Business Takeovers Buyer’s Book

1. Business TakeoversBuyer’s Book • Limited Company take over a Sole Trader • Limited Company take over the Partnership • Limited Company take over the Limited Company

2. PCCW Takeovers HK Telecom

3. PCCW Takeovers HK Telecom HK Telecom Net Assets 470 Billion PCCW Goodwill Purchase Consideration 2,250 Billion

4. Furnitures and Fixtures Business Purchase Business Purchase Furnitures and Fixtures Assets Taken Over at Their Revised Values Dr. Assets Cr. Business Purchase

5. Business Purchase Creditors Creditors Business Purchase Liabilities Taken Over Dr. Business Purchase Cr. Liabilities

6. Purchase Consideration Agreed Upon Dr. Business Purchase Cr. Vendor ( e.g. HK Telecom) Business Purchase HK Telecom HK Telecom Business Purchase

7. Loss on Acquisition Dr. Goodwill Cr. Business Purchase Goodwill Business Purchase Business Purchase Goodwill

8. Or: Profit on the Acquisition Dr. Business Purchase Cr. Capital Reserve Business Purchase Capital Reserve Capital Reserve Business Purchase

9. Settlement of the purchase consideration bycash and/or issuing shares and debentures Dr. Vendor (e.g. HK Telecom) Cr. Cash Cr.Ordinary Shares Cr.Debentures HK Telecom Cash Ordinary Shares Debentures

10. Settlement of the purchase consideration by cash and/or issuing shares and debentures Ordinary Shares HK Telecom Debentures HK Telecom

11. Web Sites of PCCW PCCW Page 54 Summary of Financial Information Page 71 Consolidated Income Statement Page 73 Consolidated Balance Sheet Page 75 Balance Sheet