the year ended 31 December 2003 and for the six months ended 30 June 2003 and 2004 (the “Relevant Periods”) for inclusion in the circular of TOM Group Limited (“TOM”) dated 21 October 2004 in connection with the acquisition by TOM of 100% of the beneficial interest in LingXun through the acquisition of the entire issued share capital of Treasure Base Investments Limited (“Treasure Base”) pursuant to the sale and purchase agreement dated 11 August 2004 entered into among Monit Holdings Corporation (“Monit”), Aosta Holdings Corporation (“Aosta”) and Windstorm Limited (“Windstorm”), being 49%, 47%, and 4% shareholders of Treasure Base respectively, Mr. Li Chuan Dong (李傳東)(“Mr. Li”), Mr. Sun Jian Ying ( 孫劍英 )(“Mr. Sun”), Ms. Yan Shan (嚴珊 )(“Ms. Yan”) and TOM Online Media Group Limited, a whollyowned subsidiary of TOM Online Inc. and a subsidiary of TOM (hereinafter referred to as the “Acquisition”).

LingXun was established in the People’s Republic of China (the “PRC”) on 11 September 2002 as a domestic limited liability company. LingXun is principally engaged in the provision of wireless short messaging services (“SMS”) to mobile telephone users through the network of China Mobile Communications Corporation (“China Mobile”) and China United Telecommunications Corporation (“China Unicom”) in the PRC.

The accounts of LingXun for the Relevant Periods were prepared in accordance with the accounting principles and regulations applicable to PRC enterprises (“PRC GAAP”) (the “PRC GAAP Accounts”). The PRC GAAP Accounts of LingXun for the year ended 31 December 2003 were audited by 北京中之光會計師事務所有限責任公司 (Beijing Zhong Zhi Guang Certified Public Accountants Co. Ltd.) in the PRC.

We have examined the audited PRC GAAP Accounts or, where appropriate, the unaudited management accounts of LingXun for the Relevant Periods and have carried out such additional procedures as are necessary in accordance with the Auditing Guideline “Prospectuses and the Reporting Accountant” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”).

The financial information as set out in sections I to V (the “Financial Information”) has been prepared in accordance with accounting principles generally accepted in Hong Kong and accounting

– 87 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

standards issued by the HKICPA, based on the audited PRC GAAP Accounts or, where appropriate, the unaudited management accounts of LingXun for the Relevant Periods, after making such adjustments as are appropriate. The director of LingXun, during the Relevant Periods, is responsible for preparing the PRC GAAP Accounts which give a true and fair view. In preparing the PRC GAAP Accounts, it is fundamental that appropriate accounting policies are selected and applied consistently.

The director of LingXun is responsible for the Financial Information. It is our responsibility to form an independent opinion, based on our examination, on the Financial Information and to report our opinion.

In our opinion, the Financial Information, for the purpose of this report, gives a true and fair view of the state of affairs of LingXun as at 31 December 2002 and 2003 and 30 June 2004 and of the results and cash flows of LingXun for the Relevant Periods.

– 88 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

I. PROFIT AND LOSS ACCOUNTS

Period from
11 September 2002
(date of
establishment) to
Year ended
31 December 31 December
Section V
2002
2003
Note
RMB’000
RMB’000
Turnover
3
–
76,318
Cost of services
–
(38,504)
Gross profit
–
37,814
Interest income
3
1
36
Selling and marketing expenses
–
(499)
General and administrative expenses
(79)
(1,260)
(Loss)/profit before taxation
4
(78)
36,091
Taxation
5
–
(981)
(Loss)/profit attributable to owners
(78)
35,110

Six months ended
30 June
30 June
2003
2004
RMB’000
RMB’000
30,874
63,813
(16,207)
(29,664)
14,667
34,149
1
83
(194)
(289)
(385)
(991)
14,089
32,952
–
(11,324)
14,089
21,628

– 89 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

II. BALANCE SHEETS

Section V Note ASSETS Non-current assets Fixed assets 10 Current assets Trade receivables 11 Prepayment and other current assets Amounts due from owners 12 Bank balances and cash Current liabilities Trade payables 13 Accrued liabilities Taxation payable Deferred revenue Net current assets Total assets less current liabilities CAPITAL AND RESERVES Paid-in capital 14 Reserves 15 Owners’ equity	31 December 2002 2003 RMB’000 RMB’000 – 1,255 ------------ ------------ – 6,472 – 2,135 – 621 971 15,251 971 24,479 ------------ ------------ – 7,124 49 1,642 – 981 – 720 49 10,467 ------------ ------------ 922 14,012 ------------ ------------ 922 15,267 1,000 10,000 (78) 5,267 922 15,267	30 June 2004 RMB’000 1,508 ------------ 11,508 2,601 657 40,082
		54,848 ------------ 3,820 2,656 12,305 680
		19,461 ------------
		35,387 ------------
		36,895

		10,000 26,895
		36,895

– 90 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

III. STATEMENTS OF CHANGES IN EQUITY

Period from 11 September 2002 (date of establishment) to Year ended 31 December 31 December Section V 2002 2003 Note RMB’000 RMB’000 Total equity at the beginning of the period/year – 922 Capital contribution from owners 14 1,000 – Net (loss)/profit for the period/year (78) 35,110 Waiver of advances to owners 15 – (20,765) Total equity at the end of the period/year 922 15,267	Six months ended 30 June 30 June 2003 2004 RMB’000 RMB’000 922 15,267 – – 14,089 21,628 – – 15,011 36,895	Six months ended 30 June 30 June 2003 2004 RMB’000 RMB’000 922 15,267 – – 14,089 21,628 – – 15,011 36,895
		36,895

– 91 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

IV. CASH FLOW STATEMENTS

Period from
11 September 2002
(date of
establishment) to
Year ended
31 December 31 December
Section V
2002
2003
Note
RMB’000
RMB’000
Net cash (outflow)/inflow
from operating activities
16(a)
(30)
37,165
---------------
---------------
Investing activities
Purchase of fixed assets
–
(1,535)
Interest received
1
36
Net cash inflow/(outflow)
from investing activities
1
(1,499)
---------------
---------------
Net cash (outflow)/inflow
before financing activities
(29)
35,666
---------------
---------------
Financing activities
16(b)
Capital contribution from owners
1,000
–
Advances to owners
–
(21,386)
Net cash inflow/(outflow) from
financing activities
1,000
(21,386)
---------------
---------------
Increase in bank balances and cash
971
14,280
Bank balances and cash at the
beginning of the period/year
–
971
Bank balances and cash at the end of
the period/year
971
15,251

Six months ended
30 June
30 June
2003
2004
RMB’000
RMB’000
12,950
25,179
---------------
---------------
(542)
(395)
1
83
(541)
(312)
---------------
---------------
12,409
24,867
---------------
---------------
–
–
(7,252)
(36)
(7,252)
(36)
---------------
---------------
5,157
24,831
971
15,251
6,128
40,082

– 92 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION

1. Basis of preparation

The Financial Information has been prepared in accordance with accounting principles generally accepted in Hong Kong and comply with accounting standards issued by the HKICPA. It has been prepared under the historical cost convention.

2. Principal accounting policies

The principal accounting policies adopted in the preparation of the Financial Information are set out below:

(a) Revenue recognition

SMS services are provided to users on a monthly basis for a fixed fee or on an usage basis for a transaction fee through the wireless data platform of various subsidiaries of China Mobile and China Unicom. LingXun recognises its revenue, net of business tax, based on gross fee billed to end users as services are rendered.

Revenue from the sales of gateway and servers is recognised when significant risk and reward of ownership of the goods are transferred to the buyers.

Upfront non-refundable fee is amortised to revenue over the relevant contract period.

Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

(b) Fixed assets

Fixed assets, comprising computer equipment, computer software and furniture and office equipment, are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

Fixed assets are depreciated at rates sufficient to write off their costs less accumulated impairment losses, if any, over their estimated useful lives on a straight-line basis. The principal annual rates are as follows:

Computer	equipment	33%
Computer	software	25%
Furniture	and office equipment	15%

At each balance sheet date, both internal and external sources of information are considered to assess whether there is any indication that assets included in fixed assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated and where relevant, an impairment loss is recognised to reduce the asset to its recoverable amount. Such impairment losses are recognised in the profit and loss account.

The gain or loss on disposal of a fixed asset is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in the profit and loss account.

(c) Trade receivables

Provision is made against trade receivables to the extent they are considered to be doubtful. Trade receivables in the balance sheet are stated net of such provision.

(d) Operating leases

– 93 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION (continued)

2. Principal accounting policies (continued)

(e) Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of LingXun. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the Financial Information. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of LingXun.

Contingent assets are not recognised but are disclosed in the notes to the Financial Information when an inflow of economic benefits is probable. When an inflow is virtually certain, an asset is recognised.

(f) Provision

Provisions are recognised when LingXun has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where LingXun expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

(g) Employee benefits

LingXun participates in a government-sponsored multi-employer benefit plan, which provides housing, medical and retirement benefits to LingXun’s employees through a defined contribution plan. Regulations issued by the local labour bureau require LingXun to pay a monthly premium to the bureau. The local labour bureau is responsible for meeting all retirement benefit obligations and LingXun has no further commitments beyond the monthly premium. Contributions to this plan are expensed as incurred.

(h) Deferred taxation

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

– 94 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION (continued)

3. Turnover and revenue

LingXun is principally engaged in the provision of SMS services to mobile phone users through the wireless data platform of various subsidiaries of China Mobile and China Unicom. LingXun’s SMS services include information services in entertainment, sports, lifestyle content, games and personalised services, which are provided to the end users when they send messages to certain designated numbers assigned by China Mobile and China Unicom.

The director is of the view that the services rendered by LingXun are of one business segment and the business is conducted in the PRC only. Accordingly, no separate segment information is presented.

Revenues recognised during the Relevant Periods are as follows:

Period from 11 September 2002 (date of establishment) to Year ended 31 December 31 December 2002 2003 RMB’000 RMB’000 Turnover Revenue from the provision of SMS services – 75,965 Sales of gateways and servers – 353 – 76,318 Interest income 1 36 Total revenues 1 76,354	Six months ended 30 June 30 June 2003 2004 RMB’000 RMB’000 30,874 63,714 – 99 30,874 63,813 1 83 30,875 63,896	Six months ended 30 June 30 June 2003 2004 RMB’000 RMB’000 30,874 63,714 – 99 30,874 63,813 1 83 30,875 63,896
		63,813 83
		63,896

4. (Loss)/profit before taxation

(Loss)/profit before taxation is stated after charging the following:

Period from 11 September 2002 (date of establishment) to Year ended 31 December 31 December 2002 2003 RMB’000 RMB’000 Staff costs_(Note 7)_ 29 1,698 Auditors’ remuneration – 22 Depreciation of fixed assets – 280 Operating lease rental for building 49 280	Six months ended 30 June 30 June 2003 2004 RMB’000 RMB’000 382 1,334 – 24 36 142 120 247

– 95 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION (continued)

5. Taxation and deferred taxation

No provision for Hong Kong profits tax has been made as LingXun has no assessable profits in Hong Kong during the Relevant Periods.

In accordance with the PRC Law of Enterprise Income Tax (“EIT”), companies incorporated in PRC are generally subject to EIT at a rate of 33%, commencing from the first tax profitable year after offsetting all tax losses carried forward from the previous five years. At the beginning of the Relevant Periods, LingXun was entitled to certain tax exemptions as a high technology enterprise operated in Hai Dian district in the PRC. With effect from December 2003, the applicable EIT rate to LingXun was reverted back to 33% as LingXun no longer operated principally in Hai Dian district.

	Period from
	11 September
	2002 (date of
	establishment) to	Year ended	Six months ended
	31 December	31 December	30 June	30 June
	2002	2003	2003	2004
	RMB’000	RMB’000	RMB’000	RMB’000
EIT	–	981	–	11,324

There were no material deferred tax assets or liabilities as of 31 December 2002, 31 December 2003 and 30 June 2004.

The taxation on LingXun’s (loss)/profit before taxation differs from the theoretical amount that would arise using the taxation rate of LingXun as follows:

Period from 11 September 2002 (date of establishment) to Year ended 31 December 31 December 2002 2003 RMB’000 RMB’000 (Loss)/profit before taxation (78) 36,091 Calculated at taxation rate of 33% (26) 11,910 Effect of tax holiday pursuant to the high technology enterprise preferential tax treatment – (11,141) Expenses not deductible for taxation purposes – 238 Unrecognised tax loss 26 – Utilisation of previously unrecognised tax loss – (26) Taxation charge – 981	Six months ended 30 June 30 June 2003 2004 RMB’000 RMB’000 14,089 32,952 4,649 10,874 (4,649) – – 450 – – – – – 11,324	Six months ended 30 June 30 June 2003 2004 RMB’000 RMB’000 14,089 32,952 4,649 10,874 (4,649) – – 450 – – – – – 11,324
		10,874 – 450 – –
		11,324

6. Earnings per share

No earnings per share is presented for the Relevant Periods since the capital of LingXun is not divided into shares.

– 96 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION (continued)

7. Staff costs, including director’s emoluments

Period from 11 September 2002 (date of establishment) to Year ended 31 December 31 December 2002 2003 RMB’000 RMB’000 Wages and salaries 21 1,251 Social welfare costs 8 447 29 1,698	Six months ended 30 June 30 June 2003 2004 RMB’000 RMB’000 278 888 104 446 382 1,334	Six months ended 30 June 30 June 2003 2004 RMB’000 RMB’000 278 888 104 446 382 1,334
		1,334

8. Director’s emoluments

The aggregate amounts of emoluments payable to the sole director of LingXun during the Relevant Periods are as follows:

	Period from
	11 September
	2002 (date of
	establishment) to	Year ended	Six months	ended
	31 December	31 December	30 June	30 June
	2002	2003	2003	2004
	RMB’000	RMB’000	RMB’000	RMB’000
Basic salaries, housing allowances,
other allowances and benefits in kind	5	66	31	60

9. Five highest paid individuals

The five individuals whose emoluments were the highest in LingXun during the Relevant Periods include the sole director whose emoluments are reflected in Note 8 above. The emoluments payable to the four remaining individuals during the Relevant Periods are as follows:

	Period from
	11 September
	2002 (date of
	establishment) to	Year ended	Six months ended
	31 December	31 December	30 June	30 June
	2002	2003	2003	2004
	RMB’000	RMB’000	RMB’000	RMB’000
Basic salaries and wages	24	616	196	232

The emoluments of the employees fell within RMBnil – RMB1,000,000 band.

– 97 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION (continued)

10. Fixed assets

Computer equipment RMB’000 Cost At 11 September 2002 (date of establishment) and at 31 December 2002 – Additions 929 At 31 December 2003 929 Additions 392 At 30 June 2004 1,321 -------------- Accumulated depreciation At 11 September 2002 (date of establishment) and at 31 December 2002 – Charge for the year 177 At 31 December 2003 177 Charge for the period 99 At 30 June 2004 276 -------------- Net book value At 31 December 2002 – At 31 December 2003 752 At 30 June 2004 1,045 Trade receivables The ageing analysis of LingXun’s trade receivables is as follows: Within 1 month 1 – 3 months	Furniture Computer and office software equipment RMB’000 RMB’000 – – 128 478 128 478 – 3 128 481 -------------- -------------- – – 13 90 13 90 5 38 18 128 -------------- -------------- – – 115 388 110 353 31 December 2002 2003 RMB’000 RMB’000 – 6,219 – 253 – 6,472	Total RMB’000 – 1,535
		1,535 395
		1,930 -------------- – 280
		280 142
		422 --------------
		–

		1,255

		1,508

		30 June 2004 RMB’000 10,845 663
		11,508

11. Trade receivables

– 98 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION (continued)

12. Amounts due from owners

Mr. Li_(note a) Mr. Sun(note b)_	31 December 2002 2003 RMB’000 RMB’000 – 317 – 304 – 621	30 June 2004 RMB’000 335 322
		657

Note a: Mr. Li, who held 51% of the equity interest in LingXun during the Relevant Periods, is the sole beneficial owner of Monit Holdings Corporation.

Note b: Mr. Sun, who held 49% of the equity interest in LingXun during the Relevant Periods, is the sole beneficial owner of Aosta Holdings Corporation.

The balances due from owners are unsecured, interest-free and repayable on demand.

13. Trade payables

The ageing analysis of LingXun’s trade payables is as follows:

31 December 2002 2003 RMB’000 RMB’000 Within 1 month – 2,049 1 – 3 months – 3,747 Over 3 months – 1,328 – 7,124 Paid-in capital Capital contribution as at date of establishment, 31 December 2002 and 30 June 2003 Capitalisation of reserves As at 31 December 2003 and 30 June 2004	30 June 2004 RMB’000 3,130 690 –
	3,820

	RMB’000 1,000 9,000
	10,000

14. Paid-in capital

The registered capital of LingXun was RMB1,000,000 at the date of establishment, which was fully paid upon establishment. According to the resolution passed at the owners’ meeting dated 1 December 2003, accumulated net profit of RMB9,000,000 was capitalised as paid-in capital.

– 99 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION (continued)

15. Reserves

Statutory common reserve funds

According to the relevant statutory rules and regulations and Articles of Association, LingXun is required to transfer 10% of its profit after taxation, as determined in accordance with PRC GAAP, after setting off accumulated losses of previous years, to the statutory common reserve funds until the reserve balance reaches 50% of the registered capital.

The statutory common reserve funds can be used to make good previous years’ losses, if any, and may be converted into paid-in capital. The transfer to this reserve must be made before the distribution of dividends to investors. Cash distribution is not allowed other than in the liquidation of LingXun.

Statutory common welfare funds

According to the relevant statutory rules and regulations and Articles of Association, LingXun is required to transfer 5% of its profit after taxation, as determined in accordance with PRC GAAP, after setting off accumulated losses of previous years, to the statutory common welfare funds.

The statutory common welfare funds can only be utilised on capital items for the collective benefits of LingXun’s employees such as the constructions of dormitories, canteen and other staff welfare facilities. The transfer to this reserve must be made before the distribution of dividends to investors. Cash distribution is not allowed other than in the liquidation of LingXun.

re At date of establishment Net loss for the period At 31 December 2002 At 1 January 2003 Net profit for the year Appropriation Waiver of advances to owners_(Note a) Converted to capital(Note 14)_ At 31 December 2003 At 1 January 2003 Net profit for the period At 30 June 2003 At 1 January 2004 Net profit for the period At 30 June 2004	(Accumulated Statutory Statutory loss)/ common common retained serve funds welfare funds earnings RMB’000 RMB’000 RMB’000 – – – – – (78) – – (78) – – (78) – – 35,110 3,511 1,756 (5,267) – – (20,765) – – (9,000) 3,511 1,756 – – – (78) – – 14,089 – – 14,011 3,511 1,756 – – – 21,628 3,511 1,756 21,628	Total RMB’000 – (78) (78) (78) 35,110 – (20,765) (9,000) 5,267 (78) 14,089 14,011 5,267 21,628 26,895

Note a:

The amount represented the waiver of advances to owners approved by the director of LingXun.

– 100 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION (continued)

16. Cash flow statements

(a) Reconciliation of (loss)/profit before taxation to net cash (outflow)/inflow from operating activities:

Period from
11 September
2002 (date of
establishment) to
Year ended
31 December
31 December
2002
2003
RMB’000
RMB’000
(Loss)/profit before taxation
(78)
36,091
Depreciation
–
280
Interest income
(1)
(36)
Operating (loss)/profit before
working capital changes
(79)
36,335
Increase in trade receivables
–
(6,472)
Increase in prepayment and
other current assets
–
(2,135)
Increase/(decrease) in trade payables
–
7,124
Increase in accrued liabilities
49
1,593
Increase/(decrease) in deferred revenue
–
720
Net cash (outflow)/inflow
from operating activities
(30)
37,165

Six months ended
30 June
30 June
2003
2004
RMB’000
RMB’000
14,089
32,952
36
142
(1)
(83)
14,124
33,011
(5,250)
(5,036)
(166)
(466)
3,958
(3,304)
284
1,014
–
(40)
12,950
25,179

– 101 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION (continued)

16. Cash flow statements (continued)

(b) Analysis of changes in financing during the Relevant Periods:

Net cash inflow from financing activities At 31 December 2002 At 1 January 2003 Advances to owners Net cash outflow from financing activities Capitalisation of reserves Waiver of advances to owners At 31 December 2003 At 1 January 2003 Advances to owners Net cash outflow from financing activities At 30 June 2003 At 1 January 2004 Advances to owners Net cash outflow from financing activities At 30 June 2004	Paid-in capital RMB’000 1,000 1,000 1,000 – – 9,000 – 10,000 1,000 – – 1,000 10,000 – – 10,000	Amounts due from owners RMB’000 – – – (21,386) (21,386) – 20,765 (621) – (7,252) (7,252) (7,252) (621) (36) (36) (657)	Total RMB’000 1,000 1,000 1,000 (21,386) (21,386) 9,000 20,765 9,379 1,000 (7,252) (7,252) (6,252) 9,379 (36) (36) 9,343

17. Operating lease commitments

LingXun leases an office under a cancellable operating lease agreement and LingXun is required to give an onemonth notice for the termination of the agreement. The lease rental charged to the profit and loss accounts during the Relevant Periods is disclosed in Note 4.

18. Subsequent events

On 11 August 2004, an exclusive option agreement and an equity pledge agreement were signed between the registered owners of LingXun and Treasure Base, a company incorporated in the British Virgin Islands and owned as to 49% by Monit, 47% by Aosta and 4% by Windstorm. On the same date, a sale and purchase agreement was entered into among TOM Online Media Group Limited, a subsidiary of TOM, Monit, Aosta and Windstorm for the acquisition by TOM of 100% of the beneficial interest in LingXun through the acquisition of the entire issued share capital of Treasure Base.

– 102 –

ACCOUNTANTS’ REPORT ON LINGXUN

APPENDIX II

V. NOTES TO FINANCIAL INFORMATION (continued)

18. Subsequent events (continued)

The consideration comprises initial consideration and earn-out consideration, the aggregate amount of which is subject to a maximum of RMB550 million and will be fully paid in cash. The initial consideration will be determined based on 4.5 times the audited combined net profit, as determined in accordance with accounting principles generally accepted in the United States (“US GAAP”), of Treasure Base and its subsidiaries (“Treasure Base Group”) for the year ending 31 December 2004; or in the event that the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2004 is less than RMB40 million, the initial consideration will then be determined based on 3.5 times the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2004. The earn-out consideration will be determined based on 1.75 times the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005; or in the event that the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005 is less than (or equal to) RMB75 million but higher than (or equal to) RMB40 million, the earnout consideration will then be determined based on 1.5 times the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005; or in the event that the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005 is less than RMB40 million, the earn-out consideration will then be the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005.

The acquisition of LingXun has been completed on 2 September 2004. Treasure Base has become a wholly-owned subsidiary of TOM Online and a non wholly-owned subsidiary of TOM.

19. Subsequent accounts

No audited accounts have been prepared for LingXun in respect of any period subsequent to 30 June 2004 and, save as disclosed in this report, no dividend or other distribution has been declared by LingXun in respect of any period subsequent to 30 June 2004.

Yours faithfully, PricewaterhouseCoopers Certified Public Accountants Hong Kong

– 103 –

ACCOUNTANTS’ REPORT ON TREASURE BASE

APPENDIX III

==> picture [93 x 46] intentionally omitted <==

21 October 2004

The Directors TOM Group Limited

Dear Sirs,

We set out our report on the financial information relating to Treasure Base Investments Limited (“Treasure Base”) for the period from 12 May 2004 (date of incorporation) to 30 June 2004 (the “Relevant Period”) for inclusion in the circular of TOM Group Limited (“TOM”) dated 21 October 2004 in connection with the acquisition by TOM of 100% of the beneficial interest in 北京靈訊互動科技發展有限公司 (Beijing LingXun Interactive Science Technology and Development Company Limited) (“LingXun”) through the acquisition of the entire issued share capital of Treasure Base pursuant to the sale and purchase agreement dated 11 August 2004 entered into among Monit Holdings Corporation (“Monit”), Aosta Holdings Corporation (“Aosta”) and Windstorm Limited (“Windstorm”), being 49%, 47%, and 4% shareholders of Treasure Base respectively, Mr. Li Chuan Dong (李傳東 )(“Mr. Li”), Mr. Sun Jian Ying (孫劍英 )(“Mr. Sun”), Ms. Yan Shan (嚴珊 )(“Ms. Yan”) and TOM Online Media Group Limited, a wholly-owned subsidiary of TOM Online Inc. and a subsidiary of TOM (hereinafter referred to as the “Acquisition”).

Treasure Base was incorporated in the British Virgin Islands on 12 May 2004 with limited liability under the Companies Law of the British Virgin Islands. Treasure Base has been inactive since its incorporation.

Treasure Base has adopted 31 December as its financial year end date. No audited statutory accounts of Treasure Base have been prepared since its date of incorporation. For the purpose of this report, the director of Treasure Base has prepared the accounts for Treasure Base for the Relevant Period in accordance with accounting principles generally accepted in Hong Kong and accounting standards issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) (“HK GAAP Accounts”). The director of Treasure Base is responsible for preparing the HK GAAP Accounts which give a true and fair view. In preparing these accounts, it is fundamental that appropriate accounting policies are selected and applied consistently. We have performed independent audit procedures on the HK GAAP Accounts for the Relevant Period in accordance with Statements of Auditing Standards issued by the HKICPA.

The financial information set out in sections I to V of this report (the “Financial Information”) has been prepared by the director of Treasure Base based on the HK GAAP Accounts. We have examined the HK GAAP Accounts and have carried out such additional procedures as are necessary in accordance with the Auditing Guideline “Prospectuses and the Reporting Accountant” issued by the HKICPA.

– 104 –

ACCOUNTANTS’ REPORT ON TREASURE BASE

APPENDIX III

The director of Treasure Base is responsible for preparing the Financial Information. It is our responsibility to form an independent opinion, based on our examination, on the Financial Information and to report our opinion.

In our opinion, the Financial Information for the purpose of this report, gives a true and fair view of the state of affairs of Treasure Base as at 30 June 2004 and of the results and cash flows of Treasure Base for the Relevant Period.

– 105 –

ACCOUNTANTS’ REPORT ON TREASURE BASE

APPENDIX III

I. PROFIT AND LOSS ACCOUNT

	Period
	from 12 May 2004
	(date of incorporation)
	to 30 June 2004
	HK$
Interest income	4
General and administrative expenses	(220)
Loss attributable to shareholder	(216)

– 106 –

ACCOUNTANTS’ REPORT ON TREASURE BASE

APPENDIX III

II. BALANCE SHEET

	Section V	30 June 2004
	Note	HK$
ASSETS
Current assets
Bank balance		1,171,784
Net assets		1,171,784
CAPITAL AND RESERVES
Share capital	3	8
Share premium	3	1,171,992
Accumulated loss		(216)
Shareholder’s fund		1,171,784

– 107 –

ACCOUNTANTS’ REPORT ON TREASURE BASE

APPENDIX III

III. STATEMENT OF CHANGES IN EQUITY

		Period
		from 12 May 2004
		(date of incorporation)
	Section V	to 30 June 2004
	Note	HK$
Issuance of ordinary share	3	1,172,000
Net loss for the period		(216)
Total equity at the end of the period		1,171,784

– 108 –

ACCOUNTANTS’ REPORT ON TREASURE BASE

APPENDIX III

IV. CASH FLOW STATEMENT

	Period
	from 12 May 2004
	(date of incorporation)
	to 30 June 2004
	HK$
Operating loss	(216)
Interest income	(4)
Net cash outflow from operating activities	(220)
	--------------
Investing activities
Interest received	4
Net cash inflow from investing activities	4
	--------------
Net cash outflow before financing activities	(216)
	--------------
Financing activities
Issuance of ordinary share	1,172,000
Net cash inflow from financing activities	1,172,000
	--------------
Increase in bank balance	1,171,784
Bank balance at the beginning of the period	–
Bank balance at the end of the period	1,171,784

– 109 –

ACCOUNTANTS’ REPORT ON TREASURE BASE

APPENDIX III

V. NOTES TO THE FINANCIAL INFORMATION

1. Basis of preparation

2. Principal accounting policies

The principal accounting policies adopted in the preparation of the Financial Information are set out below:

(a) Revenue recognition

Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

(b) Translation of foreign currencies

Transactions in foreign currencies are translated at exchange rates ruling at the transaction dates. Monetary assets and liabilities expressed in foreign currencies at the balance sheet date are translated at rates of exchange ruling at the balance sheet date. All exchange differences arising are dealt with in the profit and loss account.

3. Share capital

As at 12 May 2004 (date of incorporation) and 30 June 2004 HK$ Authorised: 50,000 ordinary shares of US$1 each 390,000 Issued and fully paid: 1 ordinary share at US$1 each 8

On the date of incorporation, 1 ordinary share of US$1 (equivalent to HK$8) was issued at US$150,000 (equivalent to HK$1,172,000), leading to a premium of US$149,999 (equivalent to HK$1,171,992) over the par value of 1 ordinary share.

– 110 –

ACCOUNTANTS’ REPORT ON TREASURE BASE

APPENDIX III

V. NOTES TO THE FINANCIAL INFORMATION (Continued)

4. Subsequent events

Treasure Base has injected US$150,000 (approximately HK$1,172,000) to set up a wholly-owned subsidiary named 森棟乙（北京）科技有限公司 (Ceng Dong Yi (Beijing) Technology Limited) on 5 July 2004.

On 1 August 2004, the registered share in the name of Mr. Li (sole director of Treasure Base) was cancelled according to a written resolution. On the same date, 49, 47 and 4 new registered shares with nominal value of US$1 per share were issued to Monit, Aosta and Windstorm respectively.

On 11 August 2004, an exclusive option agreement and an equity pledge agreement were signed between the registered owners of LingXun, a domestic limited liability company in the People’s Republic of China, and Treasure Base. On the same date, a sale and purchase agreement was entered into among TOM Online Media Group Limited, Monit, Aosta and Windstorm for the acquisition by TOM of 100% of the beneficial interest in LingXun through the acquisition of the entire issued share capital of Treasure Base.

The consideration comprises initial consideration and earn-out consideration, the aggregate amount of which is subject to a maximum of RMB550 million (approximately HK$516.4 million) and will be fully paid in cash. The initial consideration will be determined based on 4.5 times the audited combined net profit, as determined in accordance with accounting principles generally accepted in the United States (“US GAAP”), of Treasure Base and its subsidiaries (“Treasure Base Group”) for the year ending 31 December 2004; or in the event that the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2004 is less than RMB40 million (approximately HK$37.6 million), the initial consideration will then be determined based on 3.5 times the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2004. The earn-out consideration will be determined based on 1.75 times the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005; or in the event that the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005 is less than (or equal to) RMB75 million (approximately HK$70.4 million) but higher than (or equal to) RMB40 million (approximately HK$37.6 million), the earn-out consideration will then be determined based on 1.5 times the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005; or in the event that the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005 is less than RMB40 million (approximately HK$37.6 million), the earn-out consideration will then be the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005.

The acquisition of LingXun has been completed on 2 September 2004. Treasure Base has become a wholly-owned subsidiary of TOM Online and a non wholly-owned subsidiary of TOM.

5. Subsequent accounts

No audited accounts have been prepared for Treasure Base in respect of any period subsequent to 30 June 2004 and, save as disclosed in this report, no dividend or other distribution has been declared by Treasure Base in respect of any period subsequent to 30 June 2004.

Yours faithfully,

PricewaterhouseCoopers Certified Public Accountants Hong Kong

– 111 –

APPENDIX IV FINANCIAL INFORMATION ON THE ENLARGED TOM GROUP

I. UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES OF THE ENLARGED TOM GROUP

The following is a summary of the unaudited pro forma statement of assets and liabilities of the Enlarged TOM Group. It is based on the audited consolidated balance sheet of the TOM Group as at 31 December 2003, adjusted to reflect the subscription of 849,029 shares of 重慶中科普傳媒發展股份有限公司 (Chongqing Zhongkepu Media Development Joint Stock Company Limited) and the acquisition of 48.5% of the registered capital of 重慶電腦報經營有限責任公司 (China Popular Computer Week Management Company Limited) (hereinafter collectively referred to as the “PCW Acquisition”), details of which were included in the circular dated 10 September 2004, and the effect of the acquisition of 100% of the beneficial interest in LingXun through the acquisition of the entire issued share capital of Treasure Base pursuant to the Agreement dated 11 August 2004 (hereinafter referred to as the “LingXun Acquisition”), and assuming that the PCW Acquisition and LingXun Acquisition had been completed as at 31 December 2003 for the purpose of illustrating how the transactions might have affected the financial position of the TOM Group as at 31 December 2003.

The audited consolidated balance sheet of the TOM Group as at 31 December 2003, the pro forma adjustments relating to the PCW Acquisition and the financial information of LingXun and Treasure Base as at 30 June 2004 are extracted from the annual report of TOM for the year ended 31 December 2003 as set out in Appendix I to this circular, the unaudited pro forma statement of assets and liabilities as set out in Section I of Appendix IV of TOM’s circular dated 10 September 2004 in relation to the PCW Acquisition and the accountants’ reports as set out in Appendices II and III to this circular respectively.

The unaudited pro forma statement of assets and liabilities is prepared to provide financial information on the Enlarged TOM Group as if the completion of the PCW Acquisition and the LingXun Acquisition had taken place on 31 December 2003. As it is prepared for illustrative purpose only and, because of its nature, may not give a true picture of the financial position of the Enlarged TOM Group as at 31 December 2003 or any future date.

– 112 –

APPENDIX IV

FINANCIAL INFORMATION ON THE ENLARGED TOM GROUP

ASSETS Non-current assets Fixed assets Other non-current assets Goodwill Interests in jointly controlled entities Interests in associated companies Investment securities Current assets Inventories Trade and other receivables Bank balances and cash	TOM Group HK$’000 245,006 253,377 1,088,466 15,018 4,586 1,594,636 3,201,089 --------------- 102,236 1,069,908 884,563 2,056,707 ---------------	Pro forma adjustments for the PCW Acquisition(1) HK$’000 – – – –	Enlarged TOM Group immediately after the PCW Acquisition(2) HK$’000 245,006 253,377 1,088,466 15,018 199,748 1,596,386 3,398,001 --------------- 102,236 1,060,508 697,051 1,859,795 ---------------	Treasure Base HK$’000 – – – – – – – --------------- – – 1,172 1,172 ---------------	Pro forma adjustments for Enlarged the LingXun TOM LingXun Acquisition Group HK$’000 HK$’000 HK$’000 1,416 – 246,422 – – 253,377 – 483,616(3) 1,572,082 – – 15,018 – – 199,748 – – 1,596,386 1,416 483,616 3,883,033 --------------- --------------- --------------- – – 102,236 13,865 – 1,074,373 37,636 (519,432)(4) 216,427 51,501 (519,432) 1,393,036 --------------- --------------- ---------------	Enlarged TOM Group HK$’000 246,422 253,377 1,572,082 15,018 199,748 1,596,386
		13,677 181,485
		1,750 196,912 --------------- – (9,400) (187,512) (196,912) ---------------
						1,393,036 ---------------

– 113 –

APPENDIX IV

FINANCIAL INFORMATION ON THE ENLARGED TOM GROUP

Current liabilities Consideration payables – current Trade and other payables Taxation payable Long-team bank loans – current Short-term loans Net current (liabilities)/assets Total assets less current liabilities Non-current liabilities Consideration payables – non-current Other non-current liabilities Deferred tax liabilities Minority interests Net assets/(liabilities)	TOM Group HK$’000 367,211 903,235 52,607 610 882,762 2,206,425 (149,718) --------------- 3,051,371 --------------- 11,560 1,239,471 17,882 1,268,913 --------------- 163,083 1,619,375	Pro forma adjustments for the PCW Acquisition(1) HK$’000 – – – – – – (196,912) --------------- – --------------- – – – – --------------- – –	Enlarged TOM Group immediately after the PCW Acquisition(2) HK$’000 367,211 903,235 52,607 610 882,762 2,206,425 (346,630) --------------- 3,051,371 --------------- 11,560 1,239,471 17,882 1,268,913 --------------- 163,083 1,619,375	Treasure Base HK$’000 – – – – – – 1,172 --------------- 1,172 --------------- – – – – --------------- – 1,172	Pro forma adjustments for the LingXun LingXun Acquisition HK$’000 HK$’000 – – 6,719 – 11,554 – – – – – 18,273 – 33,228 (519,432) --------------- --------------- 34,644 (35,816) --------------- --------------- – – – – – – – – --------------- --------------- – – 34,644 (35,816)	Enlarged TOM Group HK$’000 367,211 909,954 64,161 610 882,762 2,224,698 (831,662) --------------- 3,051,371 --------------- 11,560 1,239,471 17,882 1,268,913 --------------- 163,083 1,619,375

– 114 –

FINANCIAL INFORMATION ON THE ENLARGED TOM GROUP

APPENDIX IV

Notes:

(1) These represent the adjustments in relation to the PCW Acquisition, the details of which were disclosed in Section I of Appendix IV of the circular despatched to the Shareholders dated 10 September 2004.
(2) This column represents the unaudited pro forma statement of assets and liabilities of the enlarged TOM Group immediately after the PCW Acquisition assuming that the PCW Acquisition had been completed as at 31 December 2003, which is extracted from Section I of Appendix IV of the circular in respect of the PCW Acquisition dated 10 September 2004.
(3) The goodwill arising from the LingXun Acquisition is calculated as follows:

Cost of investments Combined net assets of Treasure Base and LingXun as at 30 June 2004 Goodwill	HK$’000 519,432 (35,816)
	483,616

According to the Agreement, the consideration for the LingXun Acquisition comprises Initial Consideration and Earn-out Consideration, which are determined based on the audited combined net profit of Treasure Base and its subsidiaries (“Treasure Base Group”) for the years ending 31 December 2004 and 2005 (the “Actual Acquisition Consideration”) and subject to a maximum amount of RMB550 million (approximately HK$516,432,000) (the “Maximum Consideration”).

In the opinion of the Directors, in the absence of actual combined net profit of Treasure Base Group for the years ending 31 December 2004 and 2005 at the date of this circular, it is impractical to estimate the acquisition consideration with reliability. For the illustrative purpose for this circular, the cost of investments presented above comprises the Maximum Consideration, assuming that Maximum Consideration would be paid, and the estimated expenses directly attributable to the LingXun Acquisition such as legal and professional fees of HK$3,000,000.

The final amount of goodwill will be the difference between the cost of investments, comprising the Actual Acquisition Consideration as determined based on the actual combined net profit of Treasure Base Group for the years ending 31 December 2004 and 2005 together with the expenses directly attributable to the LingXun Acquisition, and the fair value of the identifiable assets and liabilities of the acquired companies on completion.

(4) This represents the payment of the Maximum Consideration and the estimated expenses in cash for the LingXun Acquisition.

– 115 –

APPENDIX IV FINANCIAL INFORMATION ON THE ENLARGED TOM GROUP

II. LETTER FROM REPORTING ACCOUNTANTS ON UNAUDITED FINANCIAL INFORMATION

The following is the letter prepared for the sole purpose of inclusion in this circular, received from the independent reporting accountants, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong in respect of the unaudited financial information after the completion of the Acquisition as set out in section I of this Appendix, a copy of the following report is available for inspection.

==> picture [93 x 46] intentionally omitted <==

21 October 2004

The Directors TOM Group Limited

Dear Sirs,

We set out our report on the unaudited pro forma statement of assets and liabilities (the “Statement”) of the TOM Group Limited (“TOM”) and its subsidiaries (the “TOM Group”) along with its investments in 重慶中科普傳媒發展股份有限公司 (Chongqing Zhongkepu Media Development Joint Stock Company Limited) and 重慶電腦報經營有限責任公司 (China Popular Computer Weekly Management Company Limited) (hereinafter collectively referred to as the “PCW Acquisition”) which were announced on 10 September 2004 and TOM’s investments in 100% of the beneficial interest in 北京靈訊互動科技發展有限公司 (Beijing LingXun Interactive Science Technology and Development Company Limited) (“LingXun”) through the acquisition of the entire issued share capital of Treasure Base Investments Limited (“Treasure Base”) (hereinafter collectively referred to as the “Enlarged TOM Group”) pursuant to the sale and purchase agreement dated 11 August 2004 entered into among Monit Holdings Corporation (“Monit”), Aosta Holdings Corporation (“Aosta”) and Windstorm Limited (“Windstorm”), being 49%, 47%, and 4% shareholders of Treasure Base, Mr. Li Chuan Dong (李傳東 ) (“Mr. Li”), Mr. Sun Jian Ying (孫劍英 ) (“Mr. Sun”), Ms. Yan Shan (嚴珊 ) (“Ms. Yan”) and TOM Online Media Group Limited, a wholly-owned subsidiary of TOM Online Inc. and a subsidiary of TOM (hereinafter referred to as the “LingXun Acquisition”). The Statement is set out in Section I of Appendix IV of TOM’s circular dated 21 October 2004 in connection with the LingXun Acquisition. The Statement has been prepared by the directors of TOM, for illustrative purposes only, to provide information about how the PCW Acquisition and the LingXun Acquisition might have affected the assets and liabilities of the Enlarged TOM Group as at 31 December 2003.

RESPONSIBILITIES

It is the responsibility solely of the directors of TOM to prepare the Statement in accordance with paragraph 29 of Chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Main Board Listing Rules”).

– 116 –

FINANCIAL INFORMATION ON THE ENLARGED TOM GROUP

APPENDIX IV

It is our responsibility to form an opinion as required by paragraph 29 of Chapter 4 of the Main Board Listing Rules, on the Statement and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Statement beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

BASIS OF OPINION

We conducted our work with reference to the Statements of Investment Circular Reporting Standards and Bulletin 1998/8 “Reporting on pro forma financial information pursuant to the Listing Rules” issued by the Auditing Practices Board in the United Kingdom, where applicable. Our work, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Statement with the directors of TOM.

Our work does not constitute an audit or review in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified Public Accountants, and accordingly, we do not express any such assurance on the Statement.

The Statement has been prepared on the basis set out in Section I of Appendix IV for illustrative purposes only and, because of its nature, it may not be indicative of the financial position of the Enlarged TOM Group had the Acquisition actually occurred on 31 December 2003 or at any future date.

OPINION

In our opinion:

(a) the Statement has been properly compiled by the directors of TOM on the basis stated;
(b) such basis is consistent with the accounting policies of the TOM Group; and
(c) the adjustments are appropriate for the purposes of the Statement as disclosed pursuant to paragraph 29 of Chapter 4 of the Main Board Listing Rules.

Yours faithfully,

PricewaterhouseCoopers Certified Public Accountants Hong Kong

– 117 –

FINANCIAL INFORMATION ON THE ENLARGED TOM GROUP

APPENDIX IV

III. INDEBTEDNESS

Borrowings

As at the close of business on 31 August 2004, being the latest practicable date for the purpose of calculating the Enlarged TOM Group’s indebtedness, the Enlarged TOM Group had outstanding borrowings of approximately HK$2,091 million which comprised convertible bonds in the amount of approximately HK$1,177 million, unsecured bank loans in the amount of approximately HK$55 million and secured bank loans of approximately HK$859 million.

Convertible Bonds

On 28 November 2003, TOM Holdings Limited, a wholly-owned subsidiary of the Company issued the Convertible Bonds in the aggregate principal amount of US$150 million (approximately HK$1,170 million), which are unconditionally and irrevocably guaranteed by and are convertible into shares of par value HK$0.10 each of TOM. The Convertible Bonds bear interest at the rate of 0.5% per annum on the principal amount of each Convertible Bond, payable semi-annually in arrear from 28 November 2003 up to but excluding 28 November 2008. The Convertible Bonds are convertible at any time on and after 8 January 2004 up to the close of business on 14 November 2008 into the Shares at an initial conversion price of HK$3.315 per share, subject to adjustment.

TOM Holdings Limited may, subject to certain conditions, on or at any time after 13 December 2006 and prior to 28 November 2008, redeem all, or from time to time, redeem some of the Convertible Bonds, at principal plus a fixed return of 1.25 per cent. per annum from 28 November 2003 to the redemption date. Unless previously redeemed, converted or purchased and cancelled, the Convertible Bonds will be redeemed at 103.86 per cent. of the principal amount, plus any accrued interest on 28 November 2008. Up to the Latest Practicable Date, no Convertible Bonds were converted or redeemed. As at 31 August 2004, the outstanding Convertible Bonds amounted to approximately US$151 million (approximately HK$1,177 million).

Contingent Liabilities

As at 31 August 2004, the Enlarged TOM Group had contingent liabilities amounted to approximately HK$9 million in respect of the provision of fixed deposits as securities for bank loans granted to an investee company in which the Enlarged TOM Group has 50% equity interest.

Charges on Group Assets

Certain Enlarged TOM Group’s assets are pledged to banks as security for general banking facilities granted to the Enlarged TOM Group. As at 31 August 2004, the pledged assets of the Enlarged TOM Group included bank deposits, cash, debt securities and other assets at net book value totalling approximately HK$969 million.

– 118 –

FINANCIAL INFORMATION ON THE ENLARGED TOM GROUP

APPENDIX IV

Contractual Obligations and Commercial Commitments

(a) As at 31 August 2004, the Enlarged TOM Group had capital commitment in respect of acquisition of fixed assets and other non-current assets amounting to approximately HK$230 million.
(b) As at 31 August 2004, the Enlarged TOM Group had commitments in respect of contributions to registered capital of an investment in a joint venture with Sanlian in the PRC amounting to approximately HK$23 million.
(c) As at 31 August 2004, the Enlarged TOM Group had capital commitment in respect of the PCW Acquisition amounting to approximately HK$188 million.
(d) As at 31 August 2004, the Enlarged TOM Group had other capital commitment in respect of the series of contractual arrangements which enabled the TOM Group to enjoy 100 per cent. economic benefits in 北京雷霆無極網絡科技有限公司 (Beijing Leitingwuji Network Technology Company Limited) (“LTWJi”) through the acquisition of the entire share capital of Puccini International Limited (“Puccini”) subject to a maximum amount of US$150 million (approximately HK$1,170 million). According to the sale and purchase agreement entered into between the TOM Group and Cranwood, the consideration for the acquisition of Puccini should equal the valuation of Puccini and LTWJi (“Puccini Group”), which is determined based on 7.7 times the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004; or in the event that the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004 is less than an amount equal to 1.2 times of audited consolidated net profit of the Puccini Group for the year ended 31 December 2003, an amount equal to 6 times the audited consolidated net profit of the Puccini Group for the year ending 31 December 2004. The other capital commitment will be 50 per cent. paid in cash and 50 per cent. paid by the issuance and allotment of shares of TOM Online Inc. (“TOM Online Shares”). An initial consideration of US$18,500,000 worth of TOM Online Shares as held in escrow were issued at the initial public offer price of TOM Online Shares on 10 March 2004.
(e) At 31 August 2004, the Enlarged TOM Group had other capital commitment in respect of the series of contractual arrangements which enabled the TOM Group to enjoy 100 per cent. beneficial interests in LingXun through the acquisition of the entire issued share capital of Treasure Base subject to a maximum amount of RMB550 million (approximately HK$516.4 million). According to the Agreement, the consideration for the acquisition for Treasure Base should be based on the audited combined net profit of Treasure Base Group in accordance with US GAAP. The consideration comprises Initial Consideration and Earn-out Consideration. The Initial Consideration will be determined based on 4.5 times the US GAAP audited combined net profit for the year ending 31 December 2004; or in the event that the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2004 is less than RMB40 million, the Initial Consideration will then be determined based on 3.5 times the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2004. The Earn-out Consideration will be determined

– 119 –

FINANCIAL INFORMATION ON THE ENLARGED TOM GROUP

APPENDIX IV

based on 1.75 times the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005; or in the event that the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005 is less than (or equal to) RMB75 million but higher than (or equal to) RMB40 million, the Earn-out Consideration will then be determined based on 1.5 times the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005; or in the event that the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005 is less than RMB40 million, the Earn-out Consideration will then be the US GAAP audited combined net profit of Treasure Base Group for the year ending 31 December 2005.

The registered capital of an investment in a joint venture with Sanlian in the PRC amounting to approximately HK$23 million will be funded by drawdown of a new bank loan. Other outstanding capital commitments of the Enlarged TOM Group as at 31 August 2004 are expected to be financed internally.

Disclaimer

Except as disclosed above, the Enlarged TOM Group did not have any outstanding loan capital, bank overdrafts, and liabilities under acceptances or other similar indebtedness, debentures, mortgages, charges or loans or acceptance credits or hire purchase commitments, or guarantees or other material contingent liabilities outstanding as at 31 August 2004, apart from intra-group liabilities, which have been disregarded for these purposes.

IV. WORKING CAPITAL

Taking into account the financial resources available to the Enlarged TOM Group, including the available banking facilities and internally generated funds, the Directors are of the opinion that the working capital available to the Enlarged TOM Group is sufficient for the Enlarged TOM Group’s present requirements, that is for at least the next 12 months from the date of this circular.

V. MATERIAL ADVERSE CHANGE

The Directors have confirmed that since 31 December 2003 (being the date to which the TOM Group’s latest consolidated financial results were prepared as set out in the annual report of the TOM Group for the year ended 31 December 2003), there has been no material adverse change in the financial or trading position of the Enlarged TOM Group.

– 120 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

Set out below are the financial information of 重慶中科普傳媒發展股份有限公司 (Chongqing Zhongkepu Media Development Joint Stock Company Limited) (“China Science Media”) and its subsidiaries (collectively known as “China Science Media Group”) and 重慶電腦報經營有限責任公司 (China Popular Computer Week Management Company Limited) (“the Joint Venture”), as extracted from the accountants’ reports on China Science Media Group and the Joint Venture included in Appendices II and III of the circular of TOM despatched to the Shareholders on 10 September 2004 in respect of (1) the proposed acquisition of 48.5% of the registered capital of the Joint Venture; and (2) proposed subscription for 849,029 shares of China Science Media.

The disclosure of the information below is in compliance of the relevant provision under the Listing Rules.

– 121 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

A. FINANCIAL INFORMATION ON CHINA SCIENCE MEDIA GROUP

I. CONSOLIDATED PROFIT AND LOSS ACCOUNTS

Section V Note Turnover 2 Cost of sales Gross profit Other revenue 2 Government grants 3 Distribution costs Administrative expenses Other operating expenses Operating profit 4 Finance costs 5 Share of (loss)/profit of a jointly controlled entity Share of profits less losses of associated companies Profit before taxation Taxation 6 Profit after taxation Minority interests Profit attributable to shareholders 7 Dividends 8 Earnings per share – basic 9	Year ended 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 160,216 208,297 282,654 (108,384) (132,773) (182,785) 51,832 75,524 99,869 2,987 7,099 14,292 – 2,335 11,938 (4,631) (12,119) (24,036) (11,383) (16,870) (19,023) (4,320) (4,700) (6,921) 34,485 51,269 76,119 (585) (170) (77) (214) (51) 4 (456) (230) (142) 33,230 50,818 75,904 (7,449) (7,848) (12,829) 25,781 42,970 63,075 382 224 (288) 26,163 43,194 62,787 – 13,992 20,988 RMB29.92 cents RMB49.39 cents RMB71.80 cents	Six months ended 30 June 2003 2004 RMB’000 RMB’000 135,300 131,639 (86,293) (82,599) 49,007 49,040 6,873 7,781 2,563 2,360 (9,959) (12,873) (5,718) (9,609) (3,358) (5,551) 39,408 31,148 (30) (29) (181) (26) (552) 632 38,645 31,725 (5,146) (5,776) 33,499 25,949 (217) (166) 33,282 25,783 – – RMB38.06 cents RMB29.48 cents

– 122 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

II(A). CONSOLIDATED BALANCE SHEETS

Section V Note ASSETS Non-current assets Fixed assets 12(a) Goodwill 13 Interest in a jointly controlled entity 15 Interests in associated companies 16 Deferred tax assets 22 Current assets Inventories 17 Trade and other receivables 18(a) Due from related parties 28(b) Trading securities 19 Bank balances and cash Current liabilities Trade and other payables 20(a) Due to related parties 28(b) Taxation payable Short-term bank loans Long-term bank loans – current 21 Deferred income Net current (liabilities)/assets Total assets less current liabilities Non-current liabilities Long-term bank loans 21 Minority interests Net assets CAPITAL AND RESERVES Capital 23 Other reserves 24(a) Retained earnings Proposed dividends 24(a) Others 24(a) Shareholders’ funds	31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 116,521 127,879 125,306 – (5,579) (5,019) 284 233 218 7,238 4,972 4,848 1,677 3,043 2,738 125,720 130,548 128,091 ----------- ----------- ----------- 13,505 20,186 27,284 39,446 48,773 51,306 4,808 14,712 20,410 741 610 445 32,176 50,591 62,448 90,676 134,872 161,893 ----------- ----------- ----------- 62,994 84,159 82,097 3,388 1,629 1,940 38,595 36,537 13,276 15,100 330 – – 52 84 859 1,178 1,803 120,936 123,885 99,200 ----------- ----------- ----------- (30,260) 10,987 62,693 ----------- ----------- ----------- 95,460 141,535 190,784 ----------- ----------- ----------- – 1,112 1,368 ----------- ----------- ----------- 297 2,066 2,264 95,163 138,357 187,152 87,450 87,450 87,450 3,116 11,686 24,940 – 13,992 20,988 4,597 25,229 53,774 4,597 39,221 74,762 95,163 138,357 187,152	30 June 2004 RMB’000 113,536 (4,373) 1,343 8,563 3,636 122,705 ----------- 21,761 61,272 13,919 401 80,918 178,271 ----------- 87,114 4,711 14,358 – 54 – 106,237 ----------- 72,034 ----------- 194,739 ----------- 1,035 ----------- 1,757 191,947 87,450 24,388 – 80,109 80,109 191,947

– 123 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

II(B). BALANCE SHEETS OF THE COMPANY

Section V Note ASSETS Non-current assets Fixed assets 12(b) Interests in subsidiaries 14 Interest in a jointly controlled entity 15 Interests in associated companies 16 Deferred tax assets 22 Current assets Inventories 17 Trade and other receivables 18(b) Due from related parties 28(b) Trading securities 19 Bank balances and cash Current liabilities Trade and other payables 20(b) Due to related parties 28(b) Taxation payable Short-term bank loans Deferred income Net current (liabilities)/assets Total assets less current liabilities CAPITAL AND RESERVES Capital 23 Other reserves 24(b) Retained earnings Proposed dividends 24(b) Others 24(b) Shareholders’ funds	31 December 2001 2002 RMB’000 RMB’000 116,453 110,183 541 4,107 284 233 6,946 4,972 1,677 3,043 125,901 122,538 ----------- ----------- 13,505 19,802 38,277 40,570 4,808 14,712 741 610 31,585 45,562 88,916 121,256 ----------- ----------- 62,132 70,723 3,388 1,629 38,566 33,691 15,000 – 859 1,178 119,945 107,221 ----------- ----------- (31,029) 14,035 ----------- ----------- 94,872 136,573 87,450 87,450 3,116 11,448 – 13,992 4,306 23,683 4,306 37,675 94,872 136,573	2003 RMB’000 107,183 3,563 218 4,848 2,738 118,550 ----------- 25,728 41,600 20,770 445 55,987 144,530 ----------- 66,603 1,940 11,209 – 1,803 81,555 ----------- 62,975 ----------- 181,525 87,450 23,986 20,988 49,101 70,089 181,525	30 June 2004 RMB’000 103,980 2,423 1,343 5,993 3,636
			117,375 ----------- 18,911 53,493 13,919 401 73,515
			160,239 ----------- 74,378 4,711 13,386 – –
			92,475 -----------
			67,764 -----------
			185,139

			87,450 23,986 – 73,703
			73,703
			185,139

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FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

III. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Total equity as at 1 January Profit for the year/period Dividends Total equity as at 31 December/30 June	Year ended 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 71,624 95,163 138,357 26,163 43,194 62,787 (2,624) – (13,992) 95,163 138,357 187,152	Six months ended 30 June 2003 2004 RMB’000 RMB’000 138,357 187,152 33,282 25,783 (13,992) (20,988) 157,647 191,947

– 125 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

IV. CONSOLIDATED CASH FLOW STATEMENTS

Section V Note Net cash inflow from operations 25(a) Interest paid Income tax paid Net cash inflow from operating activities Investing activities Purchase of fixed assets Interest received Purchase of associated companies Acquisition of subsidiaries 25(b) Disposal of a subsidiary 25(c) Net cash (outflow)/inflow from investing activities Net cash inflow before financing activities Financing activities 25(d) New bank loans payable Loan repayments Dividends paid Dividends paid from a subsidiary Contribution from minority shareholders Net cash inflow/(outflow) from financing activities Increase in bank balances and cash Bank balances and cash at beginning of year/period Bank balances and cash at end of year/period	Year ended 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 82,086 43,055 45,854 (585) (170) (77) (7,534) (8,847) (12,637) 73,967 34,038 33,140 ------------ ------------ ------------ (69,572) (1,309) (7,930) 150 246 681 – – – – 2,379 – – – – (69,422) 1,316 (7,249) ------------ ------------ ------------ 4,545 35,354 25,891 ------------ ------------ ------------ 14,100 – 288 – (14,770) (330) – (2,624) (13,992) – – – – 455 – 14,100 (16,939) (14,034) ------------ ------------ ------------ 18,645 18,415 11,857 13,531 32,176 50,591 32,176 50,591 62,448	Six months ended 30 June 2003 2004 RMB’000 RMB’000 30,582 28,785 (30) (29) (5,271) (6,674) 25,281 22,082 ------------ ------------ (4,566) (1,784) 321 435 – (1,150) – – – (1,360) (4,245) (3,859) ------------ ------------ 21,036 18,223 ------------ ------------ 12 – (330) (363) (13,083) – – (90) – 700 (13,401) 247 ------------ ------------ 7,635 18,470 50,591 62,448 58,226 80,918

– 126 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION

1. Basis of preparation and principal accounting policies

China Science Media was established in the PRC on 24 November 1998, as a domestic limited liability company and became a joint stock limited company on 28 December 2001 by converting its registered capital of RMB10,000,000 and reserves as at the same date into 87,450,000 shares of RMB1 each, and thus the Financial Information of China Science Media have been prepared on a continuing basis.

The Financial Information has been prepared in accordance with accounting principles generally accepted in Hong Kong and comply with accounting standards issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). It has been prepared under the historical cost convention except that, as set out in note 1(g) below, trading securities are stated at fair value.

(a) Consolidation

The consolidated accounts include the accounts of China Science Media and its subsidiaries made up to 31 December/30 June.

Subsidiaries are those entities in which China Science Media, directly or indirectly, controls more than one half of the voting power; has the power to govern the financial and operating policies; to appoint or remove the majority of the members of the board of directors; or to cast majority of votes at the meetings of the board of directors.

The results of subsidiaries acquired or disposed of during the Relevant Periods are included in the consolidated profit and loss account from the effective date of acquisition or up to the effective date of disposal, as appropriate.

All significant intercompany transactions and balances within the China Science Media Group are eliminated on consolidation.

The gain or loss on disposal of a subsidiary represents the difference between the proceeds of the sale and the China Science Media Group’s share of its net assets together with any unamortised goodwill or negative goodwill.

Minority interests represent the interests of outside shareholders in the operating results and net assets of subsidiaries.

In China Science Media’s balance sheet, the interests in subsidiaries are stated at cost less provision for impairment losses. The results of subsidiaries are accounted for by China Science Media on the basis of dividends received and receivable.

(b) Jointly controlled entities

A jointly controlled entity is a contractual arrangement whereby the China Science Media Group and other parties undertake an economic activity which is subject to joint control and none of the participating parties has unilateral control over the economic activity.

The consolidated profit and loss account includes the China Science Media Group’s share of the results of jointly controlled entities for the Relevant Periods, and the consolidated balance sheet includes the China Science Media Group’s share of the net assets of the jointly controlled entities and goodwill/negative goodwill on acquisition, net of accumulated amortisation and impairment losses, if any.

In China Science Media’s balance sheet, the interest in a jointly controlled entity is stated at cost less provision for impairment losses. The result of jointly controlled entity is accounted for by China Science Media on the basis of dividends received and receivable.

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APPENDIX V FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

1. Basis of preparation and principal accounting policies (continued)

(c) Associated companies

An associated company is a company, not being a subsidiary or a jointly controlled entity, in which an equity interest is held for the long-term and significant influence is exercised in its management.

The consolidated profit and loss account includes the China Science Media Group’s share of the results of associated companies for the Relevant Periods, and the consolidated balance sheet includes the China Science Media Group’s share of the net assets of the associated companies and goodwill/negative goodwill on acquisition, net of accumulated amortisation and impairment losses, if any.

Equity accounting is discontinued when the carrying amount of the investment in an associated company reaches zero, unless the China Science Media Group has incurred obligations or guaranteed obligations in respect of the associated company.

Unrealised gains on transactions between the China Science Media Group and its associated companies are eliminated to the extent of the China Science Media Group’s interest in the associated companies; unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

In China Science Media’s balance sheet, the interests in associated companies are stated at cost less provision for impairment losses. The results of associated companies are accounted for by China Science Media on the basis of dividends received and receivable.

(d) Intangibles

(i) Goodwill/negative goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the China Science Media Group’s share of the net assets of the acquired subsidiary, jointly controlled entity or associated company at the date of acquisition.

Goodwill on acquisitions is included in intangible assets and is amortised using the straight-line method over its estimated useful life. Goodwill is generally amortised over 10 years, with a maximum of 20 years.

Negative goodwill represents the excess of the fair value of the China Science Media Group’s share of the net assets acquired over the cost of acquisition.

Negative goodwill is presented in the same balance sheet classification as goodwill. To the extent that negative goodwill relates to expectations of future losses and expenses that are identified in the China Science Media Group’s plan for the acquisition and can be measured reliably, but which do not represent identifiable liabilities at the date of acquisition, that portion of negative goodwill is recognised in the profit and loss account when the future losses and expenses are recognised. Any remaining negative goodwill, not exceeding the fair values of the non-monetary assets acquired, is recognised in the profit and loss account over the remaining weighted average useful life of those assets; negative goodwill in excess of the fair values of those non-monetary assets is recognised in the profit and loss account immediately.

(ii) Impairment of intangible assets

Where an indication of impairment exists, the carrying amount of any intangible asset is assessed and written down immediately to its recoverable amount.

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APPENDIX V FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

1. Basis of preparation and principal accounting policies (continued)

(e) Fixed assets
- (i) Construction in progress

Construction in progress is stated at cost less any accumulated impairment losses. Cost comprises direct costs of construction as well as direct expenses capitalised during the period of construction and installation. Capitalisation of these costs ceases and the construction in progress is transferred to properties when subsequently all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided in respect of construction in progress.

(ii) Other fixed assets

Other fixed assets, comprising leasehold improvements, properties, plant and machinery, motor vehicles, office equipment and software, are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

(iii) Depreciation

Other fixed assets are depreciated at rates sufficient to write off their costs less accumulated impairment losses, if any, over their estimated useful lives on a straight-line basis after taking into account an estimated residual value of 3% of the costs of fixed assets except for one property which has no estimated residual value. The estimated useful lives are as follows:

Properties 50 years Leasehold improvements 5 years Plant and machinery 4 years Motor vehicles 6 years Office equipment 4 years Software 5 years

Leasehold improvements are capitalised and depreciated over their expected useful lives to the China Science Media Group.

(iv) Impairment and gain or loss on sale

At each balance sheet date, both internal and external sources of information are considered to assess whether there is any indication that fixed assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated and where relevant, an impairment loss is recognised to reduce the asset to its recoverable amount. Such impairment losses are recognised in the profit and loss account.

The gain or loss on disposal of a fixed asset is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in the profit and loss account.

(f) Government grants

A government grant is recognised, when there is a reasonable assurance that the China Science Media Group will comply with the conditions attaching with it and that the grant will be received.

(g) Trading securities

Trading securities are carried at fair value. At each balance sheet date, the net unrealised gains or losses arising from the changes in fair value of trading securities are recognised in the profit and loss account. Profits or losses on disposal of trading securities, representing the difference between the net sales proceeds and the carrying amounts, are recognised in the profit and loss account as they arise.

– 129 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

1. Basis of preparation and principal accounting policies (continued)

(h) Inventories

Inventories comprise paper stock, newspapers, books and magazines, are stated at the lower of cost and net realisable value. Costs, calculated on the weighted average basis, comprise materials, direct labour and an appropriate proportion of all overhead expenditure. Net realisable value is determined on the basis of anticipated sales proceeds less estimated selling expenses.

(i) Trade receivables

Provision is made against trade receivables to the extent they are considered to be doubtful. Trade receivables in the balance sheet are stated net of such provision.

(j) Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, cash investments with a maturity of three months or less from date of investment and bank overdrafts.

(k) Provisions

Provisions are recognised when the China Science Media Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the China Science Media Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

(l) Employee benefits

The China Science Media Group participates in a government-sponsored multi-employer benefit plan, which provides housing, medical and retirement benefits to the China Science Media Group’s employees through a defined contribution plan. Regulations issued by the local labour bureau require the China Science Media Group to pay a monthly premium to the bureau. The local labour bureau is responsible for meeting all retirement benefit obligations and China Science Media has no further commitments beyond the monthly premium. Contributions to this plan are expensed as incurred.

(m) Deferred taxation

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred taxation is provided on temporary differences arising on investments in subsidiaries, associated companies and a jointly controlled entity, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

(n) Contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the China Science Media Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

– 130 –

APPENDIX V FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

1. Basis of preparation and principal accounting policies (continued)

(n) Contingent liabilities and contingent assets (continued)

Contingent assets are not recognised but are disclosed in the notes to the Financial Information when an inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognised.

(o) Revenue recognition

Revenue from circulation and subscription sales of newspapers, bound volume issues, books and magazines is recognised on the transfer of risks and rewards of ownership.

Revenue from advertising is recognised as and when the advertisement is published.

Revenue from technical consultation service are recognised as and when service is rendered.

Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease terms.

Dividend income is recognised where the right to receive payment is established.

Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

(p) Borrowing costs

Borrowing costs are charged to the profit and loss account in the year/period in which they are incurred.

(q) Segment reporting

In accordance with the China Science Media Group’s internal financial reporting, the China Science Media Group has determined that business segments be presented as the reporting format.

Unallocated costs represent corporate expenses. Segment assets consist primarily of operating receivables, inventories and fixed assets, and mainly exclude operating cash, investments, non-operating receivables and fixed assets. Segment liabilities comprise operating liabilities and exclude items such as taxation, certain borrowings and non-operating payables.

No geographical segment information is presented as all of the China Science Media Group’s turnover and operating profit are derived within the PRC and all operating assets of the China Science Media Group are located in the PRC, which is considered as one geographic location with similar risks and returns.

– 131 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

2. Turnover, revenue and segment information

The China Science Media Group is principally engaged in the publication, sales and distribution of IT-related newspapers, bound volume issues, books and magazines, and sales of advertising space in these newspapers and magazines. Revenues recognised during the Relevant Periods are as follows:

Turnover Other revenue Interest income Rental income Technical consultation service income Sales of paper stock Dividend income Others Total revenues	Year ended 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 160,216 208,297 282,654 150 246 681 286 1,757 5,617 1,023 1,784 3,596 453 500 899 378 2,298 2,160 697 514 1,339 2,987 7,099 14,292 163,203 215,396 296,946	Six months ended 30 June 2003 2004 RMB’000 RMB’000 135,300 131,639 320 435 2,916 3,443 437 310 650 763 1,720 1,475 830 1,355 6,873 7,781 142,173 139,420	Six months ended 30 June 2003 2004 RMB’000 RMB’000 135,300 131,639 320 435 2,916 3,443 437 310 650 763 1,720 1,475 830 1,355 6,873 7,781 142,173 139,420
			7,781
			139,420

Primary reporting format – business segments

The China Science Media Group is organised into four main business segments:

Newspapers – publication, sales and distribution of IT-related newspapers and bound volume issues
Books and magazines – publication, sales and distribution of IT-related books and magazines
Advertising – sales of advertising space in newspapers and magazines
Others – provision of mail order service, training service, edit and publishing service

There are no significant sales or other transactions between the business segments.

The financial information of each business segment is further analysed into results of operations of PCW Publications (“PCW business”) and other businesses of China Science Media (“Non-PCW business”). The financials of PCW business reflect the performance derived from the exclusive distribution right and exclusive advertising agency right pursuant to the contractual arrangements between China Science Media and PCW Publishing House relating to PCW business.

– 132 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

2. Turnover, revenue and segment information (continued)

Primary reporting format – business segments (continued)

Year ended 31 December 2001 Newspapers Books and Magazines Advertising Others PCW non-PCW PCW non-PCW PCW non-PCW non-PCW business business business business business business business RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Turnover 67,902 – 11,325 4,980 70,437 – 5,572 Segment (loss)/profit (4,241) – 4,692 (2,089) 51,996 – (1,271) Unallocated costs Other revenue Other operating expenses Operating profit Finance costs Share of loss of a jointly controlled entity Share of profits less losses of associated companies Profit before taxation Taxation Profit after taxation Minority interests Profit attributable to shareholders Segment assets 15,831 – 5,479 6,186 16,749 – 2,556 Unallocated assets Total assets Segment liabilities 20,226 – 1,665 3,588 2,857 – 987 Unallocated liabilities Minority interests Total liabilities Provision for doubtful 259 – 210 9 2,209 – 98 receivables Provision for unallocated other receivables Write-down of inventories 319 – 305 693 – – 1 Depreciation 472 – 114 49 55 – 5 Unallocated Capital expenditure 3,073 – 1,584 2,817 1,000 – 302 Unallocated	Sub-total PCW non-PCW business business RMB’000 RMB’000 149,664 10,552 52,447 (3,360) 38,059 8,742 24,748 4,575 2,678 107 624 694 641 54 5,657 3,119	Total RMB’000 160,216
		49,087 (13,269) 2,987 (4,320)
		34,485 (585) (214) (456)
		33,230 (7,449)
		25,781 382
		26,163

		46,801 169,595
		216,396

		29,323 91,613 297
		121,233

		2,785 151
		2,936

		1,318

		695 980
		1,675

		8,776 60,796
		69,572

– 133 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

2. Turnover, revenue and segment information (continued)

Primary reporting format – business segments (continued)

Year ended 31 December 2002 Newspapers Books and Magazines Advertising Others PCW non-PCW PCW non-PCW PCW non-PCW non-PCW business business business business business business business RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Turnover 68,370 593 12,667 17,066 95,021 2,887 11,693 Segment (loss)/profit (6,825) (229) 3,679 103 72,877 2,040 (1,602) Unallocated costs Other revenue Government grants Other operating expenses Operating profit Finance costs Share of loss of a jointly controlled entity Share of profits less losses of associated companies Profit before taxation Taxation Profit after taxation Minority interests Profit attributable to shareholders Segment assets 15,283 100 7,514 11,743 25,295 – 10,328 Unallocated assets Total assets Segment liabilities 22,182 2,272 3,675 7,589 8,576 294 18,000 Unallocated liabilities Minority interests Total liabilities Provision for/(reversal of) – – 100 53 1,318 – (58) doubtful receivables Provision for unallocated other receivables Write-down of inventories 597 – 1,195 1,006 – – 28 Depreciation 500 – 97 171 43 – 57 Unallocated Capital expenditure 365 – 218 541 56 – 90 Unallocated	Sub-total PCW non-PCW business business RMB’000 RMB’000 176,058 32,239 69,731 312 48,092 22,171 34,433 28,155 1,418 (5) 1,792 1,034 640 228 639 631	Total RMB’000 208,297
		70,043 (23,508) 7,099 2,335 (4,700)
		51,269 (170) (51) (230)
		50,818 (7,848)
		42,970 224
		43,194

		70,263 195,157
		265,420

		62,588 62,409 2,066
		127,063

		1,413 5,025
		6,438

		2,826

		868 6,703
		7,571

		1,270 39
		1,309

– 134 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

2. Turnover, revenue and segment information (continued)

Primary reporting format – business segments (continued)

Year ended 31 December 2003 Newspapers Books and Magazines Advertising Others PCW non-PCW PCW non-PCW PCW non-PCW non-PCW business business business business business business business RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Turnover 60,719 404 19,233 27,319 112,864 3,912 58,203 Segment (loss)/profit (18,324) (1,163) 6,825 3,039 87,556 2,753 539 Unallocated costs Other revenue Government grants Other operating expenses Operating profit Finance costs Share of profit of a jointly controlled entity Share of profits less losses of associated companies Profit before taxation Taxation Profit after taxation Minority interests Profit attributable to shareholders Segment assets 16,246 – 9,282 15,659 27,956 – 5,849 Unallocated assets Total assets Segment liabilities 16,714 40 5,187 12,395 10,437 451 19,012 Unallocated liabilities Minority interests Total liabilities (Reversal of)/provision for – – (381) 184 (2,910) – 46 doubtful receivables Provision for unallocated other receivables Write-down of inventories 495 – 173 1,370 – – 794 Depreciation 596 – 146 247 132 – 66 Unallocated Capital expenditure 893 – 50 – 130 – 10 Unallocated	Sub-total PCW non-PCW business business RMB’000 RMB’000 192,816 89,838 76,057 5,168 53,484 21,508 32,338 31,898 (3,291) 230 668 2,164 874 313 1,073 10	Total RMB’000 282,654
		81,225 (24,415) 14,292 11,938 (6,921)
		76,119 (77) 4 (142)
		75,904 (12,829)
		63,075 (288)
		62,787

		74,992 214,992
		289,984

		64,236 36,332 2,264
		102,832

		(3,061) 759
		(2,302)

		2,832

		1,187 9,281
		10,468

		1,083 6,847
		7,930

– 135 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

2. Turnover, revenue and segment information (continued)

Primary reporting format – business segments (continued)

Six months ended 30 June 2003 Newspapers Books and Magazines Advertising Others PCW non-PCW PCW non-PCW PCW non-PCW non-PCW business business business business business business business RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Turnover 28,379 188 9,310 13,935 49,387 2,376 31,725 Segment (loss)/profit (5,908) (566) 3,453 2,240 38,606 1,651 1,895 Unallocated costs Other revenue Government grants Other operating expenses Operating profit Finance costs Share of loss of a jointly controlled entity Share of profits less losses of associated companies Profit before taxation Taxation Profit after taxation Minority interests Profit attributable to shareholders Segment assets 11,955 67 8,911 13,955 26,855 – 14,951 Unallocated assets Total assets Segment liabilities 10,362 – 4,000 9,588 7,164 552 24,647 Unallocated liabilities Minority interests Total liabilities Provision for/(reversal of) doubtful receivables – – 92 31 (237) – 355 (Reversal of)/write-down of inventories (318) – (251) 561 – – 449 Depreciation 329 – 67 113 22 – 25 Unallocated Capital expenditure 893 – – – – – – Unallocated	Sub-total PCW non-PCW business business RMB’000 RMB’000 87,076 48,224 36,151 5,220 47,721 28,973 21,526 34,787 (145) 386 (569) 1,010 418 138 893 –	Total RMB’000 135,300
		41,371 (8,041) 6,873 2,563 (3,358)
		39,408 (30) (181) (552)
		38,645 (5,146)
		33,499 (217)
		33,282

		76,694 205,918
		282,612

		56,313 66,369 2,283
		124,965

		241

		441

		556 6,034
		6,590

		893 3,673
		4,566

– 136 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

2. Turnover, revenue and segment information (continued)

Primary reporting format – business segments (continued)

Six months ended 30 June 2004 Newspapers Books and Magazines Advertising Others PCW non-PCW PCW non-PCW PCW non-PCW non-PCW business business business business business business business RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Turnover 27,100 306 9,088 15,781 56,171 1,539 21,654 Segment (loss)/profit (9,993) (355) 1,517 178 44,113 1,187 1,619 Unallocated costs Other revenue Government grants Other operating expenses Operating profit Finance costs Share of loss of a jointly controlled entity Share of profits less losses of associated companies Profit before taxation Taxation Profit after taxation Minority interests Profit attributable to shareholders Segment assets 8,917 – 10,164 17,931 28,750 – 11,345 Unallocated assets Total assets Segment liabilities 6,929 22 4,181 12,615 9,379 454 15,092 Unallocated liabilities Minority interests Total liabilities Provision for doubtful receivables – – 151 54 139 – 230 Write-down/(reversal of) of inventories 276 – 1,555 1,544 – – (538) Depreciation 330 – 85 496 58 – 34 Unallocated Capital expenditure 164 – 6 682 180 – – Unallocated	Sub-total PCW non-PCW business business RMB’000 RMB’000 92,359 39,280 35,637 2,629 47,831 29,276 20,489 28,183 290 284 1,831 1,006 473 530 350 682	Total RMB’000 131,639
		38,266 (11,708) 7,781 2,360 (5,551)
		31,148 (29) (26) 632
		31,725 (5,776)
		25,949 (166)
		25,783

		77,107 223,869
		300,976

		48,672 58,600 1,757
		109,029

		574

		2,837

		1,003 3,587
		4,590

		1,032 752
		1,784

Secondary reporting format – geographical segments

No geographical analysis is provided as all businesses are conducted within the PRC.

– 137 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

3. Government grants

In 2002, 2003 and 2004, China Science Media received grants from the local Government of Chongqing Yuzhong District Finance Bureau as part of the district government’s incentives to further promote the local economy, to attract investments and to support pillar industries.

4. Operating profit

Operating profit is stated after crediting and charging the following:

				Six months	Six months
	Year ended 31 December			ended 30	June
	2001	2002	2003	2003	2004
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
*Crediting:*
Reversal of provision for doubtful
receivables	–	–	2,302	–		–
Unrealised gains on trading securities	–	130	–	–		–
Amortisation of negative goodwill	–	6	560	279		257
*Charging:*
Depreciation_(Note 12)_	1,675	7,571	10,468	6,590	4,590
Staff costs, including directors’ emoluments
(Note 10)	5,462	10,621	16,482	6,386	10,118
Auditors’ remuneration	280	165	150	150		190
Loss on disposal of fixed assets	337	–	35	276		271
Loss on disposal of trading securities	2,545	–	–	–		–
Write-down of inventories	1,318	2,826	2,832	441	2,837
Provision for doubtful receivables	2,936	6,438	–	241		574
Unrealised losses on
trading securities	130	–	298	–		55
Loss on partial disposal of a subsidiary	–	–	–	–		887

5. Finance costs

				Six months
	Year ended 31 December			ended 30 June
	2001	2002	2003	2003 2004
	RMB’000	RMB’000	RMB’000	RMB’000 RMB’000
Interest expenses on bank loans	585	170	77	30 29

– 138 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

6. Taxation

In accordance with the PRC Law of Enterprise Income Tax (“EIT”), companies incorporated in PRC are generally subject to EIT at a rate of 33%, commencing from the first tax profitable year after offsetting all tax losses carried forward from the previous five years. During the Relevant Periods, being an enterprise in the encouraged industry of promoting science, China Science Media is subject to EIT rate of 15% provided at least 70% of its revenue is derived from businesses relating to science promotion. EIT rates of the subsidiaries are either at 15% or 33%.

The amount of taxation (credited)/charged to the consolidated profit and loss account represents:

EIT Deferred taxation relating to the origination and reversal of temporary differences_(Note 22)_ Share of taxation attributable to an associated company Taxation	Year ended 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 8,319 9,214 12,524 (870) (1,366) 305 – – – 7,449 7,848 12,829	Six months ended 30 June 2003 2004 RMB’000 RMB’000 5,270 6,529 (124) (898) – 145 5,146 5,776	Six months ended 30 June 2003 2004 RMB’000 RMB’000 5,270 6,529 (124) (898) – 145 5,146 5,776
			5,776

The taxation on the China Science Media Group’s profit before taxation differs from the theoretical amount that would arise using the taxation rate of China Science Media as follows:

Profit before taxation Calculated at a taxation rate of 15% Effect of different taxation rates used by subsidiaries Unrecognised tax losses Expenses not deductible for taxation purposes Taxation	Year ended 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 33,230 50,818 75,904 4,984 7,623 11,386 – – 115 154 203 145 2,311 22 1,183 7,449 7,848 12,829	Six months ended 30 June 2003 2004 RMB’000 RMB’000 38,645 31,725 5,797 4,759 52 51 209 9 (912) 957 5,146 5,776	Six months ended 30 June 2003 2004 RMB’000 RMB’000 38,645 31,725 5,797 4,759 52 51 209 9 (912) 957 5,146 5,776
			4,759 51 9 957
			5,776

7. Profit attributable to shareholders

The net profit of China Science Media was RMB25,872,000, RMB41,701,000 and RMB58,944,000 for the years ended 31 December 2001, 2002 and 2003 respectively and RMB33,281,000 and RMB24,602,000 for the six months ended 30 June 2003 and 2004 respectively and was included in determining the profit attributable to the shareholders in the consolidated profit and loss account.

8. Dividends

Dividends
				Six months
	Year ended 31 December			ended 30 June
	2001	2002	2003	2003 2004
	RMB’000	RMB’000	RMB’000	RMB’000 RMB’000
Proposed	–	13,992	20,988	– –

At the 6th Board of Directors’ meeting in 2003, the directors proposed a dividend of RMB13,992,000. This proposed dividend was reflected as an appropriation of retained earnings for the year ended 31 December 2003.

At the 10th Board of Directors’ meeting in 2004, the directors proposed a dividend of RMB20,988,000. This proposed dividend will be reflected as an appropriation of retained earnings for the year ending 31 December 2004.

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APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

9. Earnings per share

The calculation of basic earnings per share is based on the profit attributable to shareholders of RMB26,163,000, RMB43,194,000 and RMB62,787,000 for the years ended 31 December 2001, 2002 and 2003 respectively and RMB33,282,000 and RMB25,783,000 for the six months ended 30 June 2003 and 2004 respectively and 87,450,000 shares in issue throughout the Relevant Periods. The conversion of registered capital of RMB10,000,000 into share capital and the capitalisation issue of 77,450,000 shares (note 23) were deemed to have occurred at the beginning of the earliest period presented.

No dilutive earnings per share information is presented as there were no dilutive potential ordinary shares in issue during the Relevant Periods.

10. Staff costs, including directors’ emoluments

Staff costs, including directors’ remuneration, comprise:

Wages and salaries Social welfare costs Pension costs_(Note a)_	Year ended 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 4,666 9,478 14,999 682 948 1,194 114 195 289 5,462 10,621 16,482	Six months ended 30 June 2003 2004 RMB’000 RMB’000 5,715 9,164 509 711 162 243 6,386 10,118	Six months ended 30 June 2003 2004 RMB’000 RMB’000 5,715 9,164 509 711 162 243 6,386 10,118
			10,118

Note a: China Science Media Group paid a monthly premium to the local labour bureau based on certain percentages of its current employees’ total salaries. For the years ended 31 December 2001, 2002 and 2003, such contribution percentage was 25%, 26% and 26% respectively, out of which 20% was borne by the China Science Media Group and the remaining was borne by the individual employees. For the period ended 30 June 2004, the contribution percentage was 45%, of which 29% was borne by the China Science Media Group and the remaining was borne by the individual employees.

11. Directors’ and senior management’s emoluments

(a) Directors’ emoluments

The aggregate amounts of emoluments payable to directors of China Science Media during the Relevant Periods are as follows:

Basic salaries, housing allowance, other allowances and benefits in kind Discretionary bonuses Social welfare costs	Year ended 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 56 94 293 – – 180 8 12 13 64 106 486	Six months ended 30 June 2003 2004 RMB’000 RMB’000 142 146 60 120 6 8 208 274	Six months ended 30 June 2003 2004 RMB’000 RMB’000 142 146 60 120 6 8 208 274
			274

The emoluments of the directors fell within the following bands:

Number of directors

				Six months	Six months
	Year ended	31 December		ended 30	June
	2001	2002	2003	2003	2004
RMBnil – RMB1,000,000	9	9	9	9	9

None of the Directors waived any emoluments during the Relevant Periods.

– 140 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

11. Directors’ and senior management’s emoluments (continued)

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the China Science Media Group during the Relevant Periods include one director whose emoluments are reflected in the analysis presented above. The emoluments payable to the remaining four individuals during the Relevant Periods are as follows:

Basic salaries, housing allowance, other allowances and benefits in kind Discretionary bonuses Social welfare costs	Year ended 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 223 405 484 – – 555 31 50 58 254 455 1,097	Six months ended 30 June 2003 2004 RMB’000 RMB’000 223 244 185 360 27 33 435 637	Six months ended 30 June 2003 2004 RMB’000 RMB’000 223 244 185 360 27 33 435 637
			637

The emoluments fell within the following bands:

		Number of individuals	Number of individuals	Number of individuals
				Six months
	Year ended	31 December		ended 30	June
	2001	2002	2003	2003	2004
RMBnil – RMB1,000,000	4	4	4	4	4

– 141 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

12. Fixed assets

(a) Group

Leasehold improvements RMB’000 Cost At 1 January 2001 – Additions 25,650 Transfers upon completion – Disposals – At 31 December 2001 25,650 Additions – Acquisition of subsidiaries (Note 25(b)) 3,455 At 31 December 2002 29,105 Additions 1,215 Transfers upon completion – Disposals – At 31 December 2003 30,320 Additions 1,163 Disposal of a subsidiary (Note 25(c)) (1,033) Disposals – At 30 June 2004 30,450 Accumulated depreciation At 1 January 2001 – Charge for the year 342 Disposals – At 31 December 2001 342 Charge for the year 4,292 Acquisition of subsidiaries (Note 25(b)) 100 At 31 December 2002 4,734 Charge for the year 5,749 Disposals – At 31 December 2003 10,483 Charge for the period 2,496 Disposal of a subsidiary (Note 25(c)) (240) Disposals – At 30 June 2004 12,739 Net book value At 31 December 2001 25,308 At 31 December 2002 24,371 At 31 December 2003 19,837 At 30 June 2004 17,711	Properties RMB’000 1,800 – 86,998 – 88,798 – 13,383 102,181 – 2,973 – 105,154 – (6,700) – 98,454 36 385 – 421 2,381 399 3,201 2,712 – 5,913 1,209 (391) – 6,731 88,377 98,980 99,241 91,723	Plant and machinery RMB’000 1,006 330 – – 1,336 – – 1,336 729 – – 2,065 – – – 2,065 284 297 – 581 242 – 823 334 – 1,157 197 – – 1,354 755 513 908 711	Motor vehicles RMB’000 1,354 492 – (317) 1,529 59 872 2,460 1,113 – – 3,573 – (1,072) (952) 1,549 465 251 (213) 503 233 263 999 414 – 1,413 187 (226) (731) 643 1,026 1,461 2,160 906	Office equipment RMB’000 1,284 929 – (492) 1,721 1,022 1,027 3,770 1,876 – (104) 5,542 513 (1,176) (35) 4,844 525 400 (259) 666 423 355 1,444 1,213 (69) 2,588 501 (431) (9) 2,649 1,055 2,326 2,954 2,195	Construction Software in progress RMB’000 RMB’000 – 44,827 – 42,171 – (86,998) – – – – 228 – – – 228 – – 2,997 – (2,973) – – 228 24 108 – – – – (24) 336 – – – – – – – – – – – – – – – 46 – – – 46 – – – – – – – 46 – – – 228 – 182 24 290 –	Total RMB’000 50,271 69,572 – (809)
						119,034 1,309 18,737
						139,080 7,930 – (104)
						146,906 1,784 (9,981) (1,011)
						137,698

						1,310 1,675 (472)
						2,513 7,571 1,117
						11,201 10,468 (69)
						21,600 4,590 (1,288) (740)
						24,162

						116,521

						127,879

						125,306

						113,536

– 142 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

12. Fixed assets (continued)

(b) Company

Leasehold improvements RMB’000 Cost At 1 January 2001 – Additions 25,650 Transfers upon completion – Disposals – At 31 December 2001 25,650 Additions – At 31 December 2002 25,650 Additions 408 Transfers upon completion – At 31 December 2003 26,058 Additions 630 Disposals – At 30 June 2004 26,688 Accumulated depreciation At 1 January 2001 – Charge for the year 342 Disposals – At 31 December 2001 342 Charge for the year 4,292 At 31 December 2002 4,634 Charge for the year 4,251 At 31 December 2003 8,885 Charge for the period 2,160 Disposals – At 30 June 2004 11,045 Net book value At 31 December 2001 25,308 At 31 December 2002 21,016 At 31 December 2003 17,173 At 30 June 2004 15,643	Properties RMB’000 1,800 – 86,998 – 88,798 – 88,798 – 1,773 90,571 – – 90,571 36 385 – 421 2,381 2,802 2,168 4,970 998 – 5,968 88,377 85,996 85,601 84,603	Plant and machinery RMB’000 1,006 330 – – 1,336 – 1,336 729 – 2,065 – – 2,065 284 297 – 581 242 823 334 1,157 197 – 1,354 755 513 908 711	Motor vehicles RMB’000 1,354 492 – (317) 1,529 59 1,588 619 – 2,207 – (951) 1,256 465 251 (213) 503 233 736 277 1,013 164 (731) 446 1,026 852 1,194 810	Office equipment RMB’000 1,284 809 – (492) 1,601 988 2,589 1,530 – 4,119 231 (30) 4,320 525 348 (259) 614 397 1,011 983 1,994 407 (4) 2,397 987 1,578 2,125 1,923	Construction Software in progress RMB’000 RMB’000 – 44,827 – 42,171 – (86,998) – – – – 228 – 228 – – 1,773 – (1,773) 228 – 108 – – – 336 – – – – – – – – – – – – – 46 – 46 – – – – – 46 – – – 228 – 182 – 290 –	Total RMB’000 50,271 69,452 – (809)
						118,914 1,275
						120,189 5,059 –
						125,248 969 (981)
						125,236

						1,310 1,623 (472)
						2,461 7,545
						10,006 8,059
						18,065 3,926 (735)
						21,256

						116,453

						110,183

						107,183

						103,980

The properties of China Science Media and China Science Media Group are held on leases of between 10 to 50 years.

– 143 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

13. Goodwill

Cost At the beginning of year/period Acquisition of subsidiaries_(Note 25(b)) Disposal of a subsidiary(Note 25(c)) At the end of year/period Accumulated amortisation and impairment losses At the beginning of year/period Amortisation Disposal of a subsidiary(Note 25(c))_ At the end of year/period Net book amount	2001 RMB’000 – – – – – – – – –	Group 31 December 2002 2003 RMB’000 RMB’000 – (5,585) (5,585) – – – (5,585) (5,585) – 6 6 560 – – 6 566 (5,579) (5,019)	30 June 2004 RMB’000 (5,585) – 440
			(5,145)

			566 257 (51)
			772

			(4,373)

14. Interests in subsidiaries

Investments at cost – unlisted shares Less: Provision for impairment losses	2001 RMB’000 1,280 (739) 541	Company 31 December 2002 2003 RMB’000 RMB’000 5,405 5,405 (1,298) (1,842) 4,107 3,563	30 June 2004 RMB’000 4,305 (1,882)
			2,423

A list of principal subsidiaries of the China Science Media Group is set out in Note 29.

15. Interest in a jointly controlled entity

Share of net assets - unlisted Goodwill on acquisition less accumulated amortisation	2001 RMB’000 58 226 284	Group 31 December 2002 2003 RMB’000 RMB’000 32 43 201 175 233 218	30 June 2004 RMB’000 1,180 163
			1,343

Particular of the jointly controlled entity is set out in Note 29.

– 144 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

15. Interest in a jointly controlled entity (continued)

Company
31 December
2001
2002
2003
RMB’000
RMB’000
RMB’000
Investments at cost – unlisted shares
500
500
500
Less: Provision for impairment losses
(216)
(267)
(282)
284
233
218
16.
Interests in associated companies
Group
31 December
2001
2002
2003
RMB’000
RMB’000
RMB’000
Share of net assets – unlisted
4,721
2,736
2,895
Goodwill on acquisition less
accumulated amortisation
2,517
2,236
1,953
7,238
4,972
4,848
A list of principal associated companies of the China Science Media Group is set out in Note 29.
Company
31 December
2001
2002
2003
RMB’000
RMB’000
RMB’000
Investments at cost – unlisted shares
8,458
7,048
7,048
Less: Provision for impairment losses
(1,512)
(2,076)
(2,200)
6,946
4,972
4,848
17.
Inventories
Group
31 December
2001
2002
2003
RMB’000
RMB’000
RMB’000
Newspapers, books and magazines
6,633
14,509
20,293
Paper stock
3,788
4,181
4,742
Work in progress
3,084
1,496
2,249
13,505
20,186
27,284

30 June
2004
RMB’000
1,650
(307)
1,343
30 June
2004
RMB’000
6,752
1,811
8,563
30 June
2004
RMB’000
8,458
(2,465)
5,993
30 June
2004
RMB’000
18,035
2,267
1,459
21,761

As at 31 December 2001, 2002 and 2003 and 30 June 2004, all inventories comprised of the balance were stated at cost.

– 145 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

17. Inventories (continued)

Newspapers, books and magazines Paper stock Work in progress	2001 RMB’000 6,633 3,788 3,084 13,505	Company 31 December 2002 2003 RMB’000 RMB’000 14,125 18,736 4,181 4,743 1,496 2,249 19,802 25,728	30 June 2004 RMB’000 15,185 2,267 1,459
			18,911

As at 31 December 2001, 2002 and 2003 and 30 June 2004, all inventories comprised of the balance were stated at cost.

18. Trade and other receivables

(a) Group

Trade receivables Prepayments, deposits and other receivables	2001 RMB’000 20,939 18,507 39,446	31 December 2002 RMB’000 30,379 18,394 48,773	2003 RMB’000 35,043 16,263 51,306	30 June 2004 RMB’000 37,688 23,584
				61,272

Credit terms of trade receivables range from 30 to 90 days. The ageing analysis of the trade receivables is as follows:

Less than 1 year 1 – 2 years Over 2 years Less: Provision for doubtful receivables (b) Company Trade receivables Prepayments, deposits and other receivables	2001 RMB’000 22,447 2,303 3,769 28,519 (7,580) 20,939 2001 RMB’000 20,904 17,373 38,277	31 December 2002 RMB’000 31,417 2,892 5,298 39,607 (9,228) 30,379 31 December 2002 RMB’000 28,941 11,629 40,570	2003 RMB’000 35,134 2,820 3,255 41,209 (6,166) 35,043 2003 RMB’000 31,979 9,621 41,600	30 June 2004 RMB’000 39,236 2,071 3,004
				44,311 (6,623)
				37,688

				30 June 2004 RMB’000 34,427 19,066
				53,493

– 146 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

18. Trade and other receivables (continued)

(b) Company (continued)

Credit terms of trade receivables range from 30 to 90 days. The ageing analysis of the trade receivables is as follows:

Less than 1 year 1 – 2 years Over 2 years Less: Provision for doubtful receivables	2001 RMB’000 22,374 2,303 3,769 28,446 (7,542) 20,904	31 December 2002 RMB’000 29,676 2,868 5,298 37,842 (8,901) 28,941	2003 RMB’000 33,043 1,481 3,255 37,779 (5,800) 31,979	30 June 2004 RMB’000 35,492 2,071 3,003
				40,566 (6,139)
				34,427

19. Trading securities

2001 RMB’000 Equity securities listed in the PRC, at market value 741 Trade and other payables (a) Group 2001 RMB’000 Trade payables 39,149 Other payables 23,845 62,994 The ageing analysis of the trade payables is as follows: 2001 RMB’000 Less than 1 year 38,170 1 – 2 years 979 Over 2 years – 39,149	Group and Company 31 December 2002 2003 RMB’000 RMB’000 610 445 31 December 2002 2003 RMB’000 RMB’000 37,444 40,586 46,715 41,511 84,159 82,097 31 December 2002 2003 RMB’000 RMB’000 36,301 39,420 1,143 1,149 – 17 37,444 40,586	30 June 2004 RMB’000 401

		30 June 2004 RMB’000 31,955 55,159
		87,114

		30 June 2004 RMB’000 30,157 1,602 196
		31,955

20. Trade and other payables

– 147 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

20. Trade and other payables (continued)

(b) Company

Trade payables Other payables	2001 RMB’000 38,916 23,216 62,132	31 December 2002 RMB’000 33,625 37,098 70,723	2003 RMB’000 32,566 34,037 66,603	30 June 2004 RMB’000 24,986 49,392
				74,378

The ageing analysis of the trade payables is as follows:

Less than 1 year 1 – 2 years Over 2 years	2001 RMB’000 37,937 979 – 38,916	31 December 2002 RMB’000 32,482 1,143 – 33,625	2003 RMB’000 31,399 1,149 18 32,566	30 June 2004 RMB’000 23,188 1,602 196
				24,986

21. Long-term bank loans Secured bank loans Less: current portion of long-term bank loans	2001 RMB’000 – – –	Group 31 December 2002 2003 RMB’000 RMB’000 1,164 1,452 (52) (84) 1,112 1,368	30 June 2004 RMB’000 1,089 (54)
			1,035

Secured bank loans are loans borrowed from China Construction Bank at annual interest rate of 5.48% throughout the Relevant Periods.

The China Science Media Group’s bank loans were repayable as follows:

Within one year In the second year In the third to fifth year After the fifth year	2001 RMB’000 – – – – –	31 December 2002 RMB’000 52 53 162 897 1,164	2003 RMB’000 84 87 258 1,023 1,452	30 June 2004 RMB’000 54 55 160 820
				1,089

– 148 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

22. Deferred tax assets

Deferred taxation is calculated in full on temporary differences under the liability method using an effective taxation rate of 15%.

The movement on the deferred tax asset account is as follows:

At beginning of year/period Credited/(charged) to profit and loss account_(Note 6)_ At end of year/period	Group and Company 31 December 30 June 2001 2002 2003 2003 2004 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 807 1,677 3,043 3,043 2,738 870 1,366 (305) 124 898 1,677 3,043 2,738 3,167 3,636	Group and Company 31 December 30 June 2001 2002 2003 2003 2004 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 807 1,677 3,043 3,043 2,738 870 1,366 (305) 124 898 1,677 3,043 2,738 3,167 3,636
		3,636

Temporary difference resulted mainly related to provision for doubtful receivables and write-down of inventories.

The deferred tax assets are expected to be utilised within twelve months after each of the balance sheet date.

23. Capital

Capital
	Group and Company
	*RMB’000*
Registered capital as at 1 January 2001	10,000
Capitalisation of reserves	77,450
Share capital as at 31 December 2001, 2002 and 2003 and 30 June 2003 and 2004	87,450

On 28 December 2001, China Science Media became a joint stock limited company by converting its registered capital of RMB10,000,000 into 10,000,000 shares of RMB1 each. On the same date, China Science Media converted retained earnings of RMB65,010,000, statutory common reserve funds of RMB6,224,000 and statutory common welfare funds of RMB6,224,000, totalling RMB77,458,000 into 77,450,000 shares of RMB1 each. The excess of reserves capitalised over the aggregate nominal value of the share capital issued, amounted to RMB8,000, has been transferred to capital reserve. As at 31 December 2001, 2002 and 2003 and 30 June 2004, China Science Media has 87,450,000 authorised, issued and fully paid shares of RMB1 each.

24. Reserves

Capital reserve

Capital reserve represents the difference between the aggregate nominal value of the share capital of China Science Media and the reserves transferred as at 28 December 2001. Cash distribution is not allowed other than in the liquidation of the China Science Media Group.

Statutory common reserve funds

According to the relevant statutory rules and regulations and the Articles of Association, the China Science Media Group is required to transfer 10% of its profit after taxation, as determined in accordance with PRC GAAP, after setting off accumulated losses of previous years, to the statutory common reserve funds until the reserve balance reaches 50% of the registered capital.

Statutory common welfare funds

According to the relevant statutory rules and regulations and the Articles of Association, the China Science Media Group is required to transfer 5% to 10% of its profit after taxation, as determined in accordance with PRC GAAP after setting off accumulated losses of previous years, to the statutory common welfare funds.

The statutory common welfare funds can only be utilised on capital items for the collective benefits of the China Science Media Group’s employees such as the construction of dormitories, canteen and other staff welfare facilities. The transfer to this reserve must be made before distribution of dividends to investors. Cash distribution is not allowed other than in the liquidation of the China Science Media Group.

– 149 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

24. Reserves (continued)

(a) Group

At 1 January 2001 Net profit for the year Dividends Appropriation Convert to capital At 31 December 2001 Analysed by: Company and subsidiaries Jointly controlled entity Associated companies At 31 December 2001 At 1 January 2002 Net profit for the year Appropriation At 31 December 2002 Analysed by: Company and subsidiaries Jointly controlled entity Associated companies At 31 December 2002 At 1 January 2003 Net profit for the year Dividends Appropriation At 31 December 2003 Analysed by: Company and subsidiaries Jointly controlled entity Associated companies At 31 December 2003 At 1 January 2003 Net profit for the period Dividends At 30 June 2003 Analysed by: Company and subsidiaries Jointly controlled entity Associated companies At 30 June 2003 At 1 January 2004 Net profit for the period Dividends Disposals of subsidiaries At 30 June 2004 Analysed by: Company and subsidiaries Jointly controlled entity Associated companies At 30 June 2004	Capital reserve RMB’000 – – – – 8 8 8 – – 8 8 – – 8 8 – – 8 8 – – – 8 8 – – 8 8 – – 8 8 – – 8 8 – – – 8 8 – – 8	Statutory Statutory common common reserve funds welfare funds RMB’000 RMB’000 5,146 5,146 – – – – 2,632 2,632 (6,224) (6,224) 1,554 1,554 1,554 1,554 – – – – 1,554 1,554 1,554 1,554 – – 4,285 4,285 5,839 5,839 5,839 5,839 – – – – 5,839 5,839 5,839 5,839 – – – – 6,627 6,627 12,466 12,466 12,466 12,466 – – – – 12,466 12,466 5,839 5,839 – – – – 5,839 5,839 5,839 5,839 – – – – 5,839 5,839 12,466 12,466 – – – – (276) (276) 12,190 12,190 12,190 12,190 – – – – 12,190 12,190	Retained earnings RMB’000 51,332 26,163 (2,624) (5,264) (65,010) 4,597 4,960 (189) (174) 4,597 4,597 43,194 (8,570) 39,221 39,194 (26) 53 39,221 39,221 62,787 (13,992) (13,254) 74,762 74,593 29 140 74,762 39,221 33,282 (13,992) 58,511 59,089 (168) (410) 58,511 74,762 25,783 (20,988) 552 80,109 79,494 (13) 628 80,109	Total RMB’000 61,624 26,163 (2,624) – (77,450) 7,713 8,076 (189) (174) 7,713 7,713 43,194 – 50,907 50,880 (26) 53 50,907 50,907 62,787 (13,992) – 99,702 99,533 29 140 99,702 50,907 33,282 (13,992) 70,197 70,775 (168) (410) 70,197 99,702 25,783 (20,988) – 104,497 103,882 (13) 628 104,497

– 150 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

24. Reserves (continued)

(b) Company

At 1 January 2001 Net profit for the year Dividends Appropriation Convert to capital At 31 December 2001 At 1 January 2002 Net profit for the year Appropriation At 31 December 2002 At 1 January 2003 Net profit for the year Dividends Appropriation At 31 December 2003 At 1 January 2003 Net profit for the period Dividends At 30 June 2003 At 1 January 2004 Net profit for the period Dividends At 30 June 2004	Capital reserve RMB’000 – – – – 8 8 8 – – 8 8 – – – 8 8 – – 8 8 – – 8	Statutory Statutory common common reserve funds welfare funds RMB’000 RMB’000 5,146 5,146 – – – – 2,632 2,632 (6,224) (6,224) 1,554 1,554 1,554 1,554 – – 4,166 4,166 5,720 5,720 5,720 5,720 – – – – 6,269 6,269 11,989 11,989 5,720 5,720 – – – – 5,720 5,720 11,989 11,989 – – – – 11,989 11,989	Retained earnings RMB’000 51,332 25,872 (2,624) (5,264) (65,010) 4,306 4,306 41,701 (8,332) 37,675 37,675 58,944 (13,992) (12,538) 70,089 37,675 33,281 (13,992) 56,964 70,089 24,602 (20,988) 73,703	Total RMB’000 61,624 25,872 (2,624) – (77,450) 7,422 7,422 41,701 – 49,123 49,123 58,944 (13,992) – 94,075 49,123 33,281 (13,992) 68,412 94,075 24,602 (20,988) 97,689

In the opinion of the directors of China Science Media, the net reserves of China Science Media available for distribution to shareholders comprised of the retained earnings only.

– 151 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

25. Consolidated cash flow statements

(a) Reconciliation of profit before taxation to net cash inflow from operations

Profit before taxation Depreciation Amortisation of negative goodwill Loss on disposal of fixed assets Write-down of inventories Provision for/(reversal of) doubtful receivables Unrealised losses/(gains) on trading securities Losses on disposal of trading securities Share of losses/(profits) of associated companies and a jointly controlled entity Loss on partial disposal of a subsidiary Interest income Interest expense Operating profit before working capital changes (Increase)/decrease of inventories (Increase)/decrease of due from related parties (Increase)/decrease of trading securities Decrease/(increase) of trade and other receivables Increase/(decrease) of due to related parties Increase/(decrease) of trade and other payables Increase/(decrease) of taxation payable Net cash inflow from operations	Year 2001 RMB’000 33,230 1,675 – 337 1,318 2,936 130 2,545 670 – (150) 585 43,276 (4,577) (4,809) (871) 5,172 3,388 27,648 12,859 82,086	ended 31 December Six months ended 30 June 2002 2003 2003 2004 RMB’000 RMB’000 RMB’000 RMB’000 50,818 75,904 38,645 31,725 7,571 10,468 6,590 4,590 (6) (560) (279) (257) – 35 276 271 2,826 2,832 441 2,837 6,438 (2,302) 241 574 (130) 298 – 55 – – – – 281 138 733 (606) – – – 887 (246) (681) (321) (435) 170 77 30 29 67,722 86,209 46,356 39,670 (9,371) (9,930) (642) 661 (9,903) (5,698) (3,225) 6,851 260 (133) (119) (12) (9,560) (230) (8,806) (14,937) (1,758) 311 3,062 2,772 10,944 (1,526) (6,292) (7,948) (5,279) (23,149) 248 1,728 43,055 45,854 30,582 28,785

– 152 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

25. Consolidated cash flow statements (continued)

(b) Acquisition of subsidiaries

Acquisition of subsidiaries
	Year ended
	31 December 2002
	RMB’000
Net assets acquired:
Fixed assets	17,620
Inventories	137
Trade and other receivables	6,204
Bank balances and cash	4,269
Trade and other payables	(13,164)
Taxation payable	(2,853)
Bank and other loans	(1,164)
Minority interests	(1,538)
Less: Share of assets included in the consolidated balance
sheet as an associated company at the date of acquisition	(2,036)
	7,475
Goodwill_(Note 13)_	(5,585)
	1,890
Satisfied by:
Cash consideration	1,890
Analysis of the net inflow in respect of acquisition of subsidiaries:
Cash payment	(1,890)
Bank balances and cash acquired	4,269
Net cash inflow in respect of acquisition of subsidiaries	2,379

– 153 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

25. Consolidated cash flow statements (continued)

(c) Disposal of a subsidiary

On 31 March 2004, China Science Media transferred 33% interests in 重慶課堂內外有限責任公司 (Chongqing Ke Teng Nei Wei Magazine Co., Ltd.) (“Chongqing KTNW”), a 80%-owned subsidiary, to third-party individuals at a consideration of RMB990,000. As a result, China Science Media’s interest in Chongqing KTNW changed from 80% to 47% and Chongqing KTNW became an associated company.

	Six months ended
	30 June 2004
	RMB’000
Net assets disposed:
Fixed assets	8,693
Inventories	2,026
Trade and other receivables	4,037
Bank balances and cash	2,350
Trade and other payables	(9,736)
Taxation payable	(502)
Minority interest	(1,373)
	5,495
Unamortised negative goodwill	(389)
Loss on partial disposal of a subsidiary	(887)
	4,219
Satisfied by:
Reclassification as investment in associated companies	3,229
Cash	990
	4,219
Analysis of the net outflow in respect of the partial disposal:
Proceeds from disposal	990
Bank balances and cash disposed	(2,350)
Net cash outflow in respect of partial disposal of a subsidiary	(1,360)

– 154 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

V. NOTES TO THE FINANCIAL INFORMATION (continued)

25. Consolidated cash flow statements (continued)

(d) Analysis of changes in financing during the Relevant Periods

At 1 January 2001 New bank and other loans Net cash from financing activities Dividends Minority’s share of losses of subsidiaries At 31 December 2001 Loan repayments Contribution from minority shareholders Dividends paid Net cash (used in)/from financing activities Minority’s share of losses of subsidiaries Acquisition of subsidiaries At 31 December 2002 New bank and other loans Loan repayments Dividends paid Net cash used in financing activities Dividends Minority’s share of profits of subsidiaries Dividends appropriation by a subsidiary At 31 December 2003 At 1 January 2003 New bank and other loans Loan repayments Dividends paid Net cash used in financing activities Dividends Minority’s share of profits of subsidiaries At 30 June 2003 At 1 January 2004 Loan repayments Contribution from minority shareholders Net cash (used in)/from financing activities Dividends Minority’s share of profits of subsidiaries Disposal of a subsidiary At 30 June 2004	Dividend payable RMB’000 – – – ------------ 2,624 – 2,624 – – (2,624) (2,624) ------------ – – – – – (13,992) (13,992) ------------ 13,992 – – – – – – (13,083) (13,083) ------------ 13,992 – 909 – – – – ------------ 20,988 – – 20,988	Bank and other loans RMB’000 1,000 14,100 14,100 ------------ – – 15,100 (14,770) – – (14,770) ------------ – 1,164 1,494 288 (330) – (42) ------------ – – – 1,452 1,494 12 (330) – (318) ------------ – – 1,176 1,452 (363) – (363) ------------ – – – 1,089	Minority interests RMB’000 679 – – ------------ – (382) 297 – 455 – 455 ------------ (224) 1,538 2,066 – – – – ------------ – 288 (90) 2,264 2,066 – – – – ------------ – 217 2,283 2,264 – 700 700 ------------ – 166 (1,373) 1,757	Total RMB’000 1,679 14,100 14,100 ------------ 2,624 (382) 18,021 (14,770) 455 (2,624) (16,939) ------------ (224) 2,702 3,560 288 (330) (13,992) (14,034) ------------ 13,992 288 (90) 3,716 3,560 12 (330) (13,083) (13,401) ------------ 13,992 217 4,368 3,716 (363) 700 337 ------------ 20,988 166 (1,373) 23,834

– 155 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

26. Contingent liabilities

There are no material contingencies as at 31 December 2001, 2002 and 2003 and 30 June 2004.

27. Commitments

There are no material commitments as at 31 December 2001, 2002 and 2003 and 30 June 2004.

28. Related party transactions

(a) Related party transactions were carried out in the normal course of the China Science Media Group’s business. Significant related party transaction and balances are listed below:

	Year ended 31 December	Year ended 31 December	Year ended 31 December	months ended 30 June	months ended 30 June
	2001	2002	2003	2003	2004
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Sales to重慶遠望科技信息
有限公司 (note i)	191	737	467	430	310

Note i: Sales to an associated company was conducted in the normal course of business at prices and terms no less favourable than those charged to and contracted with other third party customers of the China Science Media Group.
(b) Included in the amounts due to and from China Science Media Group and China Science Media with its related parties are as follows:

Due from – Jointly controlled entity – Associated companies – Fellow subsidiaries Due to – Jointly controlled entity – Fellow subsidiaries	Group 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 – – 89 646 100 – 4,162 14,612 20,321 4,808 14,712 20,410 – 98 – 3,388 1,531 1,940 3,388 1,629 1,940	30 June 2004 RMB’000 – 1,358 12,561
		13,919

		359 4,352
		4,711

The amounts due from/to related parties are unsecured, interest free and repayable on demand.

Due from – Jointly controlled entity – Associated companies – Fellow subsidiaries – A subsidiary Due to – Jointly controlled entity – Fellow subsidiaries	Company 31 December 2001 2002 2003 RMB’000 RMB’000 RMB’000 – – 89 646 100 – 4,162 14,612 20,321 – – 360 4,808 14,712 20,770 – 98 – 3,388 1,531 1,940 3,388 1,629 1,940	30 June 2004 RMB’000 – 1,358 12,561 –
		13,919

		359 4,352
		4,711

The amounts due from/to related parties are unsecured, interest free and repayable on demand.

– 156 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

29. Principal subsidiaries, jointly controlled entity and associated companies

Particulars of principal subsidiaries, jointly controlled entity and associated companies as at 30 June 2004 are as follows:

					Particular of
			Date of	Place of	issued/
		incorporation/		incorporation/	registered	Interest	Principal activities and
	Name	establishment		establishment	capital	directly held	place of operation
@	北京世紀鼎點軟件	February 1997		PRC	7,000	25%	Design and development
	有限公司						of software products
@	北京創成信息技術		May 2000	PRC	1,000	30%	IT-related research
	有限公司						and development
@	北京賽維波信息諮詢	January 1996		PRC	500	49%	Information consultancy
	有限公司
@	重慶遠望科技信息	January 1996		PRC	8,800	25%	Publishing and distribution
	有限公司						of magazines, and provision
							of advertising services
#	重慶迪特數字通信		July 2000	PRC	3,000	50%	Publishing and distribution
	有限公司						of magazines, and provision
							of advertising services
&	重慶巨星廣告有限	June 1999		PRC	1,000	70%	Provision of advertising
	責任公司						services
&	南寧市華美樂文化有限	June 2001		PRC	500	65%	Information consultancy
	責任公司 (Note b)
&	南寧市小博士文化傳播		May 2001	PRC	500	51%	Technology consultancy
	有限責任公司
@	重慶課堂內外有限	March 2002		PRC	3,000	47%	Publishing and distribution
	責任公司 (Note c)						of magazines, and provision
							of advertising services
&	重慶科宪健文化傳播	December 2002		PRC	2,500	65%	Publishing and distribution
	有限責任公司						of magazines, and provision
							of advertising services
&	重慶數字世界文化	November 2002		PRC	500	60%	Publishing and distribution
	傳播有限公司						of magazines, and provision
							of advertising services
&	四川科幻世界傳播	August 1998		PRC	500	90%	Publishing and distribution
	有限責任公司						of magazine, and provision
							of advertising services
&	四川瑞恩博商務廣告	April 2002		PRC	500	90%	Provision of advertising services
	有限責任公司
@	Associated company
#	Jointly controlled	entity
&	Subsidiary

Note:

(a) The above table lists the principal subsidiaries, jointly controlled entity and associated companies of China Science Media as at 30 June 2004 which, in the opinion of the directors of China Science Media, principally affect the results and net assets of China Science Media. To give full details of subsidiaries, jointly controlled entity, associated companies, in the opinion of the directors of China Science Media, result in particulars of excessive length.
(b) This company was deregistered in May 2002.
(c) On 31 March 2004, China Science Media sold off 33% of its interests in 重慶課堂內外有限責任公司 . After this sale, China Science Media continues to hold 47% of 重慶課堂內外有限責任公司.

– 157 –

APPENDIX V

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

V. NOTES TO THE FINANCIAL INFORMATION (continued)

30. Subsequent events

On 5 July 2004, China Science Media entered into a co-operation framework agreement with PCW Publishing House, TOM and TOM.COM INTERNATIONAL LIMITED (the “Agreement”). Pursuant to which China Science Media agreed to sell 48.5% of registered capital of the Joint Venture and issued 849,029 shares, representing 0.97% of China Science Media, to TOM.COM INTERNATIONAL LIMITED at a total cash consideration of RMB209,475,000 (equivalent to approximately HK$196,912,014).

The Joint Venture was established on 30 July 2004 with registered capital of RMB30 million, comprising bank balances of RMB28,551,553 and fixed assets of RMB1,448,447 transferred from China Science Media. Pursuant to the Agreement, the exclusive distribution right and the exclusive advertising agency right pursuant to the existing contractual arrangements between China Science Media and PCW Publishing House relating to PCW business will also be surrendered and transferred to the Joint Venture, when all the relevant operating licences and permits have been obtained.

– 158 –

FINANCIAL INFORMATION OF ACQUISITIONS SINCE THE LATEST PUBLISHED AUDITED ACCOUNTS

APPENDIX V

B. FINANCIAL INFORMATION ON JOINT VENTURE

重慶電腦報經營有限責任公司 (China Popular Computer Week Management Company Limited) (the “Joint Venture”) was established in the People’s Republic of China (the “PRC”) on 30 July 2004 (“date of establishment”) as a domestic limited liability company.

As at 31 July 2004, the registered capital of the Joint Venture is RMB30 million, comprising bank balances of RMB28,551,553 and fixed assets of RMB1,448,447 transferred from 重慶中科普傳媒發展股份有限公司(Chongqing Zhongkepu Media Development Joint Stock Company Limited) (“China Science Media”). The Joint Venture has not commenced operation since the date of establishment to 31 July 2004.

According to the co-operation framework agreement dated 5 July 2004 entered into between China Science Media, 電腦報社(Diannaobaoshe) (“PCW Publishing House”), TOM Group Limited (“TOM”) and TOM.COM INTERNATIONAL LIMITED (the “Agreement”), upon the Joint Venture obtaining the relevant operating licences and permits, an exclusive operation agreement shall be entered into between the Joint Venture and PCW Publishing House, pursuant to which the Joint Venture will have the exclusive distribution right and the exclusive advertising agency right in relation to the operation of 電腦報 (Popular Computer Weekly), a weekly information technology-related periodical licensed by PCW Publishing House, immediately after the surrender of corresponding rights held by China Science Media. The Joint Venture shall also be converted from a domestic limited liability company to a Sino-foreign equity joint venture enterprise, subject to the approval from relevant approval authorities in the PRC.

– 159 –

GENERAL INFORMATION

APPENDIX VI

1. RESPONSIBILITY STATEMENT

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

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

As at the Latest Practicable Date, the interests and short positions of the Directors and chief executive of the Company in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO), or which were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”), to be notified to the Company and the Stock Exchange, were as follows:

A. The Company

(a) Long positions in Shares

				Number of Shares			Approximate
Name of		Personal	Family	Corporate	Other		percentage of
Directors	Capacity	Interests	Interests	Interests	Interests	Total	shareholding
Sing Wang	Interest of	–	–	5,898,000	–	5,898,000	0.15%
(Note 1)	a controlled			(Note 2)
	corporation
Wang Lei Lei	Beneficial	300,000	–	–	–	300,000	0.01%
	owner

Notes:

(1) By virtue of the SFO, Mr. Sing Wang is deemed to be interested in 5,898,000 Shares held by Amerinvest Technology Associates I Limited, which is wholly-owned by him.

(2) All the 5,898,000 Shares have been pledged as a security against his personal loan.

– 160 –

GENERAL INFORMATION

APPENDIX VI

(b) Rights to acquire Shares

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

		Number of share
		options outstanding		Subscription
Name of	Date of	as at the Latest		price per
Directors	grant	Practicable Date	Option period	Share
				HK$
Sing Wang	30/6/2000	3,000,000	30/6/2000-29/6/2010	5.27
	8/8/2000	2,138,000	8/8/2000-7/8/2010	5.30
	7/2/2002	20,000,000	7/2/2002-6/2/2012	3.76
	9/10/2003	38,000,000	9/10/2003-8/10/2013	2.505
Tommei Tong	9/10/2003	15,000,000	9/10/2003-8/10/2013	2.505
James Sha	15/11/2000	15,000,000	15/11/2000-14/11/2010	5.30
Wang Lei Lei	11/2/2000	9,080,000	11/2/2000-10/2/2010	1.78
	9/10/2003	6,850,000	9/10/2003-8/10/2013	2.505

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

(a) Long positions in shares of TOM Online

		Number of shares	Number of shares	Number of shares	of TOM Online			Approximate
Name of		Personal		Family	Corporate	Other		percentage of
Directors	Capacity	Interests	Interests		Interests	Interests	Total	shareholding
Sing Wang	Interest of	–		–	83,142	–	83,142	0.002%
(Note)	a controlled
	corporation
Wang Lei Lei	Beneficial	5,000,000		–	–	–	5,000,000	0.128%
	owner

Note: By virtue of the SFO, Mr. Sing Wang is deemed to be interested in 83,142 shares of TOM Online held by Amerinvest Technology Associates I Limited, which is wholly-owned by him.

– 161 –

GENERAL INFORMATION

APPENDIX VI

(b) Right to acquire shares in TOM Online

Pursuant to the pre-IPO share option plan adopted by TOM Online, a Director was granted share options to subscribe for the shares of TOM Online, details of which as at the Latest Practicable Date were as follows:

		Number of		Subscription
		share options		Subscription
		outstanding as at		price per
Name of	Date of	the Latest		share of
Director	grant	Practicable Date	Option period	TOM Online
				HK$
Wang Lei Lei	16/2/2004	165,000,000	16/2/2004-15/2/2014	1.50

(c) Short positions in associated corporations

Mr. Wang Lei Lei has as of 12 June 2001 (as supplemented on 26 September 2003) granted an option to a subsidiary of the Company in respect of his 20% (RMB2,200,000) equity interest in Beijing Lei Ting Wan Jun Network Technology Limited (“Beijing Lei Ting”) whereby such subsidiary of the Company has the right at any time within a period of 10 years commencing from 26 September 2003 (which may be extended for another 10 years at the option of such subsidiary of the Company) to acquire all of Mr. Wang Lei Lei’s equity interest in Beijing Lei Ting at an exercise price of RMB2,200,000.

Mr. Wang Lei Lei has also as of 19 November 2003 granted an option to a subsidiary of the Company in respect of his 80% (RMB800,000) equity interest in Beijing Leitingwuji Network Technology Company Limited (“LTWJi”) whereby such subsidiary of the Company has the right at any time within a period of 10 years commencing from 19 November 2003 (which may be extended for another 10 years at the option of such subsidiary of the Company) to acquire all of Mr. Wang Lei Lei’s equity interest in LTWJi at an exercise price of RMB800,000.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors or chief executive of the Company had any interests or short positions in any Shares, 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.

– 162 –

GENERAL INFORMATION

APPENDIX VI

3. INTERESTS AND SHORT POSITIONS OF SHAREHOLDERS

So far as is known to any Director or chief executive of the Company, as at the Latest Practicable Date, the persons/companies (not being a Director or chief executive of the Company) who have interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO are as follows:

			Approximate
			percentage
Name	Capacity	No. of Shares held	of shareholding
Li Ka-shing	Founder of	1,429,024,545 (L)	36.74%
	discretionary	(Notes 1 & 2)
	trusts &
	interest of
	controlled
	corporations
Li Ka-Shing Unity	Trustee &	1,429,024,545 (L)	36.74%
Trustee Corporation	beneficiary	(Notes 1 & 2)
Limited	of a trust
(as trustee of The
Li Ka-Shing Unity
Discretionary Trust)
Li Ka-Shing Unity	Trustee &	1,429,024,545 (L)	36.74%
Trustcorp Limited	beneficiary	(Notes 1 & 2)
(as trustee of another	of a trust
discretionary trust)
Li Ka-Shing Unity	Trustee	1,429,024,545 (L)	36.74%
Trustee Company		(Notes 1 & 2)
Limited
(as trustee of The
Li Ka-Shing Unity Trust)
Cheung Kong (Holdings)	Interest of	1,429,024,545 (L)	36.74%
Limited	controlled	(Notes 1 & 2)
	corporations
Cheung Kong Investment	Interest of	476,341,182 (L)	12.25%
Company Limited	controlled	(Note 1)
	corporations
Cheung Kong Holdings	Interest of	476,341,182 (L)	12.25%
(China) Limited	controlled	(Note 1)
	corporations

– 163 –

GENERAL INFORMATION

APPENDIX VI

			Approximate
			percentage
Name	Capacity	No. of Shares held	of shareholding
Sunnylink Enterprises	Interest of a	476,341,182 (L)	12.25%
Limited	controlled	(Note 1)
	corporation
Romefield Limited	Beneficial	476,341,182 (L)	12.25%
	owner	(Note 1)
Hutchison Whampoa	Interest of a	952,683,363 (L)	24.49%
Limited	controlled	(Note 2)
	corporation
Hutchison International	Interest of a	952,683,363 (L)	24.49%
Limited	controlled	(Note 2)
	corporation
Easterhouse Limited	Beneficial	952,683,363 (L)	24.49%
	owner	(Note 2)
Chau Hoi Shuen	Interest of	952,683,363 (L)	24.49%
	controlled	(Note 3)
	corporations
Cranwood Company	Beneficial	952,683,363 (L)	24.49%
Limited	owner &	(Note 3)
	interest of
	controlled
	corporations
Schumann International	Beneficial	580,000,000 (L)	14.91%
Limited	owner	(Note 3)
Handel International	Beneficial	348,000,000 (L)	8.95%
Limited	owner	(Notes 3 & 4)

(L) denotes long position

Notes:

(1) Romefield Limited is a wholly-owned subsidiary of Sunnylink Enterprises Limited, which in turn is a whollyowned subsidiary of Cheung Kong Holdings (China) Limited. Cheung Kong Holdings (China) Limited is a wholly-owned subsidiary of Cheung Kong Investment Company Limited, which in turn is a wholly-owned subsidiary of Cheung Kong (Holdings) Limited.

By virtue of the SFO, Cheung Kong Investment Company Limited, Cheung Kong Holdings (China) Limited and Sunnylink Enterprises Limited are all deemed to be interested in the 476,341,182 Shares held by Romefield Limited.

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APPENDIX VI

Li Ka-Shing Unity Holdings Limited, of which each of Mr. Li Ka-shing, Mr. Li Tzar Kuoi, Victor and Mr. Li Tzar Kai, Richard is interested in one-third of the entire issued share capital, owns the entire issued share capital of Li Ka-Shing Unity Trustee Company Limited. Li Ka-Shing Unity Trustee Company Limited as trustee of The Li KaShing Unity Trust, together with certain companies which Li Ka-Shing Unity Trustee Company Limited as trustee of The Li Ka-Shing Unity Trust is entitled to exercise or control the exercise of more than one-third of the voting power at their general meetings, hold more than one-third of the issued share capital of Cheung Kong (Holdings) Limited.

In addition, Li Ka-Shing Unity Holdings Limited also owns the entire issued share capital of Li Ka-Shing Unity Trustee Corporation Limited (“TDT1”) as trustee of The Li Ka-Shing Unity Discretionary Trust (“DT1”) and Li Ka-Shing Unity Trustcorp Limited (“TDT2”) as trustee of another discretionary trust (“DT2”). Each of TDT1 and TDT2 hold units in The Li Ka-Shing Unity Trust.

(2) Easterhouse Limited is a wholly-owned subsidiary of Hutchison International Limited, which in turn is a whollyowned subsidiary of Hutchison Whampoa Limited. By virtue of the SFO, Hutchison Whampoa Limited and Hutchison International Limited are deemed to be interested in the 952,683,363 Shares held by Easterhouse Limited.

In addition, subsidiaries of Cheung Kong (Holdings) Limited are entitled to exercise or control the exercise of more than one-third of the voting power at the general meetings of Hutchison Whampoa Limited. By virtue of the SFO, Mr. Li Ka-shing, being the settlor and may being regarded as a founder of each of DT1 and DT2 for the purpose of the SFO, Li Ka-Shing Unity Trustee Corporation Limited, Li Ka-Shing Unity Trustcorp Limited, Li Ka-Shing Unity Trustee Company Limited and Cheung Kong (Holdings) Limited are all deemed to be interested in the 476,341,182 Shares and 952,683,363 Shares 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 and 348,000,000 Shares held by Schumann International Limited and Handel International Limited respectively in addition to 24,683,363 Shares held by itself.

By virtue of the SFO, Ms. Chau Hoi Shuen is deemed to be interested in 24,683,363 Shares, 580,000,000 Shares and 348,000,000 Shares held by Cranwood Company Limited, Schumann International Limited and Handel International Limited respectively.

(4) Pursuant to the stock borrowing agreements each dated 6 November 2003, Handel International Limited has lent an aggregate of 30,588,236 Shares to two financial institutions. 2,847,059 Shares have been returned to Handel International Limited on 6 September 2004.

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

		No. and class of	Percentage of
Name of subsidiaries	Name of shareholders	shares held	shareholding
Y.C. Press Advertising Limited	Yangcheng Enterprise Limited	1,200 ordinary shares	20%
YCP Advertising Limited	Yangcheng Enterprise Limited	2 ordinary shares	20%
Beijing GreaTom United	Great Wall Technology	Registered capital	10%
Technology Company Limited	Company Ltd.	RMB2,500,000
廣東羊城報業體育發展	羊城晚報經濟發展總公司	Registered capital	20%
有限公司	(Yangcheng Evening News	RMB1,000,000
(Guangdong Yangcheng	Economic Development
Press Sports Development Limited)	Corporation)

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			No. and class of	Percentage of
Name of subsidiaries	Name of shareholders		shares held	shareholding
廣東羊城廣告有限公司	羊城晚報經濟發展總公司		Registered capital	20%
(Guangdong Yangcheng	(Yangcheng Evening News		RMB1,000,000
Advertising Company Limited)	Economic Development Corporation)
Yazhou Zhoukan Holdings Limited	Skyland International Investment Limited		5,000 ordinary shares	50%
Cernet Information Technology	賽爾網絡有限公司		Registered capital	49%
Company Limited	(Cernet Network Company Limited)		RMB29,400,000
Nong Nong Magazine Company Limited	Barbizon Interculture Publication		431,000 ordinary	17.24%
	Company Limited		shares
Panasia Publishing Company Limited	Weider Publications, LLC	700,000 ordinary shares		35%
Panasia Publishing Company Limited	Barbizon Interculture Publication	200,000 ordinary shares		10%
	Company Limited
Tennis Management Limited	Spectrum International Holding Limited		40 ordinary shares	40%
Shandong Longjun Media Company	Jinan Qilu Advertising Company Limited		Registered capital	40%
Limited			RMB4,400,000
Liaoning New Star Guangming	Liaoning New Star Shengshi Advertising		Registered capital	40%
Media Assets Company Limited	Company Limited		RMB4,000,000
Shenyang Sano Global Media	Wang Cheng Cheng		Registered capital	40%
Company Limited			RMB1,200,000
Xiamen Bomei Lianhe Advertising	Xiamen Bomei Advertising		Registered capital	40%
Company Limited	Company Limited		RMB1,000,000
Henan New Tianming Advertising &	Beijing Tianming International Investment		Registered capital	50%
Information Chuanbo Company Limited	Management Company Limited		RMB3,000,000
Qingdao Chunyu Advertising Chuanbo	Qingdao Chunyu Advertising and Décor		Registered capital	30%
Company Limited	Construction Company Limited		RMB450,000
Sichuan Southwest Outdoor Media	Sichuan Southwest International		Registered capital	30%
Company Limited	Advertising Company		RMB900,000
Fujian Seeout Guangming Media	Fujian Seeout Outdoor Advertising		Registered capital	30%
Advertising Company Limited	Company Limited		RMB1,500,000

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		No. and class of	Percentage of
Name of subsidiaries	Name of shareholders	shares held	shareholding
Guangzhou Tianyu Tenglong Advertising	Deng Jian Ming	Registered capital	35%
Company Limited		RMB350,000
CNPIT TOM Culture Company Limited	中圖信息技術有限公司	Registered capital	30%
	(CNPIT Information Technology	RMB1,500,000
	Company Limited)
China Entertainment Television	Turner Broadcasting System	10,778 ordinary shares	35.93%
Broadcast Limited	Asia Pacific, Inc.
Cite (H.K.) Publishing Group Limited	Wong Shun Hing	1,000,000 ordinary shares	23.81%
Cite (Malaysia) SDN. BHD.	Chew Kim Ming	40,000 ordinary shares	10%
Cite (Malaysia) SDN. BHD.	Brain Network (M) SDN. BHD.	60,000 ordinary shares	15%

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

4. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

Mr. Frank Sixt and Mrs. Susan Chow, the Chairman of the Company and a non-executive Director respectively, are executive directors of Hutchison Whampoa Limited (“HWL”), Cheung Kong Infrastructure Holdings Limited (“CKI”) and Hutchison Global Communications Holdings Limited (“HGCH”) and directors of certain of their respective associates (collectively referred to in this paragraph as “HWL Group”, “CKI Group” and “HGCH Group” respectively). Mr. Frank Sixt is also a non-executive director of Cheung Kong (Holdings) Limited (“CKH”) and a director of certain of its associates (collectively referred to as “CKH Group”). Mr. Frank Sixt and Mrs. Susan Chow are also non-executive directors of Hutchison Telecommunications International Limited and directors of certain of its associates (collectively referred to as “HTIL Group”). Mr. Edmond Ip, a non-executive Director, is an executive director of CKH and a director of certain of its associates. HWL Group is engaged in e-commerce and general information portals, event production, broadband content, sports-related content, event management and advertising and outdoor media. Both the CKH Group and the CKI Group are engaged in information technology, e- commerce and new technology. HGCH Group is engaged in systems integration and development of software and computer network systems. HTIL Group is engaged in providing mobile and fixed-line telecommunications services, including broadband data services, multimedia services and mobile and fixed-line Internet services and Intranet services. The Directors believe that there is a risk that such businesses may compete with those of the Group.

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Mr. Sing Wang, an executive Director and Chief Executive Officer of the Company, holds 4.55% of the equity interests in 北京雅寶在線拍賣有限公司 (“Yabuy Online”) whose main business consists of the operation of yabuy.com, an online auction website in the PRC. The Directors believe that there is a risk that the business of Yabuy Online may compete with those of the Group.

Ms. Tommei Tong, an executive Director and Chief Financial Officer of the Company, is a beneficial owner of less than 1% of the equity interest in Qin Jia Yuan Media Services Company Limited (“Qin Jia Yuan”) whose principal business engaged in the provision of media services in the PRC. The Directors believe that there is a risk that the business of Qin Jia Yuan may compete with those of the Group.

Ms. Debbie Chang, a non-executive Director, is a director of Beijing ChinaCare e-Med Limited (“ChinaCare”) whose main business consists of healthcare related information technology, information and consulting services. ChinaCare had entered into a content provision agreement with LTWJi. The Directors are of the view that the provisions of IVR-related content by ChinaCare to LTWJi under the agreement is complementary to, and not in competition with, the business of provision of IVR services by LTWJi. The provision of IVR-related content by ChinaCare will only be in competition with LTWJi’s business if ChinaCare provides such content to other IVR services providers in the PRC. In this regard, Cranwood has undertaken, inter alia, to the Company that companies controlled by Cranwood will not in the PRC provide IVR-related content to the competitors of the Group.

Save as disclosed above, none of the Directors or their respective associates have any interests in a business, which competes or may compete with the business of the Group.

5. OUTSTANDING SHARE OPTIONS

(1) Pre-IPO Share Option Plan

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

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(2) Share Option Scheme

Options to subscribe for an aggregate of 183,111,000 Shares (which includes the options granted to the Directors as disclosed above) were outstanding as at the Latest Practicable Date, breakdown of which are set out below:

				Option period*
				(commencing from
			Subscription	date of grant and
	No. of share	No. of	price	terminating ten
Date of grant	options	employees	per Share	years thereafter)
			HK$
23/3/2000	2,086,000	52	11.30	23/3/2000-22/3/2010
31/5/2000	2,332,000	1	4.685	31/5/2000-30/5/2010
26/6/2000	1,012,000	29	5.89	26/6/2000-25/6/2010
30/6/2000	3,000,000	1	5.27	30/6/2000-29/6/2010
8/8/2000	15,836,000	128	5.30	8/8/2000-7/8/2010
15/11/2000	15,000,000	1	5.30	15/11/2000-14/11/2010
7/2/2002	30,000,000	2	3.76	7/2/2002-6/2/2012
9/10/2003	103,845,000	52	2.505	9/10/2003-8/10/2013
16/2/2004	10,000,000	1	2.55	16/2/2004-15/2/2014

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

6. LITIGATION

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

Three wholly-owned subsidiaries of the Company, being (1) York Island (Guangzhou) Limited as plaintiff; (2) York Island (Chengdu) Limited as claimant; and (3) York Island (Beijing) Limited as claimant, have been involved in three separate proceedings initiated in 2003 before 廣州市中級人民法院 (the Guangzhou Intermediary People’s Court) and 中國國際經濟貿易仲裁委員會(China International Economic and Trade Arbitration Commission) in the PRC respectively, concerning disputes in connection with agreements entered into by the respective subsidiaries relating to the leasing, construction or delivery of (i) bus shelter with light boxes; (ii) street name light boxes; and (iii) light boxes of bicycle shelters respectively by the respective defendant or respondents. No decision has been made by the respective court and tribunals yet. However, full provisions have been made during the three months ended 31 March 2004 against the book value in the aggregate amount of approximately HK$27.8 million in respect of the three proceedings abovementioned. Notwithstanding the provisions made, the management of the respective subsidiaries will continue to pursue recovery of the sum paid.

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APPENDIX VI

7. EXPERT

The following is the qualification of the expert who has given opinion, which is contained in this circular:

Name Qualification

PricewaterhouseCoopers Certified public accountants

As at the Latest Practicable Date, PricewaterhouseCoopers, certified public accountants, Hong Kong has given and has not withdrawn its written consent to the issue of this circular with inclusion of its reports or letter, which has been prepared for inclusion in this circular, and references to its name in the form and context in which it is included.

As at the Latest Practicable Date, PricewaterhouseCoopers does not have any shareholding interest in any member of the Group or any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

8. SERVICE CONTRACTS

Each of Mr. Sing Wang and Ms. Tommei Tong, being all the executive Directors has entered into a continuous service contract with the Group commencing from 1 June 2000 in the case of Mr. Sing Wang and 17 March 2003 in the case of Ms. Tommei Tong. Mr. Wang Lei Lei, being a non-executive Director, has also entered into a continuous service contract with TOM Online commencing from 1 January 2004. The terms of the contracts with Mr. Sing Wang and Ms. Tommei Tong are continuous unless terminated by not less than three months’ notice in writing served by either party on the other. The term of the contract with Mr. Wang Lei Lei is fixed at three years and thereafter will be continuous unless terminated by not less than three months’ notice in writing served by either party on the other. Each of the three Directors is entitled to the basic salary set out below (subject to review in December of each year).

In addition, Mr. Sing Wang and Ms. Tommei Tong are entitled to a bonus payable for each twelve month period at the discretion of the Board. Mr. Wang Lei Lei is also entitled to an annual bonus payable for each twelve months period completed by him commencing on 1 January of each calendar year immediately following the date he entered into his service contract. The amount of the bonus for Mr. Wang Lei Lei shall be determined at the discretion of the board of directors of TOM Online. Each of Mr. Sing Wang, Ms. Tommei Tong and Mr. Wang Lei Lei is entitled to certain allowances, medical benefits and reimbursement of all reasonable out of pocket expenses. Neither of the above Directors is entitled to vote on the relevant board resolutions in relation to any bonus payable to him or her. The current basic annual salaries of the above Directors are as follows:

	HK$
Sing Wang	2,768,016
Tommei Tong	1,502,040
Wang Lei Lei	1,053,919

Save as disclosed above, none of the Directors has entered into any service agreements with any member of the Group (excluding contracts expiring or determinable by the employer within one year without payment of compensation other than statutory compensation).

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9. MATERIAL CONTRACTS

The following contracts, not being contracts in the ordinary course of business, have been entered into by the Group within two years preceding the Latest Practicable Date or may be material:

(1) A letter dated 18 October 2002 given by TOM Fashion Limited (“TOM Fashion”) to Opus Consultants Limited (“Opus”), Push Design Limited (“Push Design”) and Alpine Holdings International Limited (“Alpine”) with respect to the extension of option period to purchase the shares of She.com International Holdings Limited (“She.com”) pursuant to the shareholders’ agreement dated 25 May 2000 as supplemented by, inter alia: (i) a deed of adherence dated 29 August 2000, supplementing the shareholders’ agreement dated 25 May 2000 entered into between She.com and Extremes Enterprises Limited (“Extremes”) whereby Extremes became a shareholder of She.com; (ii) the deed of adherence and supplemental agreement to the shareholders’ agreement dated 24 May 2001 entered into between Alpine, She.com, TOM Fashion, Opus, Push Design, Mr. Derek Emory Yeung, Mr. Lam Wai Shan, Mr. Jeremy Lam Hou Wai and Extremes; and (iii) the supplemental agreement dated 24 November 2001 entered into between Alpine, TOM Fashion, Opus, Push Design, She.com, Mr. Derek Emory Yeung, Ms. Lam Wai Shan, Mr. Jeremy Lam Hou Wai and Extremes.
(2) A tenancy agreement dated 21 October 2002 entered into between 廣東精彩無限文化有限公司 (Guangdong FAB Endless Culture Company Limited) as landlord and Guangzhou Hongxiang Audio-Video Company Limited (“Hong Xiang”) as tenant in relation to the lease of 3rd and 4th Floors, Sheng Huo Services Company Commercial Building, Baiyun Airport, Guangzhou, Guangdong Province, the PRC (廣州白雲國際機場生活服務公司業務三樓及四樓 ) for a period of three years expiring on 20 October 2005.
(3) A supplemental agreement dated 29 October 2002 entered into between Diamond Profits Limited (“Diamond Profits”) and 宏嘉創業投資股份有限公司 (Primus Investment Fund Limited) which supplements the stock purchase agreement dated 11 December 2001 (“BW Stock Purchase Agreement”).
(4) A deed of adherence dated 29 October 2002 given by Windsor Hill Corp. in favour of Diamond Profits and TOM.COM INTERNATIONAL LIMITED (“TOM International”) in relation to the BW Stock Purchase Agreement.
(5) A supplemental agreement dated 29 October 2002 entered into between Diamond Profits and PC Home Publications Inc. (“PC Home”) which supplements the BW Stock Purchase Agreement.
(6) A deed of adherence dated 29 October 2002 given by PC Home in favour of Diamond Profits and TOM International in relation to the BW Stock Purchase Agreement.
(7) A supplemental agreement dated 29 October 2002 entered into between Diamond Profits, Chih Nan Investment Company Limited, Jeng Da Investment Company Limited and Mr. James Jin which supplements the BW Stock Purchase Agreement.

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(8) A deed of adherence dated 29 October 2002 given by Golden River Holdings Limited in favour of Diamond Profits and TOM International in relation to the BW Stock Purchase Agreement.
(9) A consultancy services agreement dated 31 October 2002 entered into between TOM International and Chongqing Zhongkepu Media Development Joint Stock Company Limited
（重慶中科普傳媒發展股份有限公司）(“China Science Media”) under which China Science Media has agreed to provide certain consultancy services in relation to the publishing and distribution of newspapers and magazines to TOM International at a fee of RMB10 million. This agreement was terminated on 5 July 2004.
(10) An equity pledge agreement dated 1 November 2002 entered into between Fujian Seeout Outdoor Advertising Company Limited (“Seeout”) as pledgor and Fujian Seeout Guangming Media Advertising Company Limited (“Seeout JV”) as pledgee whereby Seeout agreed to pledge all its outdoor advertising media assets to Seeout JV.
(11) An ISP cooperation agreement dated 4 November 2002 entered into between Beijing Lei Ting and Cernet Information Technology Company Limited (“Cernet”), as amended in May 2003. Pursuant to this agreement, Cernet provides a dial-in number to customers of Beijing Lei Ting to access the Internet and Beijing Lei Ting pays a monthly usage fee. In addition, the parties share the profits equally. Notwithstanding the above, Beijing Lei Ting will pay a fixed monthly usage fee to Cernet for the period from May 2003 to October 2003. This agreement will expire on 1 November 2003, with an automatic extension of one year if no party objects.
(12) A memorandum of understanding dated 21 November 2002 entered into between TOM International, Henan Ming Sheng Advertising Company Limited, Mr. Niu Zhi Min and Ms. Wang Li Jun relating to the formation of a joint venture company in the PRC.
(13) A license agreement dated 21 November 2002 between Cernet as licensor and Beijing Lei Ting as licensee pursuant to which, Beijing Lei Ting granted a license to Cernet to use the TOMNET trademark, but Cernet does not have the right to sub-license the TOMNET trademark to any third parties without prior consent from Beijing Lei Ting. Beijing Lei Ting also permits Cernet to use various related network resources and customer information of TOMNET. The term of this agreement is from 21 November 2002 to 20 November 2004.
(14) A termination & novation agreement dated 25 November 2002 entered into between Mr. Wang Lei Lei (“Mr. Wang”), Advanced Internet Services Limited (“Advanced Internet”) and Shenzhen Freenet Information Technology Company Limited (“Shenzhen Freenet”) with respect to (i) termination of the loan agreement dated 21 August 2002 entered into between Mr. Wang as lender and Shenzhen Freenet as borrower whereby Mr. Wang advanced a loan in the amount of RMB551,400 to Shenzhen Freenet exclusively for contributing to the registered capital of Shenzhen Freenet; and (ii) novation of all rights, obligations and liabilities from Mr. Wang to Advanced Internet with respect to a certain sum of the shareholders’ loan under the same loan agreement.

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(15) A novation agreement dated 25 November 2002 entered into between Mr. Wang, Advanced Internet and Shenzhen Freenet relating to the novation of all rights, obligation and liabilities from Mr. Wang to Shenzhen Freenet pursuant to the loan agreement dated 17 January 2001 entered into between Advanced Internet as lender and Mr. Wang as borrower whereby Advanced Internet advanced a loan in the amount of RMB1,059,500 to Mr. Wang for his onward leading to Shenzhen Freenet.
(16) A novation agreement dated 25 November 2002 entered into between Mr. Wang, Advanced Internet and Shenzhen Freenet relating to the novation of all rights, obligations and liabilities from Mr. Wang to Advanced Internet pursuant to the loan agreement dated 17 January 2001 entered into between Mr. Wang and Shenzhen Freenet as borrower whereby Mr. Wang advanced a loan in the amount of RMB1,059,500 to Shenzhen Freenet.
(17) A novation agreement dated 25 November 2002 entered into between Advanced Internet, Mr. Wang and Shenzhen Freenet relating to the novation of all rights, obligations and liabilities from Mr. Wang to Advanced Internet pursuant to the novation agreement dated 2 March 2001 entered into between Mr. Sing Wang, Mr. Wang and Shenzhen Freenet whereby Mr. Sing Wang has assigned all his rights, title, interest and benefits of and novated all his obligations and liabilities under the loan agreement dated 10 December 1999 (as supplemented) to Mr. Wang in respect of a loan in the total sum of RMB76,899,381 granted by Mr. Sing Wang to Shenzhen Freenet.
(18) A novation agreement dated 25 November 2002 entered into between Advanced Internet, Mr. Wang and Shenzhen Freenet relating to the novation of all rights, obligations and liabilities from Mr. Wang to Shenzhen Freenet pursuant to the novation agreement dated 2 March 2001 entered into between Mr. Sing Wang, Mr. Wang and Advanced Internet whereby Mr. Sing Wang has assigned all his rights, title, interest and benefits of and novated all his obligations and liabilities under the loan agreement dated 10 December 1999 in respect of a loan in the amount of HK$58,000,000 to Mr. Wang.
(19) A novation agreement dated 25 November 2002 entered into between Advanced Internet, Mr. Wang and Shenzhen Freenet relating to the novation of all rights, obligations and liabilities from Mr. Wang to Advanced Internet pursuant to the novation agreement dated 2 March 2001 entered into between Mr. Sing Wang, Mr. Wang and Shenzhen Freenet whereby Mr. Sing Wang has assigned all his rights, title, interest and benefits of and novated all his obligations and liabilities under the loan agreement dated 15 December 2000 in respect of a loan in the amount of RMB76,899,381 to Mr. Wang.
(20) A novation agreement dated 25 November 2002 entered into between Advanced Internet, Mr. Wang and Shenzhen Freenet relating to the novation of all rights, obligations and liabilities from Mr. Wang to Shenzhen Freenet pursuant to the novation agreement dated 2 March 2001 entered into between Mr. Sing Wang, Mr. Wang and Advanced Internet whereby Mr. Sing Wang has assigned all his rights, title, interest and benefits of and novated all his obligations and liabilities under the loan agreement dated 2 November 2000 in respect of a loan in the amount of RMB78,899,381 to Mr. Wang.

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(21) A novation agreement dated 25 November 2002 entered into between Advanced Internet, Mr. Wang and Shenzhen Freenet relating to the novation of all rights, obligations and liabilities from Mr. Wang to Shenzhen Freenet pursuant to the first loan agreement dated 29 December 2000 entered into between Advanced Internet as lender and Mr. Wang as borrower whereby Advanced Internet advanced to Mr. Wang a loan in the amount of RMB10,000,000 and the second loan agreement dated 5 June 2001, also entered into between Advanced Internet as lender and Mr. Wang as borrower whereby Advanced Internet advanced a loan in the amount of RMB12,022,500 to Mr. Wang.
(22) A termination agreement dated 25 November 2002 entered into between Mr. Wang, Shenzhen Freenet and Advanced Internet with respect to the termination of a loan agreement dated 21 May 2001 whereby Advanced Internet advanced a loan in the amount of RMB7,000,000 to Mr. Wang for his onward lending to Shenzhen Freenet.
(23) A termination agreement dated 25 November 2002 entered into between Mr. Wang, Shenzhen Freenet and Mr. Sing Wang with respect to the termination of a loan agreement dated 21 May 2001 whereby Mr. Wang advanced a loan in the amount of RMB630,000 to Mr. Sing Wang for his onward lending to Shenzhen Freenet.
(24) A termination and novation agreement dated 25 November 2002 entered into between Mr. Wang, Shenzhen Freenet and Advanced Internet with respect to (i) the termination of a loan agreement dated 21 August 2002 entered into between the same parties whereby Advanced Internet advanced a loan in the amount of RMB7,091,400 to Mr. Wang for his onward lending to Shenzhen Freenet; and (ii) the novation of obligations and liabilities from Mr. Wang to Shenzhen Freenet pursuant to the loan agreement dated 21 August 2002 with respect to a certain sum of the shareholders’ loan.
(25) A termination agreement dated 25 November 2002 entered into between Mr. Wang and Advanced Internet with respect to the termination of a supplemental loan agreement dated 30 March 2001 entered into between the same parties whereby Advanced Internet advanced a loan in the amount of RMB2,000,000 to Mr. Wang for his onward lending to Shenzhen Freenet.
(26) A termination agreement dated 25 November 2002 entered into between Mr. Wang and Advanced Internet with respect to the termination of an exclusive option and pledge agreement dated 2 November 2000 made between the same parties whereby Mr. Wang agreed to grant an option to Advanced Internet to purchase all his equity interest in Shenzhen Freenet.
(27) A loan agreement dated 25 November 2002 entered into between Ms. Wang Xiu Ling (“Ms. Wang”) as borrower and Advanced Internet as lender, pursuant to which Advanced Internet granted Ms. Wang a loan facility of RMB136,032,781, the proceeds of which shall be used exclusively towards the working capital of Shenzhen Freenet or Redsail. Advanced Internet has a right to demand payment of the loan at any time.

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(28) A loan agreement dated 25 November 2002 entered into between Advanced Internet as lender and Ms. Wang as borrower, pursuant to which Advanced Internet agreed to grant a loan in the amount of RMB23,000,000 to Ms. Wang for the exclusive purpose of contributing towards registered capital of Shenzhen Freenet.
(29) An equity transfer agreement dated 25 November 2002 entered into between Mr. Wang as assignor and Ms. Wang as assignee with respect to the transfer of Mr. Wang’s 70% equity interests in Shenzhen Freenet to Ms. Wang at the consideration of RMB16,100,000.
(30) An exclusive option agreement dated 25 November 2002 entered into between Advanced Internet and Mr. Wang in relation to the sole exclusive right for Advanced Internet to purchase his 20% equity interest of Shenzhen Freenet.
(31) An exclusive option agreement dated 25 November 2002 entered into between Advanced Internet and Ms. Wang in relation to the sole exclusive right for Advanced Internet to purchase her 70% equity interest of Shenzhen Freenet.
(32) An equity pledge agreement dated 25 November 2002 entered into between Advanced Internet as pledgee and Ms. Wang as pledgor whereby Ms. Wang agreed to pledge her 70% equity interest in Shenzhen Freenet to Advanced Internet, which was terminated by a termination agreement dated 26 September 2003 entered into between the same parties.
(33) An equity pledge agreement dated 25 November 2002 entered into between Advanced Internet as pledgee and Mr. Wang as pledgor whereby Mr. Wang agreed to pledge his 20% equity interest in Shenzhen Freenet to Advanced Internet.
(34) A novation agreement dated 1 December 2002 entered into between Mr. Wang, Shenzhen Freenet and Advanced Internet relating to the novation of all rights, obligations and liabilities from Mr. Wang to Advanced Internet pursuant to the loan agreement dated 29 December 2000 and supplemental loan agreement dated 30 March 2001 entered into between the same parties.
(35) A novation agreement dated 1 December 2002 entered into between Mr. Wang, Shenzhen Freenet and Advanced Internet relating to the novation of all rights, obligations and liabilities from Mr. Wang to Advanced Internet pursuant to the loan agreement dated 21 August 2002 entered into between Mr. Wang as lender and Shenzhen Freenet as borrower whereby Mr. Wang advanced a loan in the amount of RMB551,400 to Shenzhen Freenet.
(36) A termination agreement dated 1 December 2002 entered into between Mr. Wang, Shenzhen Freenet and Advanced Internet with respect to the termination of a loan agreement dated 21 August 2002 entered into between Advanced Internet as lender and Mr. Wang as borrower whereby Advanced Internet advanced a loan in the amount of RMB7,091,400 to Mr. Wang for his onward lending to Shenzhen Freenet.

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(37) A termination agreement dated 1 December 2002 entered into between Mr. Wang, Shenzhen Freenet and Advanced Internet with respect to the termination of a loan agreement dated 21 May 2001 entered into between Advanced Internet as lender and Mr. Wang as borrower whereby Advanced Internet advanced a loan in the amount of HK$6,604,000 to Mr. Wang for his onward lending to Shenzhen Freenet.
(38) A termination agreement dated 1 December 2002 entered into between Mr. Wang, Shenzhen Freenet and Advanced Internet with respect to the termination of a loan agreement dated 27 June 2002 entered into between Advanced Internet as lender and Mr. Wang as borrower whereby Advanced Internet advanced a loan in the amount of HK$6,100,000 to Mr. Wang for his onward lending to Shenzhen Freenet.
(39) A termination agreement dated 1 December 2002 entered into between Mr. Wang and Advanced Internet with respect to the termination of a loan agreement dated 29 December 2000 and a supplemental agreement dated 30 December 2001 entered into between Advanced Internet as leader and Mr. Wang as borrower whereby Advanced Internet advanced a certain sum to Mr. Wang for his onward lending to Shenzhen Freenet.
(40) A termination agreement dated 1 December 2002 entered into between Mr. Wang and Lahiji Vale Limited (“Lahiji”) with respect to the termination of a loan agreement dated 8 August 2002 entered into between Lahiji as lender and Mr. Wang as borrower whereby Lahiji advanced a loan in the amount of RMB200,000 to Mr. Wang to invest in Beijing TOM International Advertising Limited (“Beijing TOM”).
(41) A termination agreement dated 1 December 2002 entered into between Mr. Wang and Advanced Internet with respect to the termination of a loan agreement dated 24 December 2001 entered into between Advanced Internet as lender and Mr. Wang as borrower whereby Advanced Internet advanced a loan in the amount of RMB100,000 to Mr. Wang for his onward lending to ECLink Electronic Network Systems (Shenzhen) Company Limited (“ECLink Shenzhen”).
(42) A termination agreement dated 1 December 2002 entered into between Mr. Wang and Hitech Profits Limited (“Hitech”) with respect to the termination of a loan agreement dated 6 December 2000 entered into between Hitech as lender and Mr. Wang as borrower whereby Hitech advanced a loan in the amount of RMB4,207,500 to Mr. Wang to invest in Kunming Fench Enterprise Management Consultancy Limited (“Fench Management”).
(43) A termination agreement dated 1 December 2002 entered into between Mr. Wang and Lahiji with respect to the termination of a loan agreement dated 8 August 2002 entered into between Lahiji as lender and Mr. Wang as borrower whereby Lahiji advanced a loan in the amount of RMB2,200,000 to Mr. Wang to invest in Beijing Lei Ting.

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(44) A termination agreement dated 1 December 2002 entered into between Mr. Wang and Advanced Internet with respect to the termination of a loan agreement dated 18 April 2001 entered into between Advanced Internet as lender and Mr. Wang as borrower whereby Advanced Internet advanced a loan in the amount of RMB100,000 to Mr. Wang for his onward lending to Shenzhen Freenet Super Channel Advertising Company Limited (“Shenzhen Freenet Advertising”).
(45) A sale and purchase agreement dated 3 December 2002 entered into between Texcept Limited (“Texcept”) as vendor and Team Wish Enterprises Limited as purchaser pursuant to which Team Wish Enterprises Limited agreed to purchase and Texcept agreed to sell assets including stationary, computer and other electronic equipment for the consideration of HK$400,000.
(46) A capital transfer agreement dated 2 December 2002 entered into between Shenzhen Freenet as transferee, Ms. Zhang Jing and Mr. Zhang Hong Cheng as transferors, pursuant to which Ms. Zhang Jing and Mr. Zhang Hong Cheng agreed to transfer all of their respective capital injected in Hong Xiang to Shenzhen Freenet at a consideration of RMB100,000 and RMB300,000, respectively.
(47) A deed of settlement dated 4 December 2002 entered into between TOM International and International Merchandising Corporation relating to the termination of an agreement dated 8 March 2000 entered into between the same parties whereby the parties agreed to a full and final settlement of all claims arising out of or in connection with the arbitration proceedings between the same parties.
(48) A sale and purchase agreement dated 6 December 2002 entered into between Cup Limited as vendor and TOM (Cup Magazine) Publishing Limited (“Cup”) as purchaser with respect to the transfer of the business and proprietorship of Cup Magazine and AV Magazine (“Magazines”), certain employees, certain fixed assets and the past contents of the Magazines to Cup at a consideration not exceeding HK$800,000.
(49) A subscription agreement dated 27 December 2002 (“Cité Subscription Agreement”) entered into between Cité Publishing Holding Limited (“Cité Publishing Holding”), TOM Print Media Group Limited (“TOM Print Media”) as subscriber, persons named in schedule 1 of the Cité Subscription Agreement and Mr. Jan Hung Tze (“Mr. Jan”) in respect of subscription of new shares in Cité Publishing Holding and sale and purchase of shareholding interests in Business Weekly Publishing Inc. (“Business Weekly”), Sharp Point Publishing Company Limited (“Sharp Point”) and Home Media Group Limited (“Home Media”), as amended by three supplemental agreements dated 31 March 2003, 30 April 2003 and 31 May 2003 respectively entered into between the same parties.
(50) A share sale and purchase agreement dated 17 January 2003 entered into between TOM Print Media as purchaser and Business Weekly as vendor relating to the sale and purchase of certain shares in at a consideration of NT$52,249,978.

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(51) A letter dated 17 January 2003 given by TOM Fashion to Opus, Push Design and Alpine with respect to the extension of option period to purchase the shares of She.com pursuant to the She.com Shareholders’ Agreement.
(52) A tenancy agreement dated 1 February 2003 entered into between Sichuan Southwest International Advertising Company Limited (“Southwest International”) as landlord and Sichuan Southwest Outdoor Media Company Limited (“Southwest JV”) as tenant in relation to the lease of Level 24, Jiangxin Building, 58 Taisheng North Road, Chengdu, Sichuan Province, the PRC for a period of two years expiring on 31 January 2005.
(53) A stock purchase agreement dated 14 February 2003 entered into between TOM Print Media, Cité Publishing Holding and Mr. Jan with respect to the acquisition of up to an aggregate of 11.645% of the issued share capital of Cité Publishing Holding by TOM Print Media, as amended by a supplemental agreement dated 30 April 2003 entered into between the same parties.
(54) A supplemental loan facility Letter dated 12 March 2003 entered into between Timor International Limited as lender and the Company as borrower pursuant to which the parties agreed to defer the repayment date of a loan facility pursuant to a facility letter dated 10 December 2001 of up to HK$170,000,000 to 10 December 2004, as amended by a supplemental facility letter dated 2 June 2003.
(55) A letter dated 20 March 2003 given by TOM Fashion to Opus, Push Design and Alpine whereby the option period pursuant to the She.com Shareholders’ Agreement would expire and lapse on 21 March 2003.
(56) An agreement dated 24 March 2003 entered into between Media Serv Limited (“Media Serv”) and Amen Corner, SA in relation to the Europe vs Asia Golf Championship (“Golf Event”) to be held annually starting from 2003.
(57) A facility letter dated 1 April 2003 entered into between The Development Bank of Singapore Limited as lender and the Company as borrower whereby The Development Bank of Singapore Limited agreed to grant up to NT$1,875,000,000 credit facility to the Company to, inter alia, finance its acquisition of all the business, assets, issued capital and any other equity interest of Business Weekly, Sharp Point and PC Home.
(58) A cooperation agreement dated 11 April 2003 entered into between Beijing Lei Ting and China United Telecommunication Corporation (“China Unicom”) pursuant to which Beijing Lei Ting agreed to provide SMS services to China Unicom’s mobile phone users through its UNI-Info platform. This agreement expired on 11 April 2004.
(59) A surrender agreement dated 14 April 2003 entered into between Metro Broadcast Corporation Limited as tenant and the Company as landlord in respect of office units 4705-4707 and Studio 1 on 47th Floor of the Center.

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(60) A captain service agreement dated 15 April 2003 entered into between Media Serv and Mr. Severiano Ballesteros in relation to the captain’s participation as a captain in the Golf Event for a period of five years from 2003 to 2007.
(61) A framework agreement dated 30 April 2003 entered into between TOM International, 北京紅帆譽翔公用電話有限公司 (“Redsail Yuxiang”) and 北京三錦泰和科技發展有限公司 (Beijing Sanjintaihe Technology Development Company Limited) (“Sanjintaihe”) with respect to the acquisition of 60% of the economic benefits in Beijing Redsail Netlegend Data Network Technology Company Limited (“Redsail”) at the consideration of RMB50,058,489, as amended by a supplemental agreement dated 30 May 2003 entered into between the same parties.
(62) An equity transfer agreement dated 30 April 2003 entered into between Redsail Yuxiang, Sanjintaihe and Beijing Lei Ting with respect to the acquisition of 60% of the economic benefits in Redsail, as amended by an agreement dated 30 May 2003 entered into between the same parties.
(63) Cooperation agreements entered into between Beijing Lei Ting and Beijing Mobile Communication Company Limited (“Beijing Mobile”) which became effective on 1 May 2003, and entered into with Guangdong Mobile Communication Company Limited in November 2003, both are subsidiaries of China Mobile Communications Corporations (“China Mobile”). Pursuant to these agreements, Beijing Lei Ting agreed to provide SMS services to the mobile phone users of the respective China Mobile subsidiary through the Monternet platform. The expiry dates of these agreements are 30 April 2004 and November 2004, respectively.
(64) An equity transfer agreement dated 23 May 2003 entered into between Shenyang Sano Jinxiang Advertising Company Limited (“Sano”) as vendor and Mr. Wang Cheng Cheng as purchaser in relation to the acquisition of 40% equity interest in Shenyang Sano Global Media Company Limited (“Sano JV”).
(65) A deed of assignment dated 2 June 2003 entered into between Smart Smith Limited (“Smart Smith”) as assignor, Tactwood Investments Limited (“Tactwood”) as assignee and the Company in respect of an assignment of a loan facility of up to HK$340,000,000 pursuant to a loan facility letter dated 10 December 2001 (as amended) entered into between Smart Smith and the Company.
(66) A loan facility letter dated 2 June 2003 entered into between Tactwood as lender and the Company as borrower in respect of a loan facility of up to HK$340,000,000.
(67) A loan facility letter dated 2 June 2003 entered into between Tomon Limited as lender and the Company as borrower in respect of a loan facility of up to HK$170,000,000 as amended by a supplemental loan facility letter dated 11 June 2003.

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(68) A lease agreement dated 3 June 2003 entered into between LTWJi as landlord and Redsail as tenant pursuant to which LTWJi agreed to lease from Redsail two seats in its customer service center in Beijing for a monthly rental payment of RMB11,600 so that LTWJi can provide customer services to its users of wireless IVR services. This agreement expired on 3 June 2004. LTWJi further entered into a supplemental lease agreement with Redsail on 9 September 2003 to lease 12 additional seats.
(69) A deed of waiver dated 9 June 2003 entered into between Alpine, TOM Fashion and Extremes whereby She.com absolutely and irrevocably waives and renounces its rights of first refusal pursuant to Clause 10 of She.com Shareholders’ Agreement.
(70) A cooperation agreement dated 10 June 2003 entered into between Media Serv and Beijing Youth Daily Media Development Corporation Limited (北京青年報傳媒發展股份有限公司 ) (“Beijing Youth Daily”) in relation to the appointment of Media Serv to organise and host an official ATP tennis tournament in Beijing each year from 2003 to 2012 (“Beijing Tennis Tournament Agreement”).
(71) A confirmation letter dated 13 June 2003 entered into between Smart Smith as lender and the Company as borrower pursuant to which the parties confirmed that the Company has no further payment obligations owing to Smart Smith under the facility letter dated 10 December 2001 in relation to a loan facility of up to HK$340,000,000.
(72) A sub-tenancy agreement dated 15 June 2003 entered into between TOM.COM (China) Investment Limited (“TOM China”) as landlord and TOM International (Beijing Representative Office as tenant) in relation to the sub-lease of Room 908D, 9th Floor, Tower W3, Oriental Plaza, No. 1 East Chang An Avenue, Dongcheng District, Beijing, the PRC for a period of 3 years expiring on 14 June 2006.
(73) A sub-tenancy agreement dated 15 June 2003 entered into between TOM China as sublandlord and Beijing Guojiatong Information Consultancy Company Limited (“Beijing Guojiatong”) as sub-tenant in relation to the sub-lease of Room 902C, 9th Floor, Tower W3, Oriental Plaza, No. 1 East Chang An Avenue, Dongcheng District, Beijing, the PRC for a period of 3 years expiring on 14 June 2006.
(74) A sub-tenancy agreement dated 15 June 2003 entered into between TOM China as landlord and TOM Outdoor Media Group Limited (“TOM OMG”) (Beijing Representative Office) as tenant in relation to the sub-lease of Room 902B, 9th Floor, Tower W3, Oriental Plaza, No. 1 East Chang An Avenue, Dongcheng District, Beijing, the PRC for a period of 3 years expiring on 14 June 2006.
(75) A tenancy agreement dated 16 June 2003 entered into between 北京經開科創科技孵化器有限公司 (Beijing Jing Kai Ke Chuang Technology Incubator Company Limited) as landlord and LTWJi as tenant, in relation to the lease of Room 422, Block A, No. 12 Hong Da North Road, Economic Developing Zone, Beijing, the PRC for a period of one year which expired on 16 June 2004.

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(76) A termination agreement to the shareholders’ agreement dated 28 April 2000 and new shareholders’ agreement dated 18 June 2003 entered into between AA Stocks International Limited (“AA Stocks”), All Asia Financial LLC (“All Asia”), TOM Stocks Limited (“TOM Stocks”), Westport Financial LLC (“Westport”), and MKT Holdings (Cayman Islands) Limited (“MKT”), EC.COM INC. (“EC.COM”) and Mr. Moses Tsang Kwok Tai (“Mr. Tsang”) relating to the sale and purchase of 252,641 shares in by TOM Stocks to EC.COM.
(77) A share purchase agreement dated 18 June 2003 entered into between TOM Stocks as vendor, EC.COM as purchaser, Mr. Tsang, All Asia and AA Stocks relating to the sale and purchase of 252,641 shares in AA Stocks to EC.COM by TOM Stocks at a consideration of HK$2,400,000.
(78) A tenancy agreement dated 30 June 2003 entered into between 羊城晚報物業部 (Yang Cheng Evening News Property Department) as landlord and Guangdong Yangcheng Advertising Company Limited (“Yang Cheng Advertising”) as tenant in relation to the lease of Portion of Level 6, Printing Building, 733 Dongfengdong Road, Guangzhou, Guangdong Province, the PRC for a period of 21 months expiring on 31 March 2005.
(79) A tenancy agreement dated 30 June 2003 entered into between 羊城晚報物業部 (Yang Cheng Evening News Property Department) as landlord and Guangdong Yangcheng Press Sports Development Company Limited (“Yang Cheng Sports”) as tenant in relation to the lease of Portion of Level 6, Printing Building, 733 Dongfengdong Road, Guangzhou, Guangdong Province, the PRC for a period of 21 months expiring on 31 March 2005.
(80) A tenancy agreement dated 1 July 2003 entered into between Mr. Chen Hui Ying as landlord and Xiamen Bomei Advertising Company Limited (“Bomei JV”) as tenant in relation to the lease of Unit Nos. C and D, Level 22, CITIC Huiyang Building, 59 Hubin North Road, Siming District, Xiamen, Fujian Province, the PRC for a period of one year expiring on 31 July 2004.
(81) A share purchase agreement dated 2 July 2003 entered into between Turner Broadcasting System Asia Pacific Inc. (“TBSAP”) as vendor, TOM Television Group Limited (“TOM TV”) as purchaser, Turner Broadcasting System, Inc. (“TBS”) as vendor guarantor and the Company as purchaser guarantor relating to the sale and purchase of 64.07% of the issued share capital of China Entertainment Television Broadcast Limited (“CETV”) the consideration of which shall be satisfied by the issue and allotment of 21,250,000 shares, as amended by a supplemental agreement dated 28 August 2003 entered into between the same parties.
(82) A deed of indemnity dated 2 July 2003 entered into between the Company and TBSAP relating to the proposed acquisition of 4,800 shares of CETV from Lark International Multimedia Limited.
(83) A deed of indemnity dated 2 July 2003 entered into between the Company and TBSAP relating to the proposed acquisition of 1,200 shares of CETV from Mr. Chua Wah Peng, Robert.

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GENERAL INFORMATION

(84) A tenancy agreement dated 2 July 2003 entered into between Beijing Oriental Plaza Company Limited (“Beijing Oriental”) as landlord and Beijing Super Channel Network Limited (“Beijing Super Channel”) as tenant in relation to the lease of the whole of 8th Floor, Tower W3, Oriental Plaza, No. 1 East Chang An Avenue, Dongcheng District, Beijing, the PRC for a period of 3 years expiring on 14 June 2006, as amended by a supplemental tenancy agreement dated 13 February 2004.
(85) A tenancy agreement dated 2 July 2003 entered into between Beijing Oriental as landlord and TOM China as tenant in relation to the lease of Rooms 1-6, 9th Floor, Tower W3, Oriental Plaza, No. 1 East Chang An Avenue, Dongcheng District, Beijing, the PRC for a period of 3 years expiring on 14 June 2006, as amended by a supplemental tenancy agreement dated 13 February 2004.
(86) A tenancy agreement dated 2 July 2003 entered into between Beijing Oriental as landlord and TOM China as tenant in relation to the lease of Rooms 7-8, 9th Floor, Tower W3, Oriental Plaza, No. 1 East Chang An Avenue, Dongcheng District, Beijing, the PRC for a period of 3 years expiring on 14 June 2006, as amended by a supplemental tenancy agreement dated 13 February 2004.
(87) A service agreement dated 2 July 2003 entered into between Hutchison International Limited (“HIL”) and TOM International relating to provision of administrative services and operationrelated consultancy services to TOM International and its subsidiaries (from time to time) by HIL Group.
(88) An information technology consultancy agreement dated 2 July 2003 entered into between HIL and TOM International relating to provision of information technology consultancy services to TOM International and its subsidiaries (from time to time) by HIL Group.
(89) A services agreement dated 2 July 2003 between HIL and TOM International relating to provision of print and publishing services, advertising services, public relations and sports event management services and website development and maintenance services to HIL Group (from time to time) by TOM International and its subsidiaries.
(90) A services agreement dated 2 July 2003 entered into between CKH and TOM International relating to provision of print and publishing services, advertising services, public relations and sports event management services and website development and maintenance services to CKH and its subsidiaries (from time to time) by TOM International and its subsidiaries.
(91) A media services agreement dated 2 July 2003 entered into between Hutchison Global Communications Limited (“HGC”) and TOM International relating to provision of telecommunications and internet related services to TOM International and its subsidiaries (from time to time) by HGC Group.
(92) A media services agreement dated 2 July 2003 entered into between Hutchison Telecommunications (Hong Kong) Limited (“HTHK”) and TOM International relating to provision of telecommunications and internet related services to TOM International and its subsidiaries (from time to time) by HTHK Group.

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GENERAL INFORMATION

(93) A placing agreement dated 3 July 2003 entered into between Schumann, Citigroup Global Markets Limited and the Company, pursuant to which Citigroup Global Markets Limited will purchase or procure purchasers to acquire, and Schumann will sell in aggregate 450,000,000 existing shares of the Company at a price of HK$2.30 per share.
(94) A subscription agreement dated 3 July 2003 entered into between the Company as an issuer and Schumann as a subscriber, pursuant to which Schumann has conditionally agreed to subscribe for 450,000,000 new shares of the Company in total at HK$2.30 per share.
(95) A financing facility agreement dated 10 July 2003 entered into between (1) Cité Publishing Limited (“Cité”), Business Weekly, PC Home and Sharp Point as the co-borrowers; (2) The Development Bank of Singapore Limited, Taipei Branch, Credit Lyonnais, Taipei Branch, United Overseas Bank Limited, Taipei Branch, Bank Sinopac, The Bank of Nova Scotia, Taipei Branch as the banks; (3) The Development Bank of Singapore Limited as the coordinating arranger and facility agent; and (4) Bank Sinopac as the fiscal agent pursuant to which the banks agreed to grant a facility in the amount of NT$1,875,000,000 to the coborrowers (“DBS Facility Agreement”).
(96) A subordination agreement dated 10 July 2003 entered into between The Development Bank of Singapore Limited, Home Media and Cité Publishing Holding in relation to the DBS Facility Agreement.
(97) An assignment dated 15 July 2003 entered into between Diamond Profits as assignor and Cité Publishing Holding as assignee pursuant to which Diamond Profits agreed to assign to Cité Publishing Holding all the rights and obligations under a promissory note issued by Cité in July 2003 in the amount of NT$1,050,000,000.
(98) An assignment dated 15 July 2003 entered into between Right Charm International Limited (“Right Charm”) as assignor and Cité Publishing Holding as assignee pursuant to which Right Charm agreed to assign to Cité Publishing Holding all the rights and obligations under a promissory note issued by Cité in July 2003 in the amount of NT$270,000,000.
(99) A share purchase agreement dated 15 July 2003 entered into between Diamond Profits as vendor and Cité as purchaser whereby Diamond Profits agreed to sell to Cité 169,120 shares in Business Weekly at a consideration of NT$1,450,000,000.
(100) A share purchase agreement dated 15 July 2003 entered into between Home Media as vendor and Cité as purchaser whereby Home Media agreed to sell to Cité 18,310,000 shares in PC Home at a consideration of NT$1,770,000,000.
(101) A share purchase agreement dated 15 July 2003 entered into between Right Charm as vendor and Cité as purchaser whereby Right Charm agreed to sell to Cité 10,296,000 shares in Sharp Point at a consideration of NT$380,000,000.
(102) A loan agreement dated 22 July 2003 entered into between TOM OMG as lender, Mr. Li Jian and Dynamic Net Developments Limited (“Dynamic”) as borrower whereby TOM OMG agreed to lend a loan in the amount of HK$6,000,000 to Mr. Li Jian and Dynamic.
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(103) An equity pledge agreement dated 25 July 2003 entered into between Redsail Yuxiang as pledgor, Redsail and Beijing Lei Ting as pledgees in relation to the pledge of 1,260,068 shares of the Company by Redsail Yuxiang in favour of Beijing Lei Ting and Redsail.
(104) An equity pledge agreement dated 25 July 2003 entered into between Sanjintaihe as pledgor, Redsail and Beijing Lei Ting as pledgees in relation to the pledge of the 282,872 shares of the Company by Sanjintaihe in favour of Beijing Lei Ting and Redsail.
(105) An agreement dated 21 July 2003 entered into between Cité Publishing Holding, TOM Print Media, Mr. Pan Sy Zuan and Mr. Jan whereby Mr. Pan Sy Zuan agreed to (i) sell to Cité Publishing Holding all his shareholding in Home Media; (ii) subscribe for 0.78% of the enlarged issued share capital of Cité Publishing Holding; and (iii) sell one half of his shareholding in Cité Publishing Holding to TOM Print Media on substantially the same terms and conditions as those offered to the other minority shareholders of Home Media.
(106) A customer service center lease agreement dated 30 July 2003 entered into between Beijing GreaTom United Technology Company Limited (“GreaTom”) and Redsail. Pursuant to this lease agreement, GreaTom agreed to lease from Redsail one seat in its customer service center in Beijing for the provision of certain services to customers of GreaTom for a term of one year from 15 August 2003 to 15 August 2004.
(107) A content license agreement dated 6 August 2003 entered into ChinaPlus (Beijing) Company Limited (“ChinaPlus”) and GreaTom. Pursuant to this agreement, ChinaPlus granted a nonexclusive license to GreaTom for, inter alia, the use, broadcast, exhibit, transmission and downloading by website users of certain wireless contents through the Internet, wireless telecommunications equipment or other media for a term of one year from 6 August 2003 to 5 August 2004.
(108) A tenancy agreement dated 14 August 2003 entered into between Beijing Oriental as landlord and LTWJi as tenant, in relation to the lease of the Rooms 7-8 of 5th Floor, Tower W3, Oriental Plaza, No. 1 East Chang An Avenue, Dongcheng District, Beijing, the PRC for a period of 3 years expiring on 14 August 2006, as amended by a supplemental tenancy agreement dated 13 February 2004.
(109) A supplemental agreement a stock purchase agreement dated 21 August 2003 entered into between Right Charm, Mr. Michael Huang, Sharp Point and the persons named in schedule 1 of the stock purchase agreement, which supplements a stock purchase agreement dated 21 November 2001 entered into between the same parties.
(110) An equity transfer agreement dated 28 August 2003 entered into between Shenzhen Freenet as transferor and Ms. Wang and Mr. Sheng Yong (“Mr. Sheng”) as transferees pursuant to which Shenzhen Freenet agreed to transfer its 40% and 30% equity interests in Yang Cheng Advertising to Ms. Wang and Mr. Sheng respectively.

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(111) An escrow letter dated 2 September 2003 relating to the appointment of Scotiatrust (Asia) Limited (“Scotiatrust”) as an escrow agent by Redsail Yuxiang, Redsail, Beijing Lei Ting and Ms. Zhao Xue Xing (趙學英) (“Ms. Zhao”) to hold the certificate for 1,260,068 ordinary shares of the Company.
(112) An escrow letter dated 2 September 2003 relating to the appointment of Scotiatrust as an escrow agent by Sanjintaihe, Redsail, Beijing Lei Ting and Ms. Zhao to hold the certificate for 282,872 ordinary shares of the Company.
(113) A shareholders’ agreement dated 15 September 2003 entered into between Mr. Jiang Ming, Henan Tianming Advertising Company Limited (“Tianming”), TOM OMG, Beijing Tianming International Investment Management Company Limited (“Tianming International”), Fench Management and Henan New Tianming Advertising & Information Chuanbo Company Limited (“Tianming JV”), pursuant to which certain terms set out in the Tianming Framework Agreement dated 13 March 2002 were amended.
(114) A shareholders’ deed dated 15 September 2003 entered into between TOM TV, TBSAP, the Company, TBS and CETV under which, among other things, TOM TV will provide CETV with funding for working capital purposes of CETV as determined by the board of directors of CETV from time to time as amended by a supplemental deed dated 30 March 2004 entered into between the same parties.
(115) An option deed dated 15 September 2003 entered into between TOM TV, TBSAP, the Company and TBS, pursuant to which TOM TV agreed to grant to TBSAP call options over all of the 19,222 ordinary shares of HK$0.30 each in the capital of CETV held by TOM TV upon the terms and subject to the conditions set out in the deed as amended by a supplemental deed dated 30 March 2004 entered into between the same parties.
(116) A program management agreement dated 15 September 2003 entered into between TBSAP, CETV and TOM TV, under which TBSAP will provide certain programming management services to CETV at such fee agreed by TBSAP and CETV.
(117) An asset purchase agreement dated 15 September 2003 entered into between TBSAP and CETV, pursuant to which CETV will acquire from TBSAP certain office equipments (such as computers and printers) at a consideration of HK$1 upon the terms and subject to the conditions set out in the agreement.
(118) A tax deed dated 15 September 2003 entered into between TBSAP and CETV, pursuant to which TBSAP will indemnify CETV against certain tax liabilities (such as profits tax, stamp duty and estate duty) incurred by CETV from 31 May 2000 to 15 September 2003 and which are not disclosed in the audited accounts of CETV for the years ended 31 December 2001 and 31 December 2002, respectively.

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GENERAL INFORMATION

(119) A tenancy agreement dated 16 September 2003 entered into between 匯龍森國際企業孵化（北京）有限公司 (Hui Long Sen Enterprise Incubate (Beijing) Company Limited) as landlord and Puccini International Limited (“Puccini”) as tenant, in relation to the lease of Room B407-5, Level 4, Huilongsen International Enterprise Incubator Building, No. 14 Zhonghe Street, Economic and Developing Zone, Beijing, the PRC for a period of one year. This agreement expired on 30 September 2004.
(120) A sub-tenancy agreement dated 19 September 2003 entered into between TOM China and the Beijing representative office of CETV in relation to the sub-lease of Room 903B of 9th Floor, Tower W3, Oriental Plaza, No. 1 East Chang An Avenue, Dongcheng District, Beijing, the PRC expiring on 14 June 2006.
(121) A restructuring agreement dated 20 September 2003 entered into between the Company, TOM Online and Rich Wealth Holdings Limited (“Rich Wealth”), pursuant to which the Company and Rich Wealth agreed to transfer to TOM Online their 100% interest in the issued share capital of Lahiji, Laurstinus Limited (“Laurstinus”) and Advanced Internet, respectively.
(122) A license agreement dated 21 September 2003 (as amended on the same date) entered into between Dragonfly GF Company Limited (“Dragonfly”) as licensor and Beijing Lei Ting as licensee, pursuant to which Dragonfly agreed to grant Beijing Lei Ting the license to market, sell, distribute and publish “KARMA ONLINE” program and related user documentation for use.
(123) A loan agreement dated 21 September 2003 entered into between the Company as lender and Laurstinus as borrower whereby the Company advanced a loan in the amount of HK$12,751,624 to Laurstinus.
(124) A loan agreement dated 21 September 2003 entered into between the Company as lender and Lahiji as borrower whereby the Company advanced a loan in the amount of HK$67,610,673 to Lahiji.
(125) A loan agreement dated 21 September 2003 entered into between the Company as lender and Advanced Internet as a borrower whereby the Company advanced a loan in the amount of HK$75,930,226 to Advanced Internet.
(126) A novation agreement dated 21 September 2003 entered into between Shenzhen Freenet, the Company, Kunming Fench Star Information Industry Limited (“Fench Star”) pursuant to which the parties agreed the novation of all rights, obligations and liabilities of Shenzhen Freenet to the Company under the advertising design agreement dated 26 February 2001 and the promotion agreement on internet market dated 8 March 2001 entered into between Shenzhen Freenet and Fench Star respectively at a consideration of HK$1.
(127) A novation agreement dated 21 September 2003 entered into between Beijing Super Channel, the Company and Fench Star pursuant to which the parties agreed the novation of all rights, obligations and liabilities of Beijing Super Channel to the Company under several service contracts entered into between Beijing Super Channel and Fench Star on 2 January 2001, 2 February 2001, 5 February 2001, 10 February 2001 and 15 February 2001 respectively at a consideration of HK$1.

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(128) A deed of novation dated 21 September 2003 entered into between Laurstinus as assignor, the Company as assignee and TOM International as creditor in relation to the assignment of a loan in the sum of HK$18,020 from Laurstinus to the Company.
(129) A deed of novation dated 21 September 2003 entered into between Advanced Internet as assignor, the Company as assignee and Commercelink Profits Limited (“Commercelink”) as creditor in relation to the assignment of a loan in the sum of HK$12,790,075 from Advanced Internet to the Company.
(130) A deed of novation dated 21 September 2003 entered into between Lahiji as assignor, the Company as assignee and TOM International as creditor in relation to the assignment of a loan in the sum of HK$15,453 from Lahiji to the Company.
(131) A deed of novation dated 21 September 2003 entered into between GreaTom as assignor, Laurstinus as assignee and the Company as creditor in relation to the assignment of a loan in the sum of HK$155,968 from GreaTom to Laurstinus.
(132) A deed of novation dated 21 September 2003 entered into between GreaTom as assignor, the Company as assignee and Beijing Planet Network Travel Information Technology Limited (“Beijing Planet”) as creditor in relation to the assignment of a loan in the sum of HK$138,920 from GreaTom to the Company.
(133) A deed of novation dated 21 September 2003 entered into between GreaTom as assignor, the Company as assignee and China Travel Network Company Limited (“China Travel Network”) as creditor in relation to the assignment of a loan in the sum of HK$46,610 from GreaTom to the Company.
(134) A deed of novation dated 21 September 2003 entered into between GreaTom as assignor, the Company as assignee and TOM International as creditor in relation to the assignment of a loan in the sum of HK$1,654 from GreaTom to the Company.
(135) A deed of novation dated 21 September 2003 entered into between GreaTom as assignor, the Company as assignee and ChinaPlus as debtor in relation to the assignment of a loan in the sum of HK$6,051 from GreaTom to the Company.
(136) A deed of novation dated 21 September 2003 entered into between GreaTom as assignor, the Company as assignee and TOM OMG as debtor in relation to the assignment of a loan in the sum of HK$10,500 from GreaTom to the Company.
(137) A deed of novation dated 21 September 2003 entered into between GreaTom as assignor, the Company as assignee and Yang Cheng Advertising as debtor in relation to the assignment of a loan in the sum of HK$14,664 from GreaTom to the Company.
(138) A deed of novation dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and 北京維港世紀諮詢投資有限公司 (Beijing Wei Gang Shiji Consultancy Investment Company Limited) as creditor in relation to the assignment of a loan in the sum of HK$37,393 from Beijing Super Channel to the Company.

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(139) A deed of novation dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and Alexus Company Limited (“Alexus”) as creditor in relation to the assignment of a loan in the sum of HK$234,000 from Beijing Super Channel to the Company.
(140) A deed of novation dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and ECLink Shenzhen as creditor in relation to the assignment of a loan in the sum of HK$1,707,104 from Beijing Super Channel to the Company.
(141) A deed of novation dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and TOM International as creditor in relation to the assignment of a loan in the sum of HK$64,506,779 from Beijing Super Channel to the Company.
(142) A deed of novation dated 21 September 2003 entered into between Shanghai Super Channel Network Limited (“Shanghai Super Channel”) as assignor, the Company as assignee and TOM OMG as creditor in relation to the assignment of a loan in the sum of HK$52,194 from Shanghai Super Channel to the Company.
(143) A deed of novation dated 21 September 2003 entered into between Beijing Super Channel as assignor, Laurstinus as assignee and the Company as creditor in relation to the assignment of a loan in the sum of HK$48,927,432 from Beijing Super Channel to Laurstinus.
(144) A deed of assignment dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and Shanghai Maya Cultural Transmission Company Limited (“Shanghai Maya Cultural”) as debtor in relation to the assignment of a loan in the sum of HK$9,306,000 from Beijing Super Channel to the Company.
(145) A deed of novation dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and ChinaCare as debtor in relation to the assignment of a loan in the sum of HK$12,890 from Beijing Super Channel to the Company.
(146) A deed of assignment dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and Beijing Oriental China Travel Agency Limited (“Oriental China Travel”) as debtor in relation to the assignment of a loan in the sum of HK$1,998,117 from Beijing Super Channel to the Company.
(147) A deed of assignment dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and Beijing TOM as debtor in relation to the assignment of a loan in the sum of HK$4,587,909 from Beijing Super Channel to the Company.
(148) A deed of assignment dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and Beijing Planet as debtor in relation to the assignment of a loan in the sum of HK$668,193 from Beijing Super Channel to the Company.

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(149) A deed of assignment dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and ChinaPlus as debtor in relation to the assignment of a loan in the sum of HK$28,949 from Beijing Super Channel to the Company.
(150) A deed of assignment dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and China Travel Network as debtor in relation to the assignment of a loan in the sum of HK$1,584,090 from Beijing Super Channel to the Company.
(151) A deed of assignment dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and Fench Star as debtor in relation to the assignment of a loan in the sum of HK$3,684,655 from Beijing Super Channel to the Company.
(152) A deed of assignment dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and Shanghai Maya Online Broadband Network Company Limited (“Shanghai Maya Online”) as debtor in relation to the assignment of a loan in the sum of HK$5,085,095 from Beijing Super Channel to the Company.
(153) A deed of assignment dated 21 September 2003 entered into between Beijing Super Channel as assignor, the Company as assignee and Sharkwave Information Technology (Beijing) Company Limited as debtor in relation to the assignment of a loan in the sum of HK$1,140,892 from Beijing Super Channel to the Company.
(154) A deed of novation dated 21 September 2003 entered into between Beijing Lei Ting as assignor, the Company as assignee and Beijing TOM as debtor in relation to the assignment of a loan in the sum of HK$486,762 from Beijing Lei Ting to the Company.
(155) A deed of novation dated 21 September 2003 entered into between Beijing Lei Ting as assignor, the Company as assignee and Sharkwave Information Technology (Beijing) Company Limited as creditor in relation to the assignment of a loan in the sum of HK$2,765 from Beijing Lei Ting to the Company.
(156) A deed of novation dated 21 September 2003 entered into between Beijing Lei Ting as assignor, the Company as assignee and TOM International as creditor in relation to the assignment of a loan in the sum of HK$1,631,911 from Beijing Lei Ting to the Company.
(157) A deed of assignment dated 21 September 2003 entered into between Beijing Lei Ting as assignor, Lahiji as the assignee and the Company as debtor in relation to the assignment of a loan in the sum of HK$6,047,273 from Beijing Lei Ting to Lahiji.
(158) A deed of assignment dated 21 September 2003 entered into between Beijing Lei Ting as assignor, the Company as assignee and Oriental China Travel as debtor in relation to the assignment of a loan in the sum of HK$2,210,142 from Beijing Lei Ting to the Company.
(159) A deed of assignment dated 21 September 2003 entered into between Beijing Lei Ting as assignor, the Company as assignee and China Travel Network as debtor in relation to the assignment of a loan in the sum of HK$831,802 from Beijing Lei Ting to the Company.

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(160) A deed of assignment dated 21 September 2003 entered into between Beijing Lei Ting as assignor, the Company as assignee and ECLink Shenzhen as debtor in relation to the assignment of a loan in the sum of HK$19,522 from Beijing Lei Ting to the Company.
(161) A deed of assignment dated 21 September 2003 entered into between Beijing Lei Ting as assignor, the Company as assignee and Shenzhen Freenet as debtor in relation to the assignment of a loan in the sum of HK$129,438 from Beijing Lei Ting to the Company.
(162) A deed of assignment dated 21 September 2003 entered into between Beijing Lei Ting as assignor, the Company as assignee and TOM OMG as debtor in relation to the assignment of a loan in the sum of HK$259,006 from Beijing Lei Ting to the Company.
(163) A deed of assignment dated 21 September 2003 entered into between Shanghai Super Channel as assignor, Lauristinus as assignee and the Company as debtor in relation to the assignment of a loan in the sum of HK$3,505,909 from Shanghai Super Channel to the Company.
(164) A deed of novation dated 21 September 2003 entered into between Shenzhen Freenet as assignor, Advanced Internet as assignee and the Company as creditor in relation to the assignment of a loan in the sum of HK$10,508,116 from Shenzhen Freenet to Advanced Internet.
(165) A deed of novation dated 21 September 2003 entered into between Shenzhen Freenet as assignor, the Company as assignee and ECLink Shenzhen as creditor in relation to the assignment of a loan in the sum of HK$4,723,086 from Shenzhen Freenet to the Company.
(166) A deed of novation dated 21 September 2003 entered into between Shenzhen Freenet as assignor, the Company as assignee and TOM International as creditor in relation to the assignment of a loan in the sum of HK$562,917 from Shenzhen Freenet to the Company.
(167) A deed of assignment dated 21 September 2003 entered into between Shenzhen Freenet as assignor, the Company as assignee and Shanghai Maya Cultural as debtor in relation to the assignment of a loan in the sum of HK$1,314,910 from Shenzhen Freenet to the Company.
(168) A deed of assignment dated 21 September 2003 entered into between Shenzhen Freenet as assignor, the Company as assignee and Shenzhen Freenet Advertising as debtor in relation to the assignment of a loan in the sum of HK$3,478,000 from Shenzhen Freenet to the Company.
(169) A deed of assignment dated 21 September 2003 entered into between Shenzhen Freenet as assignor, the Company as assignee and Shenzhen Freenet Advertising as debtor in relation to the assignment of a loan in the sum of HK$173,458.12 from Shenzhen Freenet to the Company.
(170) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, Laurstinus as assignee and the Company as the debtor in relation to the assignment of a loan in the sum of HK$88,223,879 from TOM China to Laurstinus.

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GENERAL INFORMATION

(171) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Guangzhou Hong Xiang Audio-Video Production Company Limited (“Hong Xiang Production”) as the debtor in relation to the assignment of a loan in the sum of HK$141,687 from TOM China to the Company.
(172) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Beijing TOM as the debtor in relation to the assignment of a loan in the sum of HK$42,127 from TOM China to the Company.
(173) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and China Travel Network as the debtor in relation to the assignment of a loan in the sum of HK$19,706 from TOM China to the Company.
(174) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and ChinaPlus as the debtor in relation to the assignment of a loan in the sum of HK$156,092 from TOM China to the Company.
(175) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and CNPIT TOM Culture Company Limited 北京中圖通文化諮詢有限公司 (CNPIT TOM Culture Company Limited) (“CNPIT TOM Culture”) as the debtor in relation to the assignment of a loan in the sum of HK$7,261 from TOM China to the Company.
(176) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and ECLink Shenzhen as the debtor in relation to the assignment of a loan in the sum of HK$1,263 from TOM China to the Company.
(177) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Cernet as the debtor in relation to the assignment of a loan in the sum of HK$708,102 from TOM China to the Company.
(178) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Seeout JV as the debtor in relation to the assignment of a loan in the sum of HK$33,840 from TOM China to the Company.
(179) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Guangzhou Tianyu Tenglong Advertising Company Limited (“Tianyu Tenglong Advertising”) as the debtor in relation to the assignment of a loan in the sum of HK$230,095 from TOM China to the Company.
(180) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Tianming JV as the debtor in relation to the assignment of a loan in the sum of HK$52,931 from TOM China to the Company.
(181) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and New Star Prosperity Advertising Company Limited (“New Star JV”) as the debtor in relation to the assignment of a loan in the sum of HK$34,839 from TOM China to the Company.

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(182) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Qingdao Chunyu Advertising Chuanbo Company Limited (“Chunyu JV”) as the debtor in relation to the assignment of a loan in the sum of HK$20,651 from TOM China to the Company.
(183) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Shangdong Longjun Media Company Limited (formerly known as Qilu JV) as the debtor in relation to the assignment of a loan in the sum of HK$22,560 from TOM China to the Company.
(184) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Sano JV as the debtor in relation to the assignment of a loan in the sum of HK$45,120 from TOM China to the Company.
(185) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Southwest JV as the debtor in relation to the assignment of a loan in the sum of HK$42,300 from TOM China to the Company.
(186) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and TOM International as the debtor in relation to the assignment of a loan in the sum of HK$11,191,740 from TOM China to the Company.
(187) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and TOM OMG as debtor in relation to the assignment of a loan in the sum of HK$2,267,567 from TOM China to the Company.
(188) A deed of assignment dated 21 September 2003 entered into between TOM China as assignor, the Company as assignee and Bomei JV as the debtor in relation to the assignment of a loan in the sum of HK$16,920 from TOM China to the Company.
(189) A tenancy agreement dated 23 September 2003 entered into between Mr. Yan Zheng Yong (顏正勇 ) and the Chengdu branch of Beijing Lei Ting in relation to the lease of Room 908 and 910, Level 9, Block C, Chengdu International Business Centre, 1 Tianxianqiao South Road, Chengdu, Sichuan Province, the PRC for a period of one year. This agreement expired on 23 September 2004.
(190) A content provision agreement dated 24 September 2003 entered into between ChinaCare and LTWJi in relation to the provision by ChinaCare of medical information content and related maintenance service to LTWJi for a term of one year from 1 August 2003 to 31 July 2004.

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(191) A novation agreement dated 25 September 2003 entered into between Ms. Wang, Mr. Wang, Devine Gem Management Limited (“Devine Gem”) and Puccini, under which, Ms. Wang, Mr. Wang and Devine Gem agreed the novation of all rights, obligations and liabilities from Devine Gem to Puccini at nil consideration as set out in the (i) exclusive option agreement dated 25 July 2002 entered into between Ms. Wang, Mr. Wang, Devine Gem and LTWJi; and (ii) equity pledge agreement dated 25 July 2002 entered into between Ms. Wang, Mr. Wang and Devine Gem.
(192) A novation agreement dated 25 September 2003 entered into between Mr. Wang, Ms. Wang, Devine Gem, and Puccini, under which, all parties agreed the novation of all rights, obligations and liabilities from Devine Gem to Puccini as set out in the loan agreement dated 25 July 2002 entered into between Ms. Wang, Mr. Wang and Devine Gem.
(193) An investment attorney agreement dated 25 September 2003 entered into between Puccini, Mr. Wang and Ms. Wang, pursuant to which all parties acknowledged the provision of RMB400,000 and RMB100,000 to Mr. Wang and Ms. Wang respectively by Puccini to invest in LTWJi as registered capital.
(194) An equity transfer agreement dated 25 September 2003 entered into between Great Wall Computer Software and Systems Incorporation Limited (“Great Wall Computer”) as transferor, TOM China, Great Wall Technology Company Limited (“Great Wall Technology”) and Shenzhen Freenet as transferee, pursuant to which Great Wall Computer agreed to transfer its 20% equity interest in GreaTom to Shenzhen Freenet for a consideration of RMB3,380,000.
(195) A supplemental agreement dated 25 September 2003 entered into between TOM China, Great Wall Technology and Shenzhen Freenet, which supplements the agreement dated 2 January 2001 entered into between TOM China, Great Wall Computer and Great Wall Technology in relation to the establishment of GreaTom.
(196) A sale and purchase agreement dated 25 September 2003 entered into between Cranwood as vendor, Bright Horizon Enterprises Limited (“Bright Horizon”) as purchaser, the Company as guarantor and TOM Online as a guarantor with respect to the sale and purchase of the entire issued share capital of Puccini, which provides wireless IVR services in China through LTWJi, as amended by a supplemental agreement dated 29 October 2003 entered into between Cranwood, Bright Horizon, the Company, TOM Online and Ms. Chau Hoi Shuen.
(197) A termination agreement dated 26 September 2003 entered into between Beijing Super Channel and Beijing Lei Ting in relation to the termination of the agreement for development and provision of network content dated 12 June 2001.
(198) A termination agreement dated 26 September 2003 entered into between Beijing Super Channel and Shenzhen Freenet in relation to the termination of the agreement for development and provision of network content dated 29 December 2000.

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(199) A termination agreement dated 26 September 2003 entered into between tom.com enterprises limited (“TOM Enterprises”) and Beijing Lei Ting in relation to the termination of the domain names license agreement dated 30 April 2001.
(200) A supplemental loan agreement dated 26 September 2003 entered into between Lahiji as lender and Ms. Wang as borrower whereby Lahiji agreed to provide Ms. Wang a long term loan in the amount of RMB8,800,000 to be invested exclusively in Beijing Lei Ting, which supplements the loan agreement dated 8 August 2002 entered into between the same parties.
(201) A supplemental loan agreement dated 26 September 2003 entered into between Advanced Internet as lender and Ms. Wang as borrower whereby Advanced Internet agreed to provide Ms. Wang a long term loan in the amount of RMB70,722,947 to be invested exclusively in Shenzhen Freenet, which supplements the loan agreement dated 25 November 2002 entered into between the same parties.
(202) A loan agreement dated 26 September 2003 entered into between Advanced Internet as lender and Mr. Sheng as borrower whereby Advanced Internet agreed to provide Mr. Sheng a loan in the amount of RMB6,900,000 to be invested exclusively in Shenzhen Freenet.
(203) A supplemental loan agreement dated 26 September 2003 entered into between Advanced Internet as lender and Ms. Wang as borrower which is supplemental to the loan agreement dated 25 November 2002 entered into between the same parties whereby Advanced Internet granted a loan in the amount of RMB16,100,000 to Ms. Wang.
(204) A supplemental equity pledge agreement dated 26 September 2003 entered into between Beijing Super Channel as pledgee and Ms. Wang as pledgor relating to the novation of all rights, obligations and liabilities from Lahiji to Beijing Super Channel, pursuant to the share pledge agreement dated 8 August 2002 entered into between Ms. Wang and Lahiji. Pursuant to the supplemental share pledge agreement, Ms. Wang pledges to Beijing Super Channel her 80% equity interest in Beijing Lei Ting to guarantee the performance by Beijing Lei Ting of its obligations under the exclusive technical and consultancy services agreement between Beijing Lei Ting and Beijing Super Channel. The term of the agreement is 10 year, which may be extended with the written consent of Beijing Super Channel prior to the expiry of such 10 years term.
(205) An equity pledge agreement dated 26 September 2003 entered into between Beijing Super Channel as pledgee and Mr. Wang as pledgor, pursuant to which Mr. Wang pledges to Beijing Super Channel his 20% equity interest in Beijing Lei Ting to guarantee the performance by Beijing Lei Ting of its obligations under the exclusive technical and consultancy services agreement between Beijing Lei Ting and Beijing Super Channel. The term of the agreement is 10 year, which may be extended with the written consent of Beijing Super Channel prior to the expiry of such 10 years term.

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(206) An equity pledge agreement dated 26 September 2003 entered into between Beijing Super Channel as pledgee and Mr. Sheng as pledgor, pursuant to which Mr. Sheng pledged to Beijing Super Channel his 30% equity interest in Shenzhen Freenet to guarantee the performance by Shenzhen Freenet of its obligations under the exclusive technical and consultancy services agreement between Shenzhen Freenet and Beijing Super Channel. The term of the agreement is from the date of the registration of this pledge with the relevant PRC regulatory authority until the termination or expiration of the exclusive technical and consultancy services agreement between Beijing Super Channel and Shenzhen Freenet.
(207) An equity pledge agreement dated 26 September 2003 entered into between Beijing Super Channel as pledgee and Ms. Wang as pledgor, pursuant to which Ms. Wang pledged to Beijing Super Channel her 70% equity interest in Shenzhen Freenet to guarantee the performance by Shenzhen Freenet of its obligations under the exclusive technical and consultancy services agreement between Shenzhen Freenet and Beijing Super Channel. The term of the agreement is from the date of the registration of this pledge with the relevant PRC regulatory authority until the termination or expiration of the exclusive technical and consultancy services agreement between Beijing Super Channel and Shenzhen Freenet.
(208) An exclusive option agreement dated 26 September 2003 entered into between Ms. Wang, Lahiji and Beijing Lei Ting, pursuant to which Ms. Wang granted Lahiji an exclusive option to purchase her 80% equity interest in Beijing Lei Ting when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Wang. The term of this agreement is 10 years from the date of execution.
(209) An exclusive option agreement dated 26 September 2003 entered into between Mr. Wang, Lahiji and Beijing Lei Ting, pursuant to which Mr. Wang granted Lahiji an exclusive option to purchase his 20% equity interest in Beijing Lei Ting when permitted by PRC law at the exercise price of RMB900,000. The term of this agreement is 10 years from the date of execution.
(210) An exclusive option agreement dated 26 September 2003 entered into between Ms. Wang, Advanced Internet and Shenzhen Freenet, pursuant to which Ms. Wang granted Advanced Internet an exclusive option to purchase her 70% equity interest in Shenzhen Freenet when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Wang. The term of this agreement is 10 years from the date of execution with an option to extend for a further 10 years.
(211) An exclusive option agreement dated 26 September 2003 entered into between Mr. Sheng, Advanced Internet and Shenzhen Freenet, pursuant to which Mr. Sheng granted Advanced Internet an exclusive option to purchase his 30% equity interest in Shenzhen Freenet when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Sheng. The term of this agreement is 10 years from the date of execution with an option to extend for a further 10 years.

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GENERAL INFORMATION

(212) A business operation agreement dated 26 September 2003 entered into between Beijing Super Channel, Beijing Lei Ting, Ms. Wang and Mr. Wang, pursuant to which Beijing Super Channel agreed to act as a performance guarantor for Beijing Lei Ting in respect of its transactions with third parties. In return, Beijing Lei Ting granted Beijing Super Channel a security interest over all of its assets. In addition, Beijing Lei Ting and all of its shareholders agreed that Beijing Lei Ting will not carry on any transactions that may materially adversely affect its operations and will appoint Beijing Super Channel’s nominees as its directors, chief executive officers and other senior officers. The term of this agreement is 10 years from the date of execution.
(213) A business operation agreement dated 26 September 2003 entered into between Beijing Super Channel, Shenzhen Freenet, Ms. Wang and Mr. Sheng, pursuant to which Beijing Super Channel agreed to act as a performance guarantor for Shenzhen Freenet in respect of its transactions with third parties. In return, Shenzhen Freenet granted Beijing Super Channel a security interest over all of its assets. In addition, Shenzhen Freenet and all of its shareholders agreed that Shenzhen Freenet will not carry on any transactions that may materially adversely affect its operations and will appoint Beijing Super Channel’s nominees as its directors, chief executive officers and other senior officers. The term of this agreement is 10 years from the date of execution.
(214) A novation agreement dated 26 September 2003 entered into between Advanced Internet, Ms. Wang and Mr. Sheng, pursuant to which Mr. Sheng assumes all of the rights and obligations of Ms. Wang with respect to certain loans borrowed by Ms. Wang.
(215) An equity transfer agreement dated 26 September 2003 entered into between Beijing Lei Ting and Mr. Wang Ting Ting, pursuant to which Beijing Lei Ting agreed to transfer its 20% equity interest in Oriental China Travel to Mr. Wang Ting Ting.
(216) An equity transfer agreement dated 26 September 2003 entered into between Beijing Lei Ting, Shenzhen Freenet, Ms. Wang, Mr. Sheng, Mr. Wang Ting Ting, pursuant to which (i) Shenzhen Freenet agreed to transfer its 40% equity interest in Redsail to Ms. Wang; and (ii) Beijing Lei Ting agreed to transfer its 40% equity interest in Redsail to Mr. Sheng and 20% equity interest in Redsail to Mr. Wang Ting Ting respectively.
(217) An equity transfer agreement dated 26 September 2003 entered into between Mr. Wang and Mr. Wang Ting Ting, pursuant to which Mr. Wang agreed to transfer his 20% equity interest in Beijing TOM to Mr. Wang Ting Ting.
(218) An equity transfer agreement dated 26 September 2003 entered into between Ms. Wang and Mr. Sheng, pursuant to which Ms. Wang agreed to transfer her 40% equity interest in Beijing TOM to Mr. Sheng.
(219) A loan agreement dated 26 September 2003 entered into between TOM Outdoor Advertising Company Limited (“TOM Outdoor”) as lender and Ms. Wang as borrower whereby TOM Outdoor agreed to grant a loan in the amount of RMB400,000 to Ms. Wang to invest in Beijing TOM as its registered capital.

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GENERAL INFORMATION

(220) A loan agreement dated 26 September 2003 entered into between TOM Outdoor as lender and Mr. Sheng as borrower whereby TOM Outdoor agreed to grant a loan in the amount of RMB400,000 to Mr. Sheng to invest in Beijing TOM as its registered capital.
(221) A loan agreement dated 26 September 2003 entered into between TOM Outdoor as lender and Mr. Wang Ting Ting as borrower whereby TOM Outdoor agreed to grant a loan in the amount of RMB200,000 to Mr. Wang Ting Ting to invest in Beijing TOM as its registered capital.
(222) An exclusive option agreement dated 26 September 2003 entered into between TOM Outdoor, Beijing TOM and Ms. Wang, pursuant to which Ms. Wang granted TOM Outdoor an exclusive option to purchase her 40% equity interest in Beijing TOM when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Wang. The term of this agreement is 10 years from the date of execution with an option to extend a further 10 years.
(223) An exclusive option agreement dated 26 September 2003 entered into between TOM Outdoor, Beijing TOM and Mr. Sheng, pursuant to which Mr. Sheng granted TOM Outdoor an exclusive option to purchase his 40% equity interest in Beijing TOM when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Sheng. The term of this agreement is 10 years from the date of execution an option to extend a further 10 years.
(224) An exclusive option agreement dated 26 September 2003 entered into between TOM Outdoor, Beijing TOM and Mr. Wang Ting Ting, pursuant to which Mr. Wang Ting Ting granted TOM Outdoor an exclusive option to purchase his 20% equity interest in Beijing TOM when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Wang Ting Ting. The term of this agreement is 10 years from the date of execution an option to extend a further 10 years.
(225) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between ECLink Shenzhen and Beijing TOM, pursuant to which ECLink Shenzhen agreed to provide technical consultancy and services exclusively for Beijing TOM during the term of the agreement. This agreement was terminated by a termination agreement dated 2 June 2004 entered into between the same parties.
(226) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Ms. Wang as pledgor whereby Ms. Wang agreed to pledge her 40% equity interest in Beijing TOM to ECLink Shenzhen, as amended by a supplemental equity pledge agreement dated 2 June 2004 entered into between Ms. Wang, ECLink Shenzhen and Kunming Fench Media Company Limited (“Fench Media”).
(227) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Mr. Wang Ting Ting as pledgor whereby Mr. Wang Ting Ting agreed to pledge his 20% equity interest in Beijing TOM to ECLink Shenzhen, as amended by a supplemental equity pledge agreement dated 2 June 2004 entered into between Mr. Wang, ECLink Shenzhen and Fench Media.

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GENERAL INFORMATION

(228) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Mr. Sheng as pledgor whereby Mr. Sheng agreed to pledge his 40% equity interest in Beijing TOM to ECLink Shenzhen, as amended by a supplemental equity pledge agreement dated 2 June 2004 entered into between Mr. Sheng, ECLink Shenzhen and Fench Media.
(229) A business operation agreement dated 26 September 2003 entered into between ECLink Shenzhen, Beijing TOM, Ms. Wang, Mr. Sheng and Mr. Wang Ting Ting, pursuant to which ECLink Shenzhen agreed to act as a performance guarantor for Beijing TOM in respect of its transactions with third parties. In return, Beijing TOM granted ECLink Shenzhen a security interest over all of its assets. In addition, Beijing TOM and all of its shareholders agreed that Beijing TOM will not carry on any transactions that may materially adversely affect its operations and will appoint ECLink Shenzhen’s nominees as its directors, chief executive officer and other senior officers. The term of this agreement is ten years from the date of execution. This agreement was terminated by a termination agreement dated 2 June 2004 entered into between the same parties.
(230) An administrative services agreement dated 26 September 2003 entered into between TOM International and TOM Online, pursuant to which TOM International will provide or will use reasonable endeavours to procure the TOM Group to provide TOM Online certain (i) administrative services, including legal, advisory and supporting services, and other services of nature similar to such services as may be agreed between the relevant parties from time to time and (ii) operation-related consultancy services, including information technology consultancy and supporting services and certain business development support services.
(231) A media services agreement dated 26 September 2003 entered into between TOM International and TOM Online, pursuant to which TOM International agreed to provide, or will use reasonable endeavors to procure the TOM Group to provide, certain media services on a non-exclusive basis to TOM Online.
(232) An online media services agreement dated 26 September 2003 entered into between TOM International and TOM Online, pursuant to which TOM Online and its subsidiaries agreed to provide certain online services on a non-exclusive basis to the TOM Group.
(233) A wireless IVR services agreement dated 8 October 2003 entered into between LTWJi and Beijing Mobile. Pursuant to this agreement, LTWJi agreed to provide wireless IVR services to the mobile phone users of Beijing Mobile. This agreement will expire in November 2004.
(234) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between Beijing Super Channel and Shenzhen Freenet, pursuant to which Shenzhen Freenet agreed to engage Beijing Super Channel exclusively for certain technical and consultancy services. The term of this agreement is 10 years from the date of execution.
(235) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between Beijing Super Channel and Beijing Lei Ting, pursuant to which Beijing Lei Ting agreed to engage Beijing Super Channel exclusively for certain technical and consultancy services. The term of this agreement is 10 years from the date of execution.

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(236) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between GreaTom and Shenzhen Freenet, pursuant to which Shenzhen Freenet agreed to engage GreaTom exclusively (other than Beijing Super Channel) for certain technical and consultancy services. The term of this agreement is 10 years from the date of execution.
(237) A termination agreement dated 26 September 2003 entered into between Lahiji and Mr. Wang, with respect to the termination of the share pledge agreement dated 8 August 2002 entered into between the same parties.
(238) A termination agreement dated 26 September 2003 entered into between Lahiji, Mr. Wang and Ms. Wang in relation to the termination of the exclusive option agreement dated 8 August 2002 entered into between the same parties.
(239) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between ECLink Shenzhen and Beijing TOM, pursuant to which ECLink Shenzhen agreed to provide technical consultancy and services exclusively for Beijing TOM during the term of the agreement.
(240) A business operation agreement dated 26 September 2003 entered into between ECLink Shenzhen, Beijing TOM, Mr. Wang Ting Ting, Mr. Sheng and Ms. Wang, pursuant to which ECLink Shenzhen agreed to act as a performance guarantor for Beijing TOM in respect of its transactions with third parties. In return, Beijing TOM granted ECLink Shenzhen a security interest over all of its assets. In addition, Beijing TOM and all of its shareholders agreed that Beijing TOM will not carry on any transactions that may materially adversely affect its operations and will appoint ECLink Shenzhen’s nominees as its directors, chief executive officer and other senior officers. The term of this agreement is 10 years from the date of execution.
(241) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Mr. Wang Ting Ting as borrower whereby TOM International agreed to grant a loan in the amount of RMB100,000 to Mr. Wang Ting Ting to invest in Oriental China Travel as its registered capital.
(242) An exclusive option agreement dated 26 September 2003 entered into between TOM International, Oriental China Travel and Mr. Wang Ting Ting, pursuant to which Mr. Wang Ting Ting granted TOM International an exclusive option to purchase his 20% equity interest in Oriental China Travel when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Wang Ting Ting. The term of this agreement is 10 years from the date of execution.
(243) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between ECLink Shenzhen and Oriental China Travel, pursuant to which ECLink Shenzhen agreed to provide technical consultancy and services exclusively for Oriental China Travel during the term of the agreement.

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(244) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Mr. Wang Ting Ting as pledgor whereby Mr. Wang Ting Ting agreed to pledge his 20% equity interest in Oriental China Travel to ECLink Shenzhen.
(245) A business operation agreement dated 26 September 2003 entered into between ECLink Shenzhen, Oriental China Travel and Mr. Wang Ting Ting, pursuant to which ECLink Shenzhen agreed to act as a performance guarantor for Oriental China Travel in respect of its transactions with third parties. In return, Oriental China Travel granted ECLink Shenzhen a security interest over all of its assets. In addition, Oriental China Travel and all of its shareholders agreed that Oriental China Travel will not carry on any transactions that may materially adversely affect its operations and will appoint ECLink Shenzhen’s nominees as its directors, chief executive officer and other senior officers. The term of this agreement is ten years from the date of execution.
(246) An equity transfer agreement dated 26 September 2003 entered into between Beijing Lei Ting and Ms. Wang, pursuant to which Beijing Lei Ting agreed to transfer its 40% equity interest in China Travel Network to Ms. Wang.
(247) An equity transfer agreement dated 26 September 2003 entered into between Beijing Lei Ting and Mr. Sheng, pursuant to which Beijing Lei Ting agreed to transfer its 40% equity interest in China Travel Network to Mr. Sheng.
(248) An equity transfer agreement dated 26 September 2003 entered into between Beijing TOM and Mr. Wang Ting Ting, pursuant to which Beijing TOM agreed to transfer its 20% equity interest in China Travel Network to Mr. Wang Ting Ting.
(249) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Ms. Wang as borrower whereby TOM International agreed to grant a loan in the amount of RMB4,000,000 to Ms. Wang to invest in China Travel Network as its registered capital.
(250) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Mr. Sheng as borrower whereby TOM International agreed to grant a loan in the amount of RMB4,000,000 to Mr. Sheng to invest in China Travel Network as its registered capital.
(251) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Mr. Wang Ting Ting as borrower whereby TOM International agreed to grant a loan in the amount of RMB200,000 to Mr. Wang Ting Ting to invest in China Travel Network as its registered capital.
(252) An exclusive option agreement dated 26 September 2003 entered into between TOM International, China Travel Network and Ms. Wang, pursuant to which Ms. Wang granted TOM International an exclusive option to purchase all of her interest in China Travel Network when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Wang. The term of this agreement is 10 years from the date of execution.

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(253) An exclusive option agreement dated 26 September 2003 entered into between TOM International, China Travel Network and Mr. Sheng, pursuant to which Mr. Sheng granted TOM International an exclusive option to purchase all of his interest in China Travel Network when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Sheng. The term of this agreement is 10 years from the date of execution.
(254) An exclusive option agreement dated 26 September 2003 entered into between TOM International, China Travel Network and Mr. Wang Ting Ting, pursuant to which Mr. Wang Ting Ting granted TOM International an exclusive option to purchase all of his interest in China Travel Network when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Wang Ting Ting. The term of this agreement is 10 years from the date of execution.
(255) An exclusive technical and consultancy and services agreement dated 26 September 2003 entered into between ECLink Shenzhen and China Travel Network, pursuant to which ECLink Shenzhen agreed to provide technical consultancy and services exclusively for China Travel Network during the term of the agreement.
(256) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Ms. Wang as pledgor whereby Ms. Wang agreed to pledge her entire equity interest in China Travel Network to ECLink Shenzhen.
(257) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Mr. Sheng as pledgor whereby Mr. Sheng agreed to pledge his entire equity interest in China Travel Network to ECLink Shenzhen.
(258) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Mr. Wang Ting Ting as pledgor whereby Mr. Wang Ting Ting agreed to pledge his entire equity interest in China Travel Network to ECLink Shenzhen.
(259) A business operation agreement dated 26 September 2003 entered into between ECLink Shenzhen, China Travel Network, Ms. Wang, Mr. Sheng and Mr. Wang Ting Ting, pursuant to which ECLink Shenzhen agreed to act as a performance guarantor for China Travel Network in respect of its transactions with third parties. In return, China Travel Network granted ECLink Shenzhen a security interest over all of its assets. In addition, China Travel Network and all of its shareholders agreed that China Travel Network will not carry on any transactions that may materially adversely affect its operations and will appoint ECLink Shenzhen’s nominees as its directors, chief executive officer and other senior officers. The term of this agreement is 10 years from the date of execution.
(260) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Mr. Sheng as borrower whereby TOM International agreed to grant a loan in the amount of RMB18,530,000 to Mr. Sheng to invest in Redsail as its registered capital.

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(261) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Mr. Wang Ting Ting as borrower whereby TOM International agreed to grant a loan in the amount of RMB200,000 to Mr. Wang Ting Ting to invest in Redsail as its registered capital.
(262) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Ms. Wang as borrower whereby TOM International agreed to grant a loan in the amount of RMB35,000,000 to Ms. Wang to invest in Redsail as its registered capital.
(263) An exclusive option agreement dated 26 September 2003 entered into between TOM International, Redsail and Mr. Sheng, pursuant to which Mr. Sheng granted TOM International an exclusive option to purchase his 40% equity interest in Redsail when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Sheng. The term of this agreement is 10 years from the date of execution.
(264) An exclusive option agreement dated 26 September 2003 entered into between TOM International, Redsail and Mr. Wang Ting Ting, pursuant to which Mr. Wang Ting Ting granted TOM International an exclusive option to purchase his 20% equity interest in Redsail when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Wang Ting Ting. The term of this agreement is 10 years from the date of execution.
(265) An exclusive option agreement dated 26 September 2003 entered into between TOM International, Redsail and Ms. Wang, pursuant to which Ms. Wang granted TOM International an exclusive option to purchase her 40% equity interest in Redsail when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Wang. The term of this agreement is 10 years from the date of execution.
(266) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between ECLink Shenzhen and Redsail, pursuant to which ECLink Shenzhen agreed to provide technical consultancy and services exclusively for Redsail during the term of the agreement.
(267) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Mr. Sheng as pledgor whereby Mr. Sheng agreed to pledge his 40% equity interest in Redsail to ECLink Shenzhen.
(268) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Mr. Wang Ting Ting as pledgor whereby Mr. Wang Ting Ting agreed to pledge his 20% equity interest in Redsail to ECLink Shenzhen.
(269) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen and Ms. Wang whereby Ms. Wang agreed to pledge her entire 40% interest in Redsail to ECLink Shenzhen.

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GENERAL INFORMATION

(270) A business operation agreement dated 26 September 2003 entered into between ECLink Shenzhen, Redsail, Mr. Sheng, Mr. Wang Ting Ting and Ms. Wang, pursuant to which ECLink Shenzhen agreed to act as a performance guarantor for Redsail in respect of its transactions with third parties. In return, Redsail granted ECLink Shenzhen a security interest over all of its assets. In addition, Redsail and all of its shareholders agreed that Redsail will not carry on any transactions that may materially adversely affect its operations and will appoint ECLink Shenzhen’s nominees as its directors, chief executive officer and other senior officers. The term of this agreement is 10 years from the date of execution.
(271) An equity transfer agreement dated 26 September 2003 entered into between Shenzhen Freenet and Ms. Wang, pursuant to which Shenzhen Freenet agreed to transfer its 40% equity interest in Shenzhen New ECLink Network Information Technology Company Limited (“Shenzhen New ECLink”) to Ms. Wang.
(272) An equity transfer agreement dated 26 September 2003 entered into between Shenzhen Freenet and Mr. Sheng, pursuant to which Shenzhen Freenet agreed to transfer its 40% equity interest in Shenzhen New ECLink to Mr. Sheng.
(273) An equity transfer agreement dated 26 September 2003 entered into between Shenzhen Freenet and Mr. Wang Ting Ting, pursuant to which Shenzhen Freenet agreed to transfer its 10% equity interest in Shenzhen New ECLink to Mr. Wang Ting Ting.
(274) An equity transfer agreement dated 26 September 2003 entered into between Mr. Wang and Mr. Wang Ting Ting, pursuant to which Mr. Wang agreed to transfer his 10% equity interest in Shenzhen New ECLink to Mr. Wang Ting Ting.
(275) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Ms. Wang as borrower whereby TOM International agreed to grant a loan in the amount of RMB400,000 to Ms. Wang to invest in Shenzhen New ECLink as its registered capital.
(276) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Mr. Sheng as borrower whereby TOM International agreed to grant a loan in the amount of RMB400,000 to Mr. Sheng to invest in Shenzhen New ECLink as its registered capital.
(277) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Mr. Wang Ting Ting as borrower whereby TOM International agreed to grant a loan in the amount of RMB200,000 to Mr. Wang Ting Ting to invest in Shenzhen New ECLink as its registered capital.
(278) An exclusive option agreement dated 26 September 2003 entered into between TOM International, Shenzhen New ECLink and Ms. Wang, pursuant to which Ms. Wang granted TOM International an exclusive option to purchase her 40% equity interest in Shenzhen New ECLink when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Wang. The term of this agreement is 10 years from the date of execution.

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(279) An exclusive option agreement dated 26 September 2003 entered into between TOM International, Shenzhen New ECLink and Mr. Sheng, pursuant to which Mr. Sheng granted TOM International an exclusive option to purchase his 40% equity interest in Shenzhen New ECLink when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Sheng. The term of this agreement is 10 years from the date of execution.
(280) An exclusive option agreement dated 26 September 2003 entered into between TOM International, Shenzhen New ECLink and Mr. Wang Ting Ting, pursuant to which Mr. Wang Ting Ting granted TOM International an exclusive option to purchase his 20% equity interest in Shenzhen New ECLink when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Wang Ting Ting. The term of this agreement is 10 years from the date of execution.
(281) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between ECLink Shenzhen and Shenzhen New ECLink, pursuant to which ECLink Shenzhen agreed to provide technical consultancy and services exclusively for Shenzhen New ECLink during the term of the agreement.
(282) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Ms. Wang as pledgor whereby Ms. Wang agreed to pledge her 40% equity interest in Shenzhen New ECLink to ECLink Shenzhen.
(283) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Mr. Sheng as pledgor whereby Mr. Sheng agreed to pledge his 40% equity interest in Shenzhen New ECLink to ECLink Shenzhen.
(284) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Mr. Wang Ting Ting as pledgor whereby Mr. Wang Ting Ting agreed to pledge his 20% equity interest in Shenzhen New ECLink to ECLink Shenzhen.
(285) A business operation agreement dated 26 September 2003 entered into between ECLink Shenzhen, Shenzhen New ECLink, Ms. Wang, Mr. Sheng and Mr. Wang Ting Ting, pursuant to which ECLink Shenzhen agreed to act as a performance guarantor for Shenzhen New ECLink in respect of its transactions with third parties. In return, Shenzhen New ECLink granted ECLink Shenzhen a security interest over all of its assets. In addition, Shenzhen New ECLink and all of its shareholders agreed that Shenzhen New ECLink will not carry on any transactions that may materially adversely affect its operations and will appoint ECLink Shenzhen’s nominees as its directors, chief executive officer and other senior officers. The term of this agreement is ten years from the date of execution.
(286) An equity transfer agreement dated 26 September 2003 entered into between Shenzhen Freenet and Ms. Wang, pursuant to which Shenzhen Freenet agreed to transfer its 40% equity interest in Shenzhen Freenet Super Channel Advertising Company Limited (“Shenzhen Freenet Advertising”) to Ms. Wang.

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(287) An equity transfer agreement dated 26 September 2003 entered into between Shenzhen Freenet and Mr. Sheng, pursuant to which Shenzhen Freenet agreed to transfer its 40% equity interest in Shenzhen Freenet Advertising to Mr. Sheng.
(288) An equity transfer agreement dated 26 September 2003 entered into between Shenzhen Freenet and Mr. Wang Ting Ting, pursuant to which Shenzhen Freenet agreed to transfer its 10% equity interest in Shenzhen Freenet Advertising to Mr. Wang Ting Ting.
(289) An equity transfer agreement dated 26 September 2003 entered into between Mr. Wang and Mr. Wang Ting Ting, pursuant to which Mr. Wang agreed to transfer its 10% equity interest in Shenzhen Freenet Advertising to Mr. Wang Ting Ting.
(290) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Ms. Wang as borrower whereby TOM International agreed to grant a loan in the amount of RMB400,000 to Ms. Wang to invest in Shenzhen Freenet Advertising as its registered capital.
(291) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Mr. Sheng as borrower whereby TOM International agreed to grant a loan in the amount of RMB400,000 to Mr. Sheng to invest in Shenzhen Freenet Advertising as its registered capital.
(292) A loan agreement dated 26 September 2003 entered into between TOM International as lender and Mr. Wang Ting Ting as borrower whereby TOM International agreed to grant a loan in the amount of RMB200,000 to Mr. Wang Ting Ting to invest in Shenzhen Freenet Advertising as its registered capital.
(293) An exclusive option agreement dated 26 September 2003 entered into between TOM International, Shenzhen Freenet Advertising and Ms. Wang, pursuant to which Ms. Wang granted TOM International an exclusive option to purchase all of her interest in Shenzhen Freenet Advertising when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Wang. The term of this agreement is 10 years from the date of execution.
(294) An exclusive option agreement dated 26 September 2003 entered into between TOM International, Shenzhen Freenet Advertising and Mr. Sheng, pursuant to which Mr. Sheng granted TOM International an exclusive option to purchase all of his interest in Shenzhen Freenet Advertising when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Sheng. The term of this agreement is 10 years from the date of execution.
(295) An exclusive option agreement dated 26 September 2003 entered into between TOM International, Shenzhen Freenet Advertising and Mr. Wang Ting Ting, pursuant to which Mr. Wang Ting Ting granted TOM International an exclusive option to purchase all of his interest in Shenzhen Freenet Advertising when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Wang Ting Ting. The term of this agreement is 10 years from the date of execution.

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(296) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between ECLink Shenzhen and Shenzhen Freenet Advertising, pursuant to which ECLink Shenzhen agreed to provide technical consultancy and services exclusively for Shenzhen Freenet Advertising during the term of the agreement.
(297) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen and Ms. Wang whereby Ms. Wang agreed to pledge her 40% equity interest in Shenzhen Freenet Advertising to ECLink Shenzhen.
(298) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen and Mr. Sheng whereby Mr. Sheng agreed to pledge his 40% equity interest in Shenzhen Freenet Advertising to ECLink Shenzhen.
(299) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen and Mr. Wang Ting Ting whereby Mr. Wang Ting Ting agreed to pledge his 20% equity interest in Shenzhen Freenet Advertising to ECLink Shenzhen.
(300) A business operation agreement dated 26 September 2003 entered into between ECLink Shenzhen, Shenzhen Freenet Advertising, Ms. Wang, Mr. Sheng and Mr. Wang Ting Ting, pursuant to which ECLink Shenzhen agreed to act as a performance guarantor for Shenzhen Freenet Advertising in respect of its transactions with third parties. In return, Shenzhen Freenet Advertising granted ECLink Shenzhen a security interest over all of its assets. In addition, Shenzhen Freenet Advertising and all of its shareholders agreed that Shenzhen Freenet Advertising will not carry on any transactions that may materially adversely affect its operations and will appoint ECLink Shenzhen’s nominees as its directors, chief executive officer and other senior officers. The term of this agreement is 10 years from the date of execution.
(301) A loan agreement dated 26 September 2003 entered into between Commercelink as lender and Mr. Sheng as borrower whereby Commercelink agreed to grant a loan in the amount of RMB2,000,000 to Mr. Sheng to invest in Yang Cheng Advertising as its registered capital.
(302) A loan agreement dated 26 September 2003 entered into between Commercelink as lender and Ms. Wang as borrower whereby Commercelink agreed to grant a loan in the amount of RMB2,000,000 to Ms. Wang to invest in Yang Cheng Advertising as its registered capital.
(303) An exclusive option agreement dated 26 September 2003 entered into between Commercelink, Yang Cheng Advertising and Mr. Sheng, pursuant to which Mr. Sheng granted Commercelink an exclusive option to purchase his 40% equity interest in Yang Cheng Advertising when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Sheng. The term of this agreement is 10 years from the date of execution.
(304) An exclusive option agreement dated 26 September 2003 entered into between Commercelink, Yang Cheng Advertising and Ms. Wang, pursuant to which Ms. Wang granted Commercelink an exclusive option to purchase her 40% equity interest in Yang Cheng Advertising when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Wang. The term of this agreement is 10 years from the date of execution.

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(305) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between ECLink Shenzhen and Yang Cheng Advertising, pursuant to which ECLink Shenzhen agreed to provide technical consultancy and services exclusively for Yang Cheng Advertising during the term of the agreement.
(306) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Mr. Sheng as pledgor whereby Mr. Sheng agreed to pledge his 40% equity interest in Yang Cheng Advertising to ECLink Shenzhen.
(307) An equity pledge agreement dated 26 September 2003 entered into between ECLink Shenzhen as pledgee and Ms. Wang as pledgor whereby Ms. Wang agreed to pledge her 40% equity interest in Yang Cheng Advertising to ECLink Shenzhen.
(308) A business operation agreement dated 26 September 2003 entered into between ECLink Shenzhen, Yang Cheng Advertising, Mr. Sheng and Ms. Wang, pursuant to which ECLink Shenzhen agreed to act as a performance guarantor for Yang Cheng Advertising in respect of its transactions with third parties. In return, Yang Cheng Advertising granted ECLink Shenzhen a security interest over all of its assets. In addition, Yang Cheng Advertising and all of its shareholders agreed that Yang Cheng Advertising will not carry on any transactions that may materially adversely affect its operations and will appoint ECLink Shenzhen’s nominees as its directors, chief executive officer and other senior officers. The term of this agreement is 10 years from the date of execution.
(309) An equity transfer agreement dated 26 September 2003 entered into between Mr. Wang and Mr. Sheng, pursuant to which Mr. Wang agreed to transfer his 20% equity interest in Fench Management to Mr. Sheng.
(310) An equity transfer agreement dated 26 September 2003 entered into between Ms. Wang and Mr. Sheng, pursuant to which Ms. Wang agreed to transfer her 35% equity interest in Fench Management to Mr. Sheng.
(311) A loan agreement dated 26 September 2003 entered into between TOM Outdoor as lender and Mr. Sheng as borrower whereby TOM Outdoor agreed to grant a loan in the amount of RMB3,085,500 to Mr. Sheng to invest in Fench Management as its registered capital.
(312) A loan agreement dated 26 September 2003 entered into between TOM Outdoor as lender and Ms. Wang as borrower whereby TOM Outdoor agreed to grant a loan in the amount of RMB1,122,000 to Ms. Wang to invest in Fench Management as its registered capital.
(313) A loan agreement dated 26 September 2003 entered into between TOM Outdoor as lender and Mr. Li Jian as borrower whereby TOM Outdoor agreed to grant a loan in the amount of RMB1,402,500 to Mr. Li Jian to invest in Fench Management as its registered capital.

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(314) An exclusive option agreement dated 26 September 2003 entered into between TOM Outdoor, Fench Management and Mr. Sheng, pursuant to which Mr. Sheng granted TOM Outdoor an exclusive option to purchase his 55% equity interest in Fench Management when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Sheng. The term of this agreement is 10 years from the date of execution.
(315) An exclusive option agreement dated 26 September 2003 entered into between TOM Outdoor, Fench Management and Ms. Wang, pursuant to which Ms. Wang granted TOM Outdoor an exclusive option to purchase her 20% equity interest in Fench Management when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Wang. The term of this agreement is 10 years from the date of execution.
(316) An exclusive option agreement dated 26 September 2003 entered into between TOM Outdoor, Fench Management and Mr. Li Jian, pursuant to which Mr. Li Jian granted TOM Outdoor an exclusive option to purchase his 25% equity interest in Fench Management when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Li Jian. The term of this agreement is 10 years from the date of execution.
(317) An exclusive technical and consultancy services agreement dated 26 September 2003 entered into between Fench Media and Fench Management, pursuant to which Fench Media agreed to provide technical consultancy and services exclusively for Fench Management during the term of the agreement.
(318) An equity pledge agreement dated 26 September 2003 entered into between Fench Media and Mr. Sheng whereby Mr. Sheng agreed to pledge his 55% equity interest in Fench Management to Fench Media.
(319) An equity pledge agreement dated 26 September 2003 entered into between Fench Media and Ms. Wang whereby Ms. Wang agreed to pledge her 20% equity interest in Fench Management to Fench Media.
(320) An equity pledge agreement dated 26 September 2003 entered into between Fench Media and Mr. Li Jian whereby Mr. Li Jian agreed to pledge his 25% equity interest in Fench Management to Fench Media.
(321) A business operation agreement dated 26 September 2003 entered into between Fench Media, Fench Management, Mr. Sheng, Ms. Wang and Mr. Li Jian, pursuant to which Fench Media agreed to act as a performance guarantor for Fench Management in respect of its transactions with third parties. In return, Fench Management granted Fench Media a security interest over all of its assets. In addition, Fench Management and all of its shareholders agreed that Fench Management will not carry on any transactions that may materially adversely affect its operations and will appoint Fench Media’s designees as its directors, chief executive officer and other senior officers. The term of this agreement is ten years from 26 September 2003.

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(322) An equity transfer agreement dated 26 September 2003 entered into between Shenzhen Freenet and Shenzhen Freenet Advertising, pursuant to which Shenzhen Freenet agreed to transfer its 37% equity interest in Cernet Online Company Limited (“Cernet Online”) to Shenzhen Freenet Advertising.
(323) An equity transfer agreement dated 26 September 2003 entered into between TOM China and TOM International, pursuant to which TOM China agreed to transfer its 51% equity interest in Cernet to TOM International.
(324) A joint venture agreement dated 26 September 2003 entered into between TOM International and 中圖信息技術有限公司 (CNPIT Information Technology Company Limited) in relation to the establishment of a joint venture company CNPIT TOM Culture in the PRC, which is supplemented by a supplemental joint venture agreement dated 26 September 2003 entered into between the same parties pursuant to which the parties agreed to amend the terms of the joint venture agreement to reflect the equity transfer agreement of the same date.
(325) An equity transfer agreement dated 26 September 2003 entered into between TOM China as transferor and TOM International as transferee, pursuant to which TOM China agreed to transfer its 70% equity interest in CNPIT TOM Culture to TOM International.
(326) A set-off agreement dated 27 September 2003 entered into between Shenzhen Freenet and Ms. Wang pursuant to which the total amount owed by Shenzhen Freenet to Ms. Wang is reduced from RMB105,722,947 (owed under a novation agreement entered into between Advanced Internet, Ms. Wang and Mr. Sheng) to RMB70,722,947 after setting off the amount of RMB35,000,000, being the consideration payable by Ms. Wang to Shenzhen Freenet under an equity transfer agreement dated 26 September 2003 entered into between Ms. Wang and Shenzhen Freenet in relation to the transfer of Shenzhen Freenet’s 40% equity interest in Redsail to Ms. Wang.
(327) A tenancy agreement dated 13 October 2003 entered into between Southland Company Limited and Cup, in relation to the lease of whole 13th floor of Park Commercial Centre of No. 180 Tung Lo Wan Road, Hong Kong for a period of two years expiring on 9 October 2005.
(328) A tenancy agreement dated 14 October 2003 entered into between 北京經開科創科技孵化器有限公司 (Beijing Jing Kai Ke Chuang Technology Incubator Company Limited) as landlord and Beijing Lei Ting as tenant in relation to the lease of Unit Nos. 306, 316 and 406, Block A, Chuangxin Building, Enterprise Park, 12 Hongda North Road, Economic Developing Zone, Beijing, the PRC for a period of one year expiring on 13 November 2004.
(329) An equity transfer agreement dated 29 October 2003 entered into between Fung’s Advertising Limited (“Fung’s Advertising”) as vendor and Mr. Zhong Hai Qiang and Commercelink as purchasers, as amended by two supplemental agreements dated 31 March 2004 and 30 April 2004 respectively entered into between the same parties.

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(330) A tenancy agreement dated 31 October 2003 entered into between Mr. Wang Zhi Hua (王治華 ) as landlord and Tianming JV as tenant in relation to the lease of three units at No. 36, Jincheng Street, Guancheng District, Zhengzhou, Henan Province, the PRC for a period of one year expiring on 30 January 2005.
(331) A letter of intent dated 4 November 2003 entered into between Cité and TWP Corporation in relation to the transfer of the business of magazine, fiction and computer games from TWP Corporation to Cité.
(332) A subscription agreement dated 6 November 2003 entered into between the Company as guarantor, TOM Holdings Limited as the issuer, Citigroup Global Markets Limited and Deutsche Bank AG London as the joint bookrunners and Cazenove Asia Limited as comanager whereby the joint bookrunners and co-manager agreed to subscribe for convertible bonds of the issuer at par in an aggregate principal amount of US$150 million.
(333) An agreement dated 7 November 2003 entered into between TOM Digital Media Center Limited (“TOM Digital”) as purchaser and TCI National Digital Television Center Hong Kong, Inc. as vendor in relation to the sale and purchase of certain business assets at a consideration of US$431,587.
(334) A joint venture agreement dated 9 November 2003 entered into between TOM China and Shenghuo•Dushu•Xinzhi Sanlian Book Store (“Sanlian”), under which, TOM China and Sanlian agreed to jointly establish a sinoforeign co-operative joint venture enterprise to be known as 北京三聯世紀文化傳播有限公司 (Beijing Sanlian Shiji Wenhua Chuanbo Company Limited) in the PRC with an investment capital in the total amount of RMB50,000,000 and a registered capital in the amount of RMB40,000,000.
(335) An exclusive management consultancy agreement dated 14 November 2003 entered into between TOM China and TOM OMG, pursuant to which TOM China agreed to provide management consultancy services exclusively to TOM OMG which was terminated pursuant to a termination agreement dated 31 December 2003 entered into between the parties.
(336) A tenancy agreement dated 17 November 2003 entered into between 中國日報華南辦事處 (China Daily South China Office) as landlord and Guangzhou TOM Advertising Limited (“Guangzhou TOM”) as tenant in relation to the lease of Unit No. 1603, Level 16, West Tower, China Travel Commercial Centre, 39-49 Qiaolin Street, Linhe East Road, Tianhe District, Guangzhou, Guangdong Province, the PRC for a period of two years expiring on 15 November 2005.
(337) A tenancy agreement dated 18 November 2003 entered into between 北京明振汽車運輸服務有限公司 (Beijing Ming Zhen Motors Transportation Services Company Limited) as landlord and Beijing Lei Ting as tenant in relation to the lease of two residential units in Xinkang Garden, Yi Zhuang, Economic Developing Zone, Beijing, the PRC for a period of one year expiring on 19 November 2004.

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GENERAL INFORMATION

(338) A business operation agreement dated 19 November 2003 entered into between Puccini Network Technology (Beijing) Limited (“Puccini Beijing”), LTWJi, Ms. Wang and Mr. Wang, pursuant to which Puccini Beijing agreed to act as a performance guarantor for LTWJi in respect of its transactions with third parties. In return, LTWJi granted Puccini Beijing a security interest over all of its assets. In addition, LTWJi and all of its shareholders agreed that LTWJi will not carry on any transactions that may materially adversely affect its operations and will appoint Puccini Beijing designees as its directors, chief executive officer and other senior officers. The term of this agreement is 10 years from 19 November 2003.
(339) An exclusive technical consultancy and services agreement dated 19 November 2003 entered into between Puccini Beijing and LTWJi, pursuant to which Puccini Beijing agreed to provide technical consultancy and services exclusively for LTWJi for a term of 10 years from 19 November 2003.
(340) An exclusive option agreement dated 19 November 2003 entered into between Ms. Wang, Puccini and LTWJi, pursuant to which Ms. Wang granted Puccini an exclusive option to purchase all of her interest in LTWJi when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Wang. The term of this agreement is 10 years from 19 November 2003.
(341) An exclusive option agreement dated 19 November 2003 entered into between Mr. Wang, Puccini and LTWJi, pursuant to which Mr. Wang granted Puccini an exclusive option to purchase all of his interest in LTWJi when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Wang. The term of this agreement is 10 years from 19 November 2003.
(342) An undertaking letter dated 19 November 2003 given by Mr. Wang as borrower to Puccini in relation to the loan amount of RMB400,000 to Mr. Wang by Puccini to invest in LTWJi as registered capital.
(343) An undertaking letter dated 19 November 2003 given by Ms. Wang as borrower in relation to the loan amount of RMB100,000 to Ms. Wang by Puccini to invest in LTWJi as registered capital.
(344) An equity pledge agreement dated 19 November 2003 entered into between Puccini, Puccini Beijing and Mr. Wang, pursuant to which Puccini Beijing assumes all of the rights and obligations of Puccini under the terms and conditions as set out in the novation agreement dated 25 September 2003 entered into between Puccini, Devine Gem, Mr. Wang and Ms. Wang.
(345) An equity pledge agreement dated 19 November 2003 entered into between Puccini, Puccini Beijing and Ms. Wang, pursuant to which Puccini Beijing assumes all of the rights and obligations of Puccini under the terms and conditions as set out in the novation agreement dated 25 September 2003 entered into between Puccini, Devine Gem, Mr. Wang and Ms. Wang.

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(346) A media service agreement dated 19 November 2003 entered into between CETV and YCP Advertising Limited (“YCP Advertising”) relating to “The 40th Golden Horse Awards Presentation Ceremony”.
(347) A media service agreement dated 19 November 2003 entered into between CETV and YCP Advertising relating to “Dolphin Bay Lovers”.
(348) A loan agreement dated 20 November 2003 entered into between Commercelink as lender and Mr. Sheng as borrower whereby Commercelink agreed to advance a loan in the amount of RMB500,000 to Mr. Sheng to be invested exclusively in Yang Cheng Sports.
(349) A business operation agreement dated 20 November 2003 entered into between Yang Cheng Sports, ECLink Shenzhen, Ms. Wang and Mr. Sheng pursuant to which ECLink Shenzhen agreed to act as a guarantor for any obligations undertaken by Yang Cheng Sports in respect of its transactions with third parties. No consideration is payable under this agreement. In return, Yang Cheng Sports granted ECLink Shenzhen a security interest over all of its assets. In addition, Yang Cheng Sports and its shareholders agreed that Yang Cheng Sports will not carry on any transactions that may materially adversely affect its operations and will appoint ECLink Shenzhen’s nominees as its directors, chief executive officers and other senior officers. The term of this agreement in ten years from the date of execution.
(350) An exclusive technical and consultancy services agreement dated 20 November 2003 entered into between ECLink Shenzhen and Yang Cheng Sports pursuant to which Yang Cheng Sports agreed to engage ECLink Shenzhen to provide technical consultancy and services exclusively for Yang Cheng Sports during the term of the agreement.
(351) An equity pledge agreement dated 20 November 2003 entered into between ECLink Shenzhen as pledgee and Mr. Sheng as pledgor pursuant to which Mr. Sheng agreed to pledge his entire equity interest in Yang Cheng Sports to ECLink Shenzhen.
(352) An exclusive option agreement dated 20 November 2003 entered into between Mr. Sheng and Commercelink pursuant to which Mr. Sheng agreed to grant an exclusive option to Commercelink to purchase all of his equity interest in Yang Cheng Sports when permitted by PRC law at the exercise price equivalent to the actual capital contribution towards the registered capital of Yang Cheng Sports by Mr. Sheng. The term of this agreement is 10 years from the date of execution.
(353) A supplemental equity pledge agreement dated 20 November 2003 entered into between Ms. Wang as pledgor, ECLink Shenzhen as pledgee and Commercelink relating to the novation of all rights, obligation and liabilities from Commercelink to ECLink Shenzhen pursuant to an equity pledge agreement dated 24 September 2002 entered into between Ms. Wang and Commercelink. Pursuant to this supplemental agreement, Ms. Wang agreed to pledge all of her equity interest in Yang Cheng Sports to ECLink Shenzhen.

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(354) A termination agreement dated 21 November 2003 entered into between CETV and 北京易澄影視文化傳播有限公司 (Beijing Yi Cheng Audio-Video Cultural Transmission Company Limited) relating to the termination of a syndication agreement dated 6 January 2003 entered into between the same parties.
(355) An equity sale and purchase agreement dated 26 November 2003 entered into between Mr. Ding Da Tian as vendor and Media Focus Limited (“Media Focus”) as purchaser pursuant to which Mr. Ding Da Tian agreed to sell to Media Focus his 8,909 shares in Cité at a consideration of NT$205,393.
(356) An advertisement promotion agreement dated 29 November 2003 entered into between CETV and YCP Advertising relating to, inter alia, the promotion of “Dolphin Bay Lovers” by way of advertisement from 29 November 2003 to 6 March 2004.
(357) A letter of agreement dated 12 December 2003 entered into between Europe vs Asia Golf Championship Limited as licensor and Matching Entertainment Co. Ltd. as host in relation to the Golf Event in Thailand to be held in 2004 to 2008 whereby the licensor and host agreed to co-operate to organize and promote the Golf Events.
(358) A renewal agreement dated 18 December 2003 entered into between 北京萬壽路物業管理中心 (Beijing Wan Shou Lu Property Management Centre) as landlord and ChinaPlus as tenant in relation to the lease of Unit 108, Office Tower, 61 Fuxing Road, Haidian District, Beijing, the PRC commencing on 20 December 2003.
(359) A sub-tenancy agreement dated 24 December 2003 entered into between TOM China as landlord and the Beijing Dongcheng branch of GreaTom as tenant in relation to the sublease of Room 905 of 9th Floor, Tower W3, Oriental Plaza, No. 1 East Chang An Avenue, Dongcheng District, Beijing, the PRC expiring on 14 June 2006.
(360) A supplemental agreement dated 31 December 2003 entered into between TOM China and TOM International.
(361) A supplemental novation agreement dated 31 December 2003 entered into between TOM China and TOM International.
(362) A loan agreement dated 17 January 2004 entered into between TOM Outdoor as lender and Mr. Li Jian as borrower whereby TOM Outdoor advanced a loan in the amount of RMB600,000 to Mr. Li Jian exclusively for contributing to the registered capital of Shanghai TOM Advertising Limited (“Shanghai TOM”).
(363) A loan agreement dated 17 January 2004 entered into between TOM Outdoor as lender and Mr. Yang Zhen Kun (“Mr. Yang”) as borrower whereby TOM Outdoor advanced a loan in the amount of RMB400,000 to Mr. Yang exclusively for contributing to the registered capital of Shanghai TOM.

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(364) A sale of business agreement dated 20 January 2004 entered into between Cité and TWP Corporation in relation to the transfer of the business of magazine, fiction and computer games from TWP Corporation to Cité for a consideration of NT$60,000,000.
(365) An engagement letter dated 11 February 2004 entered into between CETV and Commerce & Finance Law Offices, Beijing.
(366) An undertaking letter dated 13 February 2004 entered into between TOM Online and the Company pursuant to which the Company undertakes to TOM Online not to demand repayment of the amounts due to it within a certain period under the separate loan agreements entered into between the Company and each of Laurstinus, Lahiji and Advanced Internet dated 21 September 2003 except in certain circumstances.
(367) A tenancy agreement dated 13 February 2004 entered into between Beijing Oriental and LTWJi in relation to the lease of Rooms 7-8, 5/F., Tower W3, Oriental Plaza, No. 1 East Chang An Avenue, Dongcheng District, Beijing, the PRC expiring on 14 August 2006.
(368) An undertaking letter dated 16 February 2004 entered into between TOM OMG, Mr. Au Yeung and Qingdao Chunyu Advertising and Décor Construction Company Limited relating to develop the payment process of 35 unipoles and asset transfer of 9 unipoles and asset transfer of framework agreement.
(369) A tenancy agreement dated 20 February 2004 entered into between 福盛國際有限公司 (Fu Sheng International Company Limited) and CETV in relation to the lease of Unit Nos. 2207-2210, Level 22, West Tower, Yang Cheng International Trade Centre, 122 Tiyu East Road, Tianhe District, Guangzhou, Guangdong Province, the PRC for a period of 2 years and 14 days expiring on 28 February 2006.
(370) A business operation agreement dated 25 February 2004 entered into between Fench Media, Shanghai TOM, Mr. Li Jian and Mr. Yang, pursuant to which Fench Media agreed to act as guarantor for any obligations undertaken by Shanghai TOM in respect of its transactions with third parties. In return, Shanghai TOM granted Fench Media a security interest over all of its assets. In addition, Shanghai TOM and its shareholders agreed that Shanghai TOM will not carry on any transactions that may materially adversely affect its operations and will appoint Fench Media’s nominees as its directors, chief executive officers and other senior officers. No consideration was payable under the business operation agreement. The term of this agreement is 10 years from the date of execution.
(371) An exclusive technical and consultancy services agreement dated 25 February 2004 entered into between Fench Media and Shanghai TOM pursuant to which Shanghai TOM agreed to engage Fench Media exclusively for certain technical and consultancy services during the term of the agreement.
(372) An equity pledge agreement dated 25 February 2004 entered into between Fench Media as pledgee and Mr. Li Jian as pledgor pursuant to which Mr. Li Jian agreed to pledge his entire equity interest in Shanghai TOM to Fench Media.

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(373) An equity pledge agreement dated 25 February 2004 entered into between Fench Media as pledgee and Mr. Yang as pledgor pursuant to which Mr. Yang agreed to pledge his entire equity interest in Shanghai TOM to Fench Media.
(374) An exclusive option agreement dated 25 February 2004 entered into between TOM Outdoor, Mr. Li Jian and Shanghai TOM pursuant to which Mr. Li Jian agreed to grant an exclusive option to TOM Outdoor to purchase all of his equity interest in Shanghai TOM when permitted by PRC law at the exercise price equivalent to the actual capital contribution towards the registered capital of Shanghai TOM by Mr. Li Jian. The term of this agreement is 10 years from the date of execution with an option to extend for a further 10 years.
(375) An exclusive option agreement dated 25 February 2004 entered into between TOM Outdoor, Mr. Yang and Shanghai TOM pursuant to which Mr. Yang agreed to grant an exclusive option to TOM Outdoor to purchase all of his equity interest in Shanghai TOM when permitted by PRC law at the exercise price equivalent to the actual capital contribution towards the registered capital of Shanghai TOM by Mr. Yang. The term of this agreement is 10 years from the date of execution with an option to extend for a further 10 years.
(376) A tenancy agreement dated 27 February 2004 entered into between 北京德惠俱樂部有限公司 (Beijing De Hui Club Company Limited) and Yang Cheng Advertising in relation to the lease of Unit 402, Level 4, Block A, Dehui Building, A39 Xinfu Avenue, Chong Wen District, Beijing, the PRC for a period of one year expiring on 31 March 2005.
(377) A tenancy agreement dated 1 March 2004 entered into between 深圳市國際信息技術交流中心 (Shenzhen International Information Technology Exchange Centre) as landlord and ECLink Shenzhen as tenant in relation to the lease of Unit No. 403, Level 4, Xin Xi Building, 1 Tongxin Road Futian District, Shenzhen, Guangdong Province, the PRC for a period of one year expiring on 28 February 2005.
(378) A supplemental agreement dated 1 March 2004 entered into between Beijing Super Channel and LTWJi which supplements a trademark license agreement dated 19 November 2003.
(379) A supplemental agreement dated 1 March 2004 entered into between Beijing Super Channel and LTWJi which supplements domain name license agreement dated 19 November 2003.
(380) An assignment dated 5 March 2004 entered into between Media Serv, Beijing Youth Daily, China Open Sports Marketing Company Limited in relation to the Beijing Tennis Tournament Agreement.
(381) A loan agreement dated 5 March 2004 entered into between Great Top International Limited (“Great Top”) as lender and Teleplus Limited (“Teleplus”) as borrower pursuant to which Great Top agreed to lend the sum of HK$1,416,000 to Teleplus.
(382) A share pledge agreement dated 5 March 2004 entered into between Great Top as pledgee and Teleplus as pledgor pursuant to which Teleplus agreed to pledge its shareholding in Tennis Tournaments Holdings Limited as security for the loan of HK$1,416,000 granted by Great Top.

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(383) A management services agreement dated 8 March 2004 entered into between Media Serv and China Open Sports Marketing Company Limited.
(384) A loan agreement dated 11 March 2004 entered into between TOM Outdoor as lender and Mr. Li Jian as borrower whereby TOM Outdoor advanced a loan in the amount of RMB600,000 to Mr. Li Jian exclusively for contributing to the registered capital of Guangzhou TOM.
(385) A loan agreement dated 11 March 2004 entered into between TOM Outdoor as lender and Mr. Yang as borrower whereby TOM Outdoor advanced a loan in the amount of RMB400,000 to Mr. Yang exclusively for contributing to the registered capital of Guangzhou TOM.
(386) An agreement dated 18 March 2004 entered into between 中國國際電視總公司 (China International Television Corporation) and CETV in relation to the provision of coverage of satellite television in the PRC.
(387) An agency agreement dated 20 March 2004 entered into between Media Serv and 北京藝劍影視廣告有限公司 (as marketing agent) to market and promote the annual tennis tournament called the “China Open” held in the PRC (“Event”).
(388) An agency agreement dated 20 March 2004 entered into between Media Serv and Marketing Favour Co. Ltd. (as marketing agent) to market and promote the Event.
(389) An agency agreement dated 20 March 2004 entered into between Media Serv and 北京泛亞互通廣告有限公司 (as marketing agent) to market and promote the Event.
(390) A business operation agreement dated 22 March 2004 entered into between Fench Media, Guangzhou TOM, Mr. Li Jian and Mr. Yang pursuant to which Fench Media agreed to act as guarantor for any obligations undertaken by Guangzhou TOM in respect of its transactions with third parties. In return, Guangzhou TOM granted Fench Media a security interest over all of its assets. In addition, Guangzhou TOM and its shareholders agreed that Guangzhou TOM will not carry on any transactions that may materially adversely affect its operations and will appoint Fench Media’s nominees as its directors, chief executive officers and other senior officers. No consideration was payable under the business operation agreement. The term of this agreement is 10 years from the date of execution.
(391) An exclusive technical and consultancy services agreement dated 22 March 2004 entered into between Fench Media and Guangzhou TOM pursuant to which Guangzhou TOM agreed to engage Fench Media exclusively for certain technical and consultancy services during the term of the agreement.
(392) An equity pledge agreement dated 22 March 2004 entered into between Fench Media as pledgee and Mr. Li Jian as pledgor pursuant to which Mr. Li Jian agreed to pledge his entire equity interest in Guangzhou TOM to Fench Media.

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(393) An equity pledge agreement dated 22 March 2004 entered into between Fench Media as pledgee and Mr. Yang as pledgor pursuant to which Mr. Yang agreed to pledge his entire equity interest in Guangzhou TOM to Fench Media.
(394) An exclusive option agreement dated 22 March 2004 entered into between TOM Outdoor, Mr. Li Jian and Guangzhou TOM pursuant to which Mr. Li Jian agreed to grant an exclusive option to TOM Outdoor to purchase all of his equity interest in Guangzhou TOM when permitted by PRC law at the exercise price equivalent to the actual capital contribution towards the registered capital of Guangzhou TOM by Mr. Li Jian. The term of this agreement is 10 years from the date of execution with an option to extend for a further 10 years.
(395) An exclusive option agreement dated 22 March 2004 entered into between TOM Outdoor, Mr. Yang and Guangzhou TOM pursuant to which Mr. Yang agreed to grant an exclusive option to TOM Outdoor to purchase all of his equity interest in Guangzhou TOM when permitted by PRC law at the exercise price equivalent to the actual capital contribution towards the registered capital of Guangzhou TOM by Mr. Yang. The term of this agreement is 10 years from the date of execution with an option to extend for a further 10 years.
(396) A loan agreement dated 30 March 2004 entered into between TOM International as lender and Tennis Management Limited (“Tennis Management”) as borrower in respect of a loan facility in the amount of US$1,500,000.
(397) A deed of novation dated 30 March 2004 entered into between Swidon Enterprises Limited as assignor, Tennis Management as assignee and TOM International as creditor in relation to the novation of the loan of US$1,500,000 from Swidon Enterprises Limited to Tennis Management.
(398) A deed dated 30 March 2004 entered into between Modern Perfect Developments Limited, Spectrum International Holding Limited, Mr. Lincoln Serejo Venancio and Tennis Management in relation to Tennis Management.
(399) A transponder utilisation agreement dated 30 March 2004 entered into between Asia Satellite Telecommunications Company Limited (“AsiaSat”) and CETV pursuant to which AsiaSat agreed to provide digital television of both analogue and digital form for a term of one year commencing on 1 April 2004 (the “Transponder Utilisation Agreement”).
(400) A guarantee dated 30 March 2004 executed by the Company as guarantor in favour of AsiaSat to guarantee the performance of all obligations of CETV under the Transponder Utilisation Agreement.
(401) A WTA Event Agreement dated 30 March 2004 between Media Serv and 北京中國網球公開賽體育推廣有限公司 (“COL”) whereby Media Serv agreed to grant COL the exclusive operating commercial rights of an annual WTA tennis tournament held in China for a period of 10 years from 2004 to 2013.
(402) A supplemental framework agreement dated 31 March 2004 relating to Hong Xiang entered into between TOM Solutions Limited and Mr. Zhang Bao Cheng in relation to the framework agreement dated 5 March 2002.

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(403) A tenancy agreement dated 1 April 2004 entered into between The Center (48) Limited as landlord and TOM International as tenant in relation to the lease of the whole of the 48 Floor of “The Center” erected on Inland Lot No. 8827 for a period of three year expiring on 31 March 2007.
(404) A tenancy agreement dated 1 April 2004 entered into between Holgain Limited as landlord and Yazhou Zhoukan Limited (“YZZK”) as tenant in relation to the lease of the office, godown and car parking spaces at Ming Pao Industrial Centre, 18 Ka Yip Street, Chai Wan, Hong Kong for a term of one year expiring on 31 March 2005.
(405) A shareholders’ loan agreement dated 2 April 2004 entered into between AA Stocks, All Asia and EC.COM.
(406) A supplemental framework agreement dated 8 April 2004 relating to Hong Xiang entered into between TOM Solutions Limited and Mr. Zhang Bao Cheng, which supplements the framework agreement dated 5 March 2002 (as supplemented) entered into between the same parties.
(407) A loan agreement dated 8 April 2004 entered into between Alexus as lender and TOM Television Group Limited as borrower whereby the lender shall make the first advance, being an amount of HK$470,000 (equivalent to RMB500,000) available to the borrower.
(408) A wireless content co-operation agreement dated 15 April 2004 entered into between CETV and Beijing Lei Ting in relation to CETV to provide menu and channel promoting information to Beijing Lei Ting and Beijing Lei Ting shall use such information to produce wireless value-added business products. The period is half year from 15 April 2004 to 14 October 2004.
(409) A deed of adherence dated 22 April 2004 entered into between AA Stocks and Westport to reflect the termination of the old shareholders’ agreement dated 18 June 2000 and the entering into of a new share purchase agreement on 17 March 2004.
(410) A consultancy and services agreement dated 28 April 2004 entered into between Fung’s Advertising and Commercelink pursuant to which Commercelink agreed to engage Fung’s Advertising to provide consultancy services for the term from the date of the agreement to 30 April 2004 for a consultancy fee of HK$1,822,248.97, as terminated by a termination agreement dated 30 April 2004.
(411) A loan declaration and confirmation dated 30 April 2004 entered into between Commercelink as lender and Ms. Wang as borrower whereby Commercelink and Ms. Wang confirmed that Commercelink had advanced a loan in the amount of RMB3,500,000 to Ms. Wang on 24 September 2002 for investing exclusively in Yang Cheng Sports.
(412) An equity transfer agreement dated 30 April 2004 entered into between Shenzhen Freenet as transferor and Ms. Zhang Jing as transferee whereby Shenzhen Freenet agreed to transfer 50% of the equity interest in Hong Xiang Production to Ms. Zhang Jing at a consideration of RMB400,000.

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APPENDIX VI

(413) A loan agreement dated 30 April 2004 entered into between ECLink Shenzhen as lender and Ms. Wang as borrower whereby ECLink Shenzhen advanced a loan in the amount of RMB2,161,202.54 to Ms. Wang for her onward lending to Shenzhen New ECLink as its working capital.
(414) A loan agreement dated 30 April 2004 entered into between Ms. Wang as lender and Shenzhen New ECLink as borrower whereby Ms. Wang advanced a loan in the amount of RMB2,161,202.54 to Shenzhen New ECLink as its working capital.
(415) A supplemental agreement dated 30 April 2004 entered into between Hitech, Dynamic and Mr. Li Jian which supplements a share purchase agreement dated 2 March 2001.
(416) A supplemental agreement dated 30 April 2004 entered into between Hitech and Dynamic which supplements an incentive shares agreement dated 2 March 2001.
(417) A loan agreement dated 14 May 2004 entered into between TOM Online as lender and Mr. Wang as borrower whereby TOM Online agreed to grant a loan in the amount of HK$5,600,000 (equivalent to RMB5,936,000) to Mr. Wang to invest in LTWJi.
(418) A tenancy agreement dated 15 May 2004 entered into between 昆明高新技術創業服務中心 (Kunming High and New Technology New Industry Service Centre) as landlord and Fench Media as tenant in relation to the lease of Level 2, Block A, Enterprise Service Centre, Jindingshan, High and New Technology Developing Area, Kunming, Yunnan Province, the PRC for a period of one year expiring on 15 May 2005.
(419) A business operation agreement dated 2 June 2004 entered into between Fench Media, Kunming Guojia Technology Company Limited (“Kunming Guojia”), Mr. Li Jian and Mr. Yang pursuant to which Fench Media agreed to act as a guarantor for any obligations undertaken by Kunming Guojia in respect of its transactions with third parties. No consideration is payable under this agreement. In return, Kunming Guojia granted Fench Media a security interest over all of its assets. In addition, Kunming Guojia and its shareholders agreed that Kunming Guojia will not carry on any transactions that may materially adversely affect its operations and will appoint Fench Media’s nominees as its directors, chief executive officers and other senior officers. The term of this agreement in 10 years from the date of execution.
(420) An exclusive technical and consultancy services agreement dated 2 June 2004 entered into between Fench Media and Kunming Guojia pursuant to which Kunming Guojia agreed to engage Fench Media to provide technical consultancy and services exclusively for Kunming Guojia during the term of the agreement.

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(421) A supplemental equity pledge agreement dated 2 June 2004 entered into between Fench Media as pledgee, Mr. Li Jian as pledgor and World Focus Developments Limited (“World Focus”) relating to the novation of all rights, obligation and liabilities from World Focus pursuant to an equity pledge agreement dated 2 March 2001 entered into between Mr. Li Jian and World Focus. Pursuant to this supplemental agreement, Mr. Li Jian agreed to pledge all of his equity interest in Kunming Guojia to Fench Media.
(422) A supplemental equity pledge agreement dated 2 June 2004 entered into between Fench Media as pledgee, Mr. Yang as pledgor and World Focus relating to the novation of all rights, obligation and liabilities from World Focus pursuant to an equity pledge agreement dated 2 March 2001 entered into between Mr. Yang and World Focus. Pursuant to this supplemental agreement, Mr. Yang agreed to pledge all of his equity interest in Kunming Guojia to Fench Media.
(423) A business operation agreement dated 2 June 2004 entered into between Beijing TOM, Fench Media, Ms. Wang, Mr. Wang Ting Ting and Mr. Sheng pursuant to which Fench Media agreed to act as a guarantor for any obligations undertaken by Beijing TOM in respect of its transactions with third parties. No consideration is payable under this agreement. In return, Beijing TOM granted Fench Media a security interest over all of its assets. In addition, Beijing TOM and its shareholders agreed that Beijing TOM will not carry on any transactions that may materially adversely affect its operations and will appoint Fench Media’s nominees as its directors, chief executive officers and other senior officers. The term of this agreement in 10 years from the date of execution.
(424) An exclusive technical and consultancy services agreement dated 2 June 2004 entered into between Fench Media and Beijing TOM pursuant to which Beijing TOM agreed to engage Fench Media to provide technical consultancy and services exclusively for Beijing TOM during the term of the agreement.
(425) A supplemental equity pledge agreement dated 2 June 2004 entered into between Fench Media as pledgee, Ms. Wang as pledgor and ECLink Shenzhen relating to the novation of all rights, obligation and liabilities from ECLink Shenzhen pursuant to an equity pledge agreement dated 26 September 2003 entered into between Ms. Wang and ECLink Shenzhen. Pursuant to this supplemental agreement, Ms. Wang agreed to pledge all of her equity interest in Beijing TOM to Fench Media.
(426) A supplemental equity pledge agreement dated 2 June 2004 entered into between Fench Media as pledgee, Mr. Wang Ting Ting as pledgor and ECLink Shenzhen relating to the novation of all rights, obligation and liabilities from ECLink Shenzhen pursuant to an equity pledge agreement dated 26 September 2003 entered into between Mr. Wang Ting Ting and ECLink Shenzhen. Pursuant to this supplemental agreement, Mr. Wang Ting Ting agreed to pledge all of his equity interest in Beijing TOM to Fench Media.

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(427) A supplemental equity pledge agreement dated 2 June 2004 entered into between Fench Media as pledgee, Mr. Sheng as pledgor and ECLink Shenzhen relating to the novation of all rights, obligation and liabilities from ECLink Shenzhen pursuant to an equity pledge agreement dated 26 September 2003 entered into between Mr. Sheng and ECLink Shenzhen. Pursuant to this supplemental agreement, Mr. Sheng agreed to pledge all of his equity interest in Beijing TOM to Fench Media.
(428) An exclusive technical and consultancy services agreement dated 2 June 2004 entered into between Fench Media and Tianyu Tenglong Advertising pursuant to which Tianyu Tenglong Advertising agreed to engage Fench Media to provide technical consultancy and services exclusively for Tianyu Tenglong Advertising during the term of the agreement.
(429) A supplemental equity pledge agreement dated 2 June 2004 entered into between Fench Media as pledgee, Mr. Feng Zhi Gang as pledgor and Perfect Team Limited (“Perfect Team”) relating to the novation of all rights, obligation and liabilities from Perfect Team pursuant to an equity pledge agreement dated 11 October 2001 entered into between Mr. Feng Zhi Gang and Perfect Team. Pursuant to this supplemental agreement, Mr. Feng Zhi Gang agreed to pledge all of his equity interest in Tianyu Tenglong Advertising to Fench Media.
(430) A business operation agreement dated 3 June 2004 entered into between Tianyu Tenglong Advertising, Fench Media and Mr. Feng Zhi Gang pursuant to which Fench Media agreed to act as a guarantor for any obligations undertaken by Tianyu Tenglong Advertising in respect of its transactions with third parties. No consideration is payable under this agreement. In return, Tianyu Tenglong Advertising granted Fench Media a security interest over all of its assets. In addition, Tianyu Tenglong Advertising and Mr. Feng Zhi Gang agreed that Tianyu Tenglong Advertising will not carry on any transactions that may materially adversely affect its operations and will appoint Fench Media’s nominees as its directors, chief executive officers and other senior officers. The term of this agreement in 10 years from the date of execution.
(431) A loan agreement dated 3 June 2004 entered into between Prime Digital Limited (“Prime Digital”) as lender and Mr. Li Jian as borrower whereby Prime Digital advanced a loan in the amount of RMB51,000 to Mr. Li Jian for the sole purpose of investing in Beijing Guojiatong.
(432) A loan agreement dated 3 June 2004 entered into between Prime Digital as lender and Mr. Yang as borrower whereby Prime Digital advanced a loan in the amount of RMB49,000 to Mr. Yang for the sole purpose of investing in Beijing Guojiatong.

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APPENDIX VI

(433) A business operation agreement dated 3 June 2004 entered into between ECLink Shenzhen, Beijing Guojiatong, Mr. Li Jian and Mr. Yang, pursuant to which ECLink Shenzhen agreed to act as guarantor for any obligations undertaken by Beijing Guojiatong in respect of its transactions with third parties. In return, Beijing Guojiatong granted ECLink Shenzhen a security interest over all of its assets. In addition, Beijing Guojiatong and its shareholders agreed that Beijing Guojiatong will not carry on any transactions that may materially adversely affect its operations and will appoint Beijing Guojiatong’s nominees as its directors, chief executive officers and other senior officers. No consideration was payable under the business operation agreement. The term of this agreement is 10 years from the date of execution.
(434) An exclusive technical and consultancy services agreement dated 3 June 2004 entered into between ECLink Shenzhen and Beijing Guojiatong pursuant to which Beijing Guojiatong agreed to engage ECLink Shenzhen exclusively for certain technical and consultancy services during the term of the agreement.
(435) An equity pledge agreement dated 3 June 2004 entered into between ECLink Shenzhen as pledgee and Mr. Li Jian as pledgor pursuant to which Mr. Li Jian agreed to pledge his entire equity interest in Beijing Guajiatong in favour of ECLink Shenzhen.
(436) An equity pledge agreement dated 3 June 2004 entered into between ECLink Shenzhen as pledgee and Mr. Yang as pledgor pursuant to which Mr. Yang agreed to pledge his entire equity interest in Beijing Guajiatong in favour of ECLink Shenzhen.
(437) An exclusive option agreement dated 3 June 2004 entered into between Mr. Li Jian, Prime Digital and Beijing Guojiatong pursuant to which Mr. Li Jian agreed to grant an exclusive option to Prime Digital to purchase all of his equity interest in Beijing Guojiatong when permitted by PRC law at the exercise price equivalent to the actual capital contribution towards the registered capital of Beijing Guojiatong by Mr. Li Jian. The term of this agreement is 10 years from the date of execution with an option to extend for a further 10 years.
(438) An exclusive option agreement dated 3 June 2004 entered into between Mr. Yang, Prime Digital and Beijing Guojiatong pursuant to which Mr. Yang agreed to grant an exclusive option to Prime Digital to purchase all of his equity interest in Beijing Guojiatong when permitted by PRC law at the exercise price equivalent to the actual capital contribution towards the registered capital of Beijing Guojiatong by Mr. Yang. The term of this agreement is 10 years from the date of execution with an option to extend a further 10 years.
(439) A supplemental facility letter dated 8 June 2004 entered into between the Company and Cranwood pursuant to which certain terms of the loan facility letter dated 10 December 2001 (as amended by a supplemental facility letter dated 12 March 2003) in respect of a loan facility of up to HK$34,000,000 were amended.

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APPENDIX VI

GENERAL INFORMATION

(440) A tenancy agreement dated 9 June 2004 entered into between 瀋陽東大智能物業管理有限公司 (Shenyang Dong Da Zhi Neng Property Management Company Limited) as landlord and Liaoning Falida Advertising Company Limited as tenant in relation to the lease of Unit Nos. 05 and 07, Level 10, Dongda Zhihui Building, 87 Xiao Xi Road, Shenhe District, Shenyang, Liaoning Province, the PRC for a period of 6 months from 13 June 2004 to 12 December 2004.
(441) A cooperation agreement dated 22 June 2004 entered into between Beijing TOM, Guangzhou TOM, Shanghai TOM, Fench Media, Bomei JV, Chunyu JV, New Star JV, Shandong Longjun Media Company Limited (formerly known as Qilu JV), Sano JV, Seeout JV, Southwest JV and Tianming JV regarding the provision of outdoor advertising services. The term of this agreement is three years from 1 January 2004 to 31 December 2006.
(442) A cooperation framework agreement dated 5 July 2004 entered into between China Science Media, Diannaobaoshe （電腦報社） (“PCW Publishing House”), TOM International and the Company regarding (a) the proposed acquisition by TOM International of 48.5% of the registered capital of China Popular Computer Week Management Company Limited （重慶電腦報經營有限公司） (“China Popular”); and (b) the proposed subscription by TOM International of 849,029 shares of RMB1 each in the capital of China Science Media.
(443) A joint venture contract dated 5 July 2004 entered into between China Science Media and TOM International regarding the establishment of China Popular with a registered capital of RMB30,000,000.
(444) A computer room construction contract dated 16 July 2004 entered into between CETV and 深圳市易達視訊科技有限公司 in relation to subcontracting the construction works of the computer room of 華娛電視廣播（深圳）有限公司 . The contract fee is RMB10,580,000.
(445) A services agreement dated 17 July 2004 entered into between CETV and Rich & Famous Talent Management Group Limited whereby CETV engages Rich & Famous Talent Management Group Limited to provide to CETV the services of Miss Cheung Wai Gee Nicola, being the presenter of the program currently entitled “The Scent of Women”, for a period from the date of execution of this agreement to 17 October 2004.
(446) A share subscription agreement dated 23 July 2004 entered into between Fairgood Technology Limited (“Fairgood”), Wang Bing (王冰 ), Dai Chuan Le (戴川樂 ), Liu Xin (劉新 ), Sichuan GreatWall Software Technology Co., Ltd. (四川長城軟件科技有限公司 ), 北京全點信息科技有限公司 , Sichuan GreatWall Aircom Data Technology Co., Ltd. (四川長城天訊數碼技術有限公司 ), the Company, IDG Technology Venture Investments, LP (“IDGVC”) and QUALCOMM Incorporated (“QUALCOMM”) (the Company, IDGVC and QUALCOMM, collectively known as Investors) whereby Fairgood agreed to issue warrants and to allow Investors to subscribe for (i) up to 3,561,642 Series A preferred shares of par value of HK$0.01 per share and (ii) up to 3,307,965 Series B preferred shares of par value of HK$0.01 per share of Fairgood.

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GENERAL INFORMATION

APPENDIX VI

(447) A shareholders’ agreement dated 23 July 2004 entered into between Fairgood, Wang Bing (王冰 ), Dai Chuan Le (戴川樂 ), Liu Xin (劉新 ), the Company, IDGVC and QUALCOMM, Sichuan GreatWall Software Technology Co., Ltd. (四川長城軟件科技有限公司 ), 北京全點信息科技有限公司 , Sichuan GreatWall Aircom Data Technology Co., Ltd. (四川長城天訊數碼技術有限公司 ) and each of shareholders of Sichuan GreatWall Software Technology Co., Ltd. and 北京全點信息科技有限公司 .
(448) A facility letter dated 27 July 2004 from Bank of China (Hong Kong) Limited (as lender) to TOM International (as borrower) in relation to the term loan up to the extent of HK$850,000,000 or its equivalent in USD to refinance existing shareholder’s loan or for general working capital of the Company, its subsidiaries and/or its associates. The final maturity date is 48 months from the date of the facility letter.
(449) A deed of charge over securities dated 28 July 2004 entered into between TOM International (as chargor); and Bank of China (Hong Kong) Limited (as lender) in relation to HK$850,000,000 facility to TOM International.
(450) An agreement dated 11 August 2004 entered into between TOM Online Media, Monit, Aosta and Windstorm in relation to the acquisition of the entire issued share capital of Treasure Base at a consideration of not more than RMB550 million.
(451) An exclusive technical and consultancy services agreement dated 11 August 2004 entered into between WFOE and LingXun under which WFOE will provide certain technical and consultancy services to LingXun.
(452) A business operation agreement dated 11 August 2004 entered into between WFOE, LingXun and each of the shareholders of LingXun under which WFOE agreed to act as a guarantor for any obligations undertaken by LingXun and in return for which, LingXun will pledge to WFOE their accounts receivable and assets at nil consideration.
(453) An exclusive option agreement dated 11 August 2004 entered into between Treasure Base and each of the shareholders of LingXun pursuant to which the shareholders of LingXun will grant an exclusive right to Treasure Base to purchase all or part of the shareholders’ equity interest in LingXun at an aggregate exercise price of RMB10 million.
(454) An equity pledge agreement dated 11 August 2004 entered into between WFOE and each of the shareholders of LingXun pursuant to which the shareholders of LingXun will pledge their respective interest in LingXun to WFOE for the performance of LingXun’s payment obligation under the exclusive technical and consultancy services agreement dated 11 August 2004 at nil consideration.
(455) A transfer agreement of the equity interest in LingXun dated 11 August 2004 entered into between Mr. Li, Mr. Sun, Mr. Sheng and Ms. Du Ying Shuang (“Ms. Du”) whereby Mr. Li and Mr. Sun will transfer their respective equity interest in LingXun to Mr. Sheng and Ms. Du at an aggregate consideration of RMB10 million.

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GENERAL INFORMATION

APPENDIX VI

(456) An irrevocable power of attorney dated 11 August 2004 entered into between the shareholders of LingXun in favour of Mr. Sheng and Ms. Du so that they have full power and authority to exercise all of the shareholder’s rights with respect to the shareholders’ interests in LingXun.
(457) A loan agreement dated 11 August 2004 entered into between Treasure Base and each of the shareholders of LingXun for the provision of loans by Treasure Base to Mr. Sheng and Ms. Du for the exclusive purpose of investment in the registered capital of LingXun.
(458) A sale and purchase contract dated 12 August 2004 entered into between CETV and Broadcast Technology Ltd. in relation to the establishment of a wholly foreign owned enterprise namely 華娛信息諮詢（深圳）有限公司 in Shanghai. 深圳市易達視訊科技有限公司 agreed to provide certain equipment and its corresponding installation testing and system integration services to the Broadcast Technology Ltd. at a consideration of RMB6,312,474.
(459) A share transfer agreement dated 31 August 2004 entered into between China Science Media and TOM International whereby China Science Media agreed to transfer 48.5% registered capital of China Popular to TOM International at a consideration of RMB14,550,000.
(460) A supplemental financing facility agreement dated 2 September 2004 entered into between (1) Cité, Business Weekly, PC Home and Sharp Point as the co-borrowers and Home Media as the new co-borrower; (2) DBS Bank Ltd, Calyon, United Overseas Bank Ltd, Bank Sinopac and the Bank of Nova Scotia as the banks; (3) DBS Bank Ltd as the coordinating arranger and facility agent; and (4) Bank Sinopac as the fiscal agent which supplements the DBS Facility Agreement.
(461) A loan agreement dated 27 September 2004 entered into between TOM Print Media as lender and Ms. Meng Hai Ping (“Ms. Meng”) as borrower whereby TOM Print Media agreed to provide Ms. Meng a long term loan in the amount of RMB1,000,000 exclusively for contributing to the registered capital of Shanghai TOM Cité Distribution Limited (“Shanghai TOM Cité Distribution”).
(462) A loan agreement dated 27 September 2004 entered into between TOM Print Media as lender and Mr. Sheng as borrower whereby TOM Print Media agreed to provide Mr. Sheng a long term loan in the amount of RMB1,000,000 exclusively for contributing to the registered capital of Shanghai TOM Cité Distribution.
(463) An irrevocable power of attorney dated 27 September 2004 executed by Ms. Meng in relation to Shanghai TOM Cité Distribution.
(464) An irrevocable power of attorney dated 27 September 2004 executed by Mr. Sheng in relation to Shanghai TOM Cité Distribution.

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GENERAL INFORMATION

APPENDIX VI

(465) An exclusive option agreement dated 27 September 2004 entered into between TOM Print Media, Ms. Meng and Shanghai TOM Cité Distribution, pursuant to which Ms. Meng granted TOM Print Media an exclusive option to purchase her 50% equity interest in Shanghai TOM Cité Distribution when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Ms. Meng. The term of this agreement is 10 years from the date of execution.
(466) An exclusive option agreement dated 27 September 2004 entered into between TOM Print Media, Mr. Sheng and Shanghai TOM Cité Distribution, pursuant to which Mr. Sheng granted TOM Print Media an exclusive option to purchase his 50% equity interest in Shanghai TOM Cité Distribution when permitted by PRC law at the exercise price equivalent to the actual capital contribution by Mr. Sheng. The term of this agreement is 10 years from the date of execution.
(467) An equity pledge agreement dated 27 September 2004 entered into between Shanghai TOM Cité Consulting Limited (“Shanghai TOM Cité Consulting”) as pledgee and Ms. Meng as pledgor whereby Ms. Meng agreed to pledge her 50% equity interest in Shanghai TOM Cité Distribution to Shanghai TOM Cité Consulting.
(468) An equity pledge agreement dated 27 September 2004 entered into between Shanghai TOM Cité Consulting Limited (“Shanghai TOM Cité Consulting”) as pledgee and Mr. Sheng as pledgor whereby Mr. Sheng agreed to pledge his 50% equity interest in Shanghai TOM Cité Distribution to Shanghai TOM Cité Consulting.
(469) A business operation agreement dated 27 September 2004 entered into between Shanghai TOM Cité Consulting, Shanghai TOM Cité Distribution, Ms. Meng and Mr. Sheng, pursuant to which Shanghai TOM Cité Consulting agreed to act as a performance guarantor for Shanghai TOM Cité Distribution in respect of its transactions with third parties. In return, Shanghai TOM Cité Distribution granted Shanghai TOM Cité Consulting a security interest over all of its assets. In addition, Shanghai TOM Cité Consulting and all of its shareholders agreed that Shanghai TOM Cité Distribution will not carry on any transactions that may materially adversely affect its operations and will appoint Shanghai TOM Cité Consulting’s nominees as its directors, chief executive officer and other senior officers.
(470) An exclusive technical and consultancy services agreement dated 27 September 2004 entered into between Shanghai TOM Cité Consulting and Shanghai TOM Cité Distribution pursuant to which Shanghai TOM Cité Distribution agreed to engage Shanghai TOM Cité Consulting exclusively for certain technical and consultancy services during the term of the agreement.

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GENERAL INFORMATION

APPENDIX VI

10. GENERAL

(a) The head office and principal place of business of the Company is at 48th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong. The share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited at Rooms 1712-1716, 17 Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong.
(b) The Qualified Accountant of the Company as required under Rule 3.24 of the Listing Rules is Ms. Tommei Tong. She holds a Bachelor of Social Sciences Degree from the University of Hong Kong in 1986. She is also a Fellow of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants.
(c) The Company Secretary of the Company is Ms. Angela Mak. Ms. Mak holds a Bachelor of Commerce degree and a Bachelor of Laws degree from the University of New South Wales in Australia and has been admitted as a solicitor in New South Wales (Australia), England and Wales and Hong Kong.
(d) Save as disclosed in this circular:
a none of the Directors or expert as named in this appendix has any direct or indirect interest in any assets which have been, since 31 December 2003, the date to which the latest published audited financial statements of the Company were made up, to the Latest Practicable Date, acquired or disposed of by or leased to any member of the Group or are proposed to be acquired or disposed of by or leased to any member of the Group; and
b none of the Directors is materially interested in any contract or arrangement subsisting at the Latest Practicable Date which is significant in relation to the business of the Group,
(e) The English text of this circular shall prevail over the Chinese text.

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GENERAL INFORMATION

APPENDIX VI

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business of the Company at 48th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong during normal business hours on any weekday other than public holidays, up to and including 5 November 2004:

(a) the Memorandum of Association and Articles of Association of the Company;
(b) the material contracts referred to in the section headed “Material Contracts” of this appendix;
(c) the service contracts referred to in the section headed “Service Contracts” of this appendix;
(d) the annual report of the Company for each of the years ended 31 December 2002 and 31 December 2003;
(e) the interim report of the Company for the six months ended 30 June 2004;
(f) the accountants’ report on LingXun signed by PricewaterhouseCoopers, the text of which is set out in Appendix II of this circular and the related statement of adjustments;
(g) the accountants’ report on Treasure Base signed by PricewaterhouseCoopers, the text of which is set out in Appendix III of this circular;
(h) the letter dated 21 October 2004 on the unaudited pro forma statement of assets and liabilities of the Enlarged TOM Group from PricewaterhouseCoopers, the text of which is set out in Section II of Appendix IV of this Circular;
(i) the written consent of PricewaterhouseCoopers referred to in paragraph 7 of this appendix;
(j) each of the circulars of the Company issued since 1 January 2004; and
(k) the Agreement.

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AI assistant

TOM Group Limited — Proxy Solicitation & Information Statement 2004

50566_rns_2004-10-21_f809bbf1-0814-443e-aa46-8d92f385e997.pdf

MAJOR TRANSACTION

Acquisition of the entire issued share capital of Treasure Base Investments Limited

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

LETTER FROM THE BOARD

To the Shareholders

MAJOR TRANSACTION

Acquisition of the entire issued share capital of Treasure Base Investments Limited

A. INTRODUCTION

B. THE AGREEMENT

1. Date

3. Assets acquired

4. WFOE

LETTER FROM THE BOARD

5. Transfer of equity interest in LingXun

6. Consideration

LETTER FROM THE BOARD

7. Payment terms

LETTER FROM THE BOARD

8. Structure chart of TBIL Group as at the date of the Agreement

LETTER FROM THE BOARD

9. Structure chart of the TBIL Group immediately after Completion

LETTER FROM THE BOARD

10. Conditions Precedent

11. Completion

LETTER FROM THE BOARD

12. Contractual Arrangements

LETTER FROM THE BOARD

C. INFORMATION ON TREASURE BASE

D. INFORMATION ON LINGXUN

1. Principal activities

LETTER FROM THE BOARD

2. Business and financial review and prospect

LETTER FROM THE BOARD

E. REASONS FOR ENTERING INTO THE AGREEMENT

F. LIQUIDITY AND FINANCIAL RESOURCES OF THE TOM GROUP

G. GENERAL

LETTER FROM THE BOARD

APPENDIX I

1. SHARE CAPITAL

(i) Shares

(ii) Convertible bonds

(iii) Options

APPENDIX I

APPENDIX I

2. UNAUDITED INTERIM RESULTS OF THE GROUP FOR THE SIX MONTHS ENDED 30 JUNE 2004

Unaudited Consolidated Profit and Loss Account

APPENDIX I

Consolidated Balance Sheet

APPENDIX I

Consolidated Statement of Changes in Equity

APPENDIX I

Condensed Consolidated Cash Flow Statement

APPENDIX I

Notes to the Condensed Interim Accounts

1. Basis of preparation and accounting policies

2.

Restatement of turnover and cost of sales

3. Segment information

APPENDIX I

FINANCIAL INFORMATION ON TOM GROUP

APPENDIX I

4. Operating profit/(loss)

6. Provision for impairment of assets

7. Provision for contracts termination

8. Taxation

9. Dividend

10. Earnings/(loss) per share

(b) Diluted

11. Fixed assets

APPENDIX I

12. Other non-current assets

APPENDIX I

TOM Group Limited Proxy Solicitation & Information Statement 2004