| Schedule of Estimated Fair Values of Assets and Liabilities |
The following table sets forth the estimated fair values of assets to be acquired and liabilities to be assumed and the goodwill resulting from the Business Combination: | | | HK$ | | | US$ | | | Total consideration | | | 1,062,402 | | | | 136,557 | | | Fair value of net assets as of the acquisition date at 51% | | | 5,100 | | | | 655 | | | Goodwill (Note 13) | | | 1,057,302 | | | | 135,902 | | | | | Note | | (HK$) | | | (US$) | | | Assets acquired: | | | | | | | | | | Cash and cash equivalents | | (a) | | | 5,943,222 | | | | 758,064 | | | Accounts receivable, net | | (a) | | | 6,625,174 | | | | 845,048 | | | Contract assets, net | | (a) | | | 7,478,885 | | | | 953,939 | | | Deposit paid and other receivables | | (a) | | | 1,908,000 | | | | 243,367 | | | Amount due from a shareholder | | (a) | | | 7,000 | | | | 893 | | | Property and equipment, net | | (b) | | | 725,803 | | | | 92,577 | | | Right-of-use assets | | (c) | | | 418,184 | | | | 53,340 | | | Customer relationship | | | | | 26,385,737 | | | | 3,365,528 | | | Fair value of assets acquired | | | | | 49,492,005 | | | | 6,312,756 | | | Liabilities assumed: | | | | | | | | | | | | Accounts payable | | (a) | | | (8,515,051 | ) | | | (1,086,104 | ) | | Accruals and other payables | | (a) | | | (1,136,000 | ) | | | (144,899 | ) | | Dividend payable | | (a) | | | (7,880,000 | ) | | | (1,005,102 | ) | | Contract liabilities | | (a) | | | (13,000 | ) | | | (1,658 | ) | | Operating lease liabilities | | (c) | | | (344,415 | ) | | | (43,930 | ) | | Tax payables | | (a) | | | (2,577,854 | ) | | | (328,808 | ) | | Amount due to a director | | (a) | | | (1,034,114 | ) | | | (131,902 | ) | | Deferred tax liabilities – non current | | (e) | | | (4,353,647 | ) | | | (555,312 | ) | | Operating lease liabilities – non current | | (c) | | | (83,405 | ) | | | (10,638 | ) | | Fair value of liabilities assumed | | | | | (25,937,486 | ) | | | (3,308,353 | ) | | Fair value of net assets as of the acquisition date | | | | | 23,554,519 | | | | 3,004,403 | | | Total consideration | | | | | 217,000,000 | | | | 27,678,571 | | | Goodwill | | | | | 193,445,481 | | | | 24,674,168 | | Notes: | (a) | The carrying amounts reported are approximate their respective fair values because of the short-term nature of these accounts. | | (b) | Property and equipment are valued using the cost approach, which is based on current replacement and/or reproduction cost of the asset as new, less depreciation attributable to physical, functional, and economic factors. It was determined that the fair value of property and equipment closely approximated their carrying value and no pro forma adjustment was deemed necessary or reflected in the purchase price allocation table. | | (c) | The carrying amounts of right-of-use assets and operating lease liabilities are approximate to their respective fair values because it is discounted using an appropriate interest rate. | | (d) | The customer relationship intangible asset was measured using income-based valuation approach. Under this method, the value of the customer relationship is determined by estimating the future cash flows attributable specifically to existing customers and then deducting contributory asset charges for the use of other supporting assets. The resulting excess earnings are discounted to present value using an appropriate discount rate that reflects the risk associated with the customer relationship. This approach captures the economic benefits expected to be generated from the existing customer base over its remaining useful life. | | (e) | Deferred tax liabilities arise from the customer relationship intangible asset recognized in the business combination. The asset is amortized for financial reporting purposes but is not deductible for tax purposes, creating a taxable temporary difference. As a result, a deferred tax liability is recorded and will reverse over the asset’s useful life. | | | | HK$ | | | US$ | | | Consideration | | | 5,000 | | | | 638 | | | Add: Carrying amount of VBS’s net liabilities | | | 22,412,227 | | | | 2,858,702 | | | Gain on deconsolidation | | | 22,417,227 | | | | 2,859,340 | | | Non-controlling interest | | | (10,275,166 | ) | | | (1,310,608 | ) | | Net gain from deconsolidation of subsidiaries | | | 12,142,061 | | | | 1,548,732 | |
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