Annual Report 2011 - QuamIR

Notes to the Consolidated Financial StatementsFor the year ended 31 March 201137. Acquisition of Subsidiaries (continued)(b)Acquisition of Nice Think Group LimitedOn 17 April 2009, Sino Prosper (States Gold) Investment Limited (a wholly-owned subsidiaryof the Company) (as purchaser) and Mr. Leung, a director and substantial shareholder of theCompany (as vendor) pursuant to which the purchaser has agreed to acquire and the vendor hasagreed to dispose of the entire issued share capital of Nice Think, which is wholly and beneficiallyowned by the vendor, and all obligations, liabilities and debts owing or incurred by Nice Thinkto the vendor, at a total consideration of RMB360 million (equivalent to approximately HK$409.1million) (the “Acquisition Agreement I”). Pursuant to the terms of the Acquisition AgreementI, the consideration was satisfied by the issuance of (i) zero coupon convertible bonds in theprincipal amount of approximately HK$136,364,000 (equivalent to approximately RMB120,000,000)with a 5-year maturity; and (ii) promissory note of the balance of RMB240,000,000 (equivalent toapproximately HK$272,728,000) to the vendor with a 1.5% per annum coupon rate payable on aquarterly basis with a 2-year maturity. Details of the convertible bonds and promissory note areset out in notes 27 and 28 respectively. The vendor is a connected person by virtue of him beinga director and a substantial shareholder of the Company. As such, the acquisition constituteda connected transaction as defined in Chapter 14A of the Listing Rules. The acquisition alsoconstituted a very substantial acquisition as defined in Chapter 14 of the Listing Rules. Allconditions precedent under the Acquisition Agreement I have been satisfied and the acquisitionwas completed on 30 September 2009.The acquisition has been accounted for as acquisition of the assets. The acquisition of NiceThink is not considered as a business acquisition as the activities of the Nice Think through itssubsidiaries are the holding of certain exploration permits in Heilongjiang Province, the PRC.The assets and the associated liabilities acquired in the transaction were as follows:HK$’000Property, plant and equipment 68Exploration and evaluation assets 1,016,859Bank balances and cash 4,816Prepayments, deposits and other receivables 1,246Amount due from a non-controlling interest of a subsidiary 22Amount due to a shareholder (1,227)Other payables (1,564)Amount due to a related company (4,780)1,015,440Non-controlling interests (355,746 )Net assets acquired 659,694Sino Prosper State Gold Resources Holdings Limited114