Annual Report 2019

220 CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED Notes to the Consolidated Financial Statements For the year ended 31 December 2019 40. ACQUISITION OF SUBSIDIARIES (CONTINUED) For the year ended 31 December 2018 (Continued) Pursuant to the shareholders’ agreement, a put option was granted by the Group to the non-controlling equity holders of TCP Group (the “Option Holders”) exercisable 2 years after 23 February 2018. The Option Holders have the right to sell to, and require the Group to acquire all of the Option Holders’ remaining equity interest of TCP Group after 23 February 2018 at a cash consideration. At initial recognition, the fair value of the put option as at acquisition date amounted to HK$189 million. The Group was also granted with a call option to acquire all of the Option Holders’ remaining equity interest of TCP Group, where the fair value of the call option was determined as negligible at initial recognition. TCP Group is principally engaged in operation of port facilities in Brazil. The transaction was completed on 23 February 2018. Since then, the Group has the right to appoint the majority of board members to the Board of Directors of TCP, which is the authority of the power to direct the relevant activities of TCP. Accordingly, TCP Group is accounted for as subsidiaries of the Group. Further details of the TCP Acquisition are set out below: HK$’million Consideration Cash 6,731 Fair value of identifiable assets acquired and liabilities assumed: Intangible assets (note 16) 6,485 Property, plant and equipment (note 17) 2,453 Deferred tax assets 39 Inventories 1 Debtors, deposits and prepayments 255 Taxation recoverable 40 Cash and bank balances 1,103 Bank and other borrowings (2,714) Other non-current liabilities (4,349) Deferred tax liabilities (722) Creditors and accruals (274) Taxation payable (57) Total identifiable net assets 2,260 The fair values of the above intangible assets acquired in the TCP Acquisition and the value of put option had been determined by a group of professional valuers, Greater China Appraisal Limited. Fair values of the identifiable assets acquired and liabilities assumed were determined by reference to valuations performed by Greater China Appraisal Limited based on asset-based approach. Significant assumptions of the valuations include the growth rates, discount rates and expected future cash inflows/outflows of TCP Group.