Annual Report 2011 - QuamIR

Notes to the Consolidated Financial StatementsFor the year ended 31 March 201134. WarrantsOn 21 May 2007, the Company announced that it had entered into a conditional warrant subscriptionagreement dated 16 May 2007 with an independent investor in relation to a private placing of 244,000,000non-listed warrants at an issue price of HK$0.01 per warrant. The warrants entitled the holder thereof tosubscribe for new shares of the Company at an initial exercise price of HK$0.64 per new share (subjectto adjustment) at any time during a period of three years commencing from the date of issue of thewarrants. Each warrant carried the right to subscribe for one new share.The warrants were issued on 1 June 2007 upon completion of the warrant subscription agreement, andthe Company received proceeds of HK$2,440,000 in respect of the placing of the warrants. The netproceeds from the placing of the warrants were used for general working capital of the Group.During the year ended 31 March 2010, the Company had 244,000,000 warrants outstanding. The exercisein full of such warrants would, under the present capital structure of the Company, result in the issueof 244,000,000 additional shares of HK$0.01 each.During the year ended 31 March 2011, the warrants were lapsed as the warrants holder did not exercisethe right to subscribe for new shares of the Company before the maturity date.35. Capital Risk ManagementThe Group manages its capital to ensure that entities in the Group will be able to continue as a goingconcern while maximizing the return to stakeholders through the optimization of the debt and equitybalance. The Group’s overall strategy remains unchanged from prior year.The capital structure of the Group consists of debts (which include convertible bonds and promissorynote), cash and cash equivalents and equity (comprising issued share capital, reserves and non-controllinginterests).Gearing ratioThe Group’s management committee reviews the capital structure on a semi-annual basis. As part of thisreview, the committee considers the cost of capital and the risks associated with each class of capital.Annual Report 2011105