UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP Unaudited Pro Forma Consolidated Statement of Financial Position (continued) Notes for Unaudited Pro Forma Consolidated Statement of Financial Position of the Enlarged Group (1) The balances have been extracted from the audited consolidated statement of financial position of the Group as at 31 December 2021. (2) The balances have been extracted from the audited consolidated statement of financial position of the ARA Group. (3) Reclassifications are to align the classifications of the respective amounts of financial statement line items as shown on the consolidated statement of financial position of ARA Group to those of the consolidated statement of financial position of the Group: (i) from “Financial assets (non-current)” of ARA Group to “Financial assets at fair value through profit or loss” and “Financial assets at fair value through other comprehensive income” of the Group.; (ii) from “Other intangible assets” of ARA Group to “Goodwill” of the Group. This is to separate goodwill from other intangible assets and disclose as a separate line; (iii) from “Prepayments, other receivables and other assets” of ARA Group to “Trade receivables” of the Group for trade balances related to fee receivables of ARA Group; (4) The Group has applied the acquisition accounting in accordance with IFRS 3 Business Combinations to account for the acquisition of ARA Group, based on net tangible asset acquired as of 31 December 2021, as if the acquisition was completed on 31 December 2021. The pro forma goodwill is calculated as follows: Note USD’000 Total Consideration (a) 4,859,393 Less: Carrying amount of net tangible assets acquired 1,779,866 Non-controlling interests of ARA Group (b) (404,834) Perpetual capital securities (c) (704,860) 670,172 Pro forma goodwill (“the Goodwill”) 4,189,221 (a) Pursuant to the Acquisition Agreement, the total consideration was satisfied in the following manner: (i) US$519 million in cash, funded by internal resources of the Group and the net proceeds from the subscription of new shares by Sumitomo Mitsui Banking Corporation (“SMBC”) for US$250 million; and (ii) US$4,340 million by the issue of 1,345,898,078 shares at HK$25.15 per share, based on share price on completion date of 20 January 2022. (b) The non-controlling interests of ARA Group is measured at their proportionate share in the recognised fair value of ARA Group’s identifiable net assets (c) The carrying amount of perpetual capital securities as of 31 December 2021 represents proceeds received upon issuance (net of issuance costs). Pursuant to IFRS 3, the fair values of identifiable assets acquired, and liabilities assumed of the ARA Group at the date of completion shall be recognised and any excess of the Total Consideration over the fair values of the identifiable assets acquired and the liabilities assumed measured in accordance with IFRS 3 of the ARA Group shall be recognised as goodwill. As the fair values of the identifiable net assets of the ARA Group at the date of completion may be different from the carrying values of the net assets of the ARA Group as at 31 December 2021, actual excess of the Total Consideration over the fair values of the identifiable net assets of the ARA Group and the final amounts of assets and liabilities of the ARA Group recognised may be different from the amounts above. According to the Group’s accounting policy, after initial recognition, the Goodwill will be measured at cost less any accumulated impairment losses. The Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. In the preparation of this Unaudited Pro Forma Financial Information of the Enlarged Group, the Directors had performed an impairment assessment of the Goodwill in accordance with IAS 36 Impairment of Assets and the Group’s accounting policy. The Directors have taken into consideration the recoverable amount and synergy effect to the business of the Enlarged Group as key parameters for the assessment and accordingly, no pro forma adjustment in respect of goodwill impairment is made by the Directors in the Unaudited Pro Forma Financial Information for the Enlarged Group. Such assessment assumed that (i) there are no major material adverse changes in the fair values of the assets and liabilities; and (ii) the identifiable assets and liabilities can be realized at their book values. However, should there be any adverse changes to the business of ARA Group, including but not limited to, any subsequent adverse changes in the operation, impairment may be required to be recognised against the Goodwill in accordance with IAS 36 and the Group’s accounting policy. The auditors have conducted their engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 Assurance Engagements to Report on the Compilation of Unaudited Pro Forma Financial Information Included in a Prospectus and considered that the goodwill impairment test performed by the Directors is consistent with the Company’s applicable financial reporting framework and its accounting policies under that framework. However, the auditors did not perform an audit or review of the financial information used in the preparation of the goodwill impairment test prepared by the Directors. The Directors confirmed that they will apply consistent accounting policies, principal assumptions and valuation method to assess impairment of the Goodwill in subsequent reporting periods in accordance with the requirement of IAS 36. The Company also confirmed with its auditors that they will audit and opine on the consolidated financial statements of the Company in accordance with Hong Kong Standards on Auditing. R E A C H I N G N E W H E I G H T S 244
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