Annual Report 2019

FAR EAST CONSORTIUM INTERNATIONAL LIMITED 240 For the year ended 31 March 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 38. ACQUISITION/DISPOSAL OF SUBSIDIARIES (a) Acquisition of business On 30 April 2018, the Group acquired the entire share capital of TWC, a company incorporated in United States of America. The principal activity of TWC is hospitality and gaming business. The acquisition was accounted for using the purchase method. Carrying amount in the acquiree’s financial records Fair value adjustment Fair value of net assets HK$’000 HK$’000 HK$’000 Net assets acquired: Property, plant and equipment 445,986 79,948 525,934 Debtors, deposits and prepayments 64,486 – 64,486 Bank balances and cash 55,339 – 55,339 Creditors and accruals (38,733) – (38,733) Bank borrowings (153,825) – (153,825) Deferred tax liabilities (3,278) (12,643) (15,921) 369,975 67,305 437,280 Bargain purchase gain (108,000) Consideration satisfied by cash 329,280 Net cash outflow arising on acquisition: Cash consideration 329,280 Cost incurred in connection with the acquisition 3,386 Bank balances and cash acquired (55,339) 277,327 The bargain purchase gain represents the excess of the acquirer’s interest in the net fair value of assets over the purchase consideration attributable to the sale by the exiting shareholders of the acquiree for realisation of their investment due to the anticipation of the change in the gaming regulatory and operating environment in Czech Republic. Had the acquisition been completed on 1 April 2018, the directors of the Company would not have expected a material impact to the Group’s revenue and profit for the year as the revenue and losses contributed by TWC from 1 April up to 30 April 2018 (date of acquisition) was insignificant to the Group.