| Business combinations |
| 32. |
Business combinations |
Share data have been revised to give
effect to the share split as explained in Note 4 b) (d).
Acquisition of MG:
| a) | The Group acquired control of MG on May 25, 2023 through the
acquisition of a 100% shares in MG, which provides e-commerce and digital advertising services including consultation and online social
marketing. The total consideration transferred for the acquisition of MG by the Group is as follows: |
| | |
May 25,
2023 | |
| | |
| |
| Purchase consideration | |
| | |
| Equity instruments (501,789 ordinary shares of the Company) | |
$ | 70,629,011 | |
| b) | The following table summarizes the recognized amounts of assets
acquired and liabilities assumed at the acquisition date: |
| | |
May 25, 2023 | |
| | |
| |
| Cash and cash equivalents | |
$ | 1,903,424 | |
| Accounts receivables and notes receivables | |
| 2,633,089 | |
| Other receivables | |
| 130,238 | |
| Inventories | |
| 130,150 | |
| Prepayments | |
| 373,905 | |
| Property, plant and equipment, net | |
| 525,791 | |
| Right-of-use assets | |
| 6,371,979 | |
| Intangible assets | |
| 30,960,827 | |
| Non-current financial assets at fair value through profit or loss | |
| 40,654 | |
| Non-current financial assets at fair value through other comprehensive income | |
| 118,400 | |
| Deferred tax assets | |
| 403,458 | |
| Other non-current assets | |
| 729,435 | |
| Short-term borrowings | |
| (3,239,093 | ) |
| Contract liabilities | |
| (367,500 | ) |
| Accounts payable | |
| (915,805 | ) |
| Income tax payable | |
| (10,207 | ) |
| Other payables | |
| (697,286 | ) |
| Other current liabilities | |
| (742,761 | ) |
| Bonds payable | |
| (469,476 | ) |
| Long-term borrowings | |
| (210,333 | ) |
| Lease liabilities | |
| (6,098,825 | ) |
| Deferred tax liabilities | |
| (10,500,374 | ) |
| Provision | |
| (667,522 | ) |
| Other non-current liabilities | |
| (842,610 | ) |
| Fair value of identifiable net assets | |
$ | 19,559,558 | |
| c) | The fair value of the Company’s 501,789 shares was derived
from the Discounted Cash Flow method supplemented with three conventional approaches used to estimate its fair value: (i) Income approach;
(ii) Cost approach; and (iii) Market approach. The main assumptions are the probability of occurrence of earnings before interest and
tax, depreciation and amortization under various scenarios to estimate the price to be paid, and the discounted present value estimated
by the risk-adjusted discount rate. |
| d) | The fair value of acquired trade receivables is 2,633,089.
The gross contractual amount for trade receivables due is 2,637,301, with a loss allowance of 4,212 recognized on acquisition. |
| e) | The goodwill recognized by the Group as a result of the acquisition
is as follows: |
| | |
May 25, 2023 | |
| | |
| |
| Transfer considerations | |
$ | 70,629,011 | |
| Less: Fair value of identifiable net assets | |
| (19,559,558 | ) |
| Goodwill | |
$ | 51,069,453 | |
The goodwill is attributable to the
workforce and potential synergy of the acquired business. It will not be deductible for tax purposes.
| f) | The operating revenue included in the consolidated statement
of comprehensive income from May 25, 2023 contributed by MG was $15,130,557. MG also contributed loss before income tax of 94,864 over
the same period. Had MG been consolidated from January 1, 2023, the consolidated statement of comprehensive income would show operating
revenue of $45,206,882 and loss before income tax of ($3,400,794). |
Acquisition of Green Quest:
| | a) | On August 23, 2024, the Company entered into the Share Purchase Agreement with Green Quest, a Cayman Islands company, which owns 100% of the issued and outstanding shares of Dragon Marketing. Dragon Marketing specializes in search engine optimization and social media marketing in Taiwan. The Company will acquire 100% of the issued and outstanding shares of Green Quest. The closing date was set on September 1, 2024. |
Pursuant to the Share Purchase Agreement,
the total number of the Company’s shares to be issued for the acquisition is calculated based on the sum of a) the purchase price
and b) an earn-out consideration based on future performance (the “Total Consideration”).
The Company shall pay the purchase price
to the shareholders by issuance a number of the Company’s shares equal to the sum of i), ii), and iii) listed below (the “Purchase
Price”) divided by US$11.21, to be rounded down to the nearest whole number:
| i) | Fixed
consideration: NT$ 95,000,000 (US$2,975,258). |
| ii) | Closing
cash consideration: Green Quest Holding Inc and Dragon Marketing’s net cash available as of the closing, which shall exclude any
cash resulting from unearned revenues, accounts payable and bank loans, and for the avoidance of doubt shall be a negative number if
the amount of such net cash is less than zero. |
| iii) | Accounts
receivable consideration: The monetary value of Dragon Marketing’s accounts receivable collected within 90 calendar days of the
closing, converted using a foreign exchange rate equal to the reference exchange rate. |
In addition to the Purchase Price, the
earn-out consideration is based on future performance set as follows:
| i) | If
Dragon Marketing achieves any revenue in year 2024, the Company shall pay to the shareholders the US dollar equivalent of NT$110,000,000
multiplied by the earn-out ratio, converted using a foreign exchange rate equal to the reference exchange rate. the Company shall pay
the earn-out consideration to the shareholders by issuance to the shareholders a number of the Company’s shares equal to the product
of the earn-out consideration divided by US$11.21, to be rounded down to the nearest whole number (the “Earn-Out Shares”). |
| ii) | The
earn-out ratio means a fraction, the numerator of which is the revenue achieved by Dragon Marketing in the year 2024 and the denominator
of which is NT$18,500,000 (US$579,392). |
Pursuant to the Share Purchase Agreement,
the Total Consideration used as the basis to calculate the total number of the Company’s shares to be issued shall not exceed the
US dollar equivalent of NT$200,000,000, and the amount of shares is allocated to Purchase Price first, with the remaining allocated as
the Earn-Out Shares.
The total consideration transferred for
the acquisition of Dragon Marketing by the Group is as follows:
| |
|
September 1,
2024 |
|
| |
|
|
|
| Purchase consideration |
|
|
|
|
| Equity instruments (27,934 ordinary shares of the Company) |
|
$ |
4,625,055 |
|
At the closing date, the fair value of
the Company’s 27,934 shares was derived from the Discounted Cash Flow method. The main assumption is the discounted present value
estimated by the risk-adjusted discount rate.
The total value of the equity consideration
amounted to US$4,625,066 (27,934 shares) is allocated between the Purchase Price amounted to US$3,184,536 (19,152 shares) recognized in
capital surplus (see Note 20) and the Earn-Out Shares amounted to US$1,440,519 (8,782 shares) recognized in financial liabilities measured
at fair value through profit or loss.
As of December 31, 2025, the Company had
issued all equity consideration pursuant to the payment terms of the Share Purchase Agreement, resulting in the issuance of 27,934 ordinary
shares.
| b) | The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the
acquisition date: |
| | |
September 1,
2024 | |
| | |
| |
| Cash and cash equivalents | |
$ | 1,552,346 | |
| Contract Assets | |
| 61,278 | |
| Accounts receivables | |
| 78,816 | |
| Other receivables | |
| 643,607 | |
| Prepayments | |
| 303,398 | |
| Investment Properties | |
| 2,437,957 | |
| Intangibles assets | |
| 474,852 | |
| Contract liabilities | |
| (45,762 | ) |
| Other payables | |
| (98,791 | ) |
| Other current liabilities | |
| (2,355,122 | ) |
| Long-term borrowings | |
| (269,437 | ) |
| Deferred tax liabilities | |
| (101,812 | ) |
| Other non-current liabilities | |
| (125 | ) |
| Fair value of identifiable net assets | |
$ | 2,681,205 | |
| c) | The fair value of the Company’s 27,934 shares was derived from the Discounted Cash Flow method supplemented
with three conventional approaches used to estimate its fair value: (i) Income approach; (ii) Cost approach; and (iii) Market approach.
The main assumptions are the probability of occurrence of earnings before interest and tax, depreciation and amortization under various
scenarios to estimate the price to be paid, and the discounted present value estimated by the risk-adjusted discount rate. |
| d) | The fair value of acquired trade receivables is 78,816. |
| e) | The goodwill recognized by the Group as a result of the acquisition is as follows: |
| | |
September 1,
2024 | |
| | |
| |
| Transfer considerations | |
$ | 4,625,055 | |
| Less: Fair value of identifiable net assets | |
| (2,681,205 | ) |
| Goodwill | |
$ | 1,943,850 | |
The goodwill is attributable
to the workforce and potential synergy of the acquired business. It will not be deductible for tax purposes.
The operating revenue included in the
consolidated statement of comprehensive income from September 1, 2024 contributed by Dragon Marketing was $261,943. Dragon Marketing also
contributed income before income tax of $197,090 over the same period. Had Dragon Marketing been consolidated from January 1, 2024, the
consolidated statement of comprehensive income would show operating revenue of $48,636,474 and loss before income tax of $(77,946,255).
|