Annual Report 2011/12 - International Entertainment Corporation

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Notes to the Consolidated Financial StatementsFor the year ended 31 March 201233. CAPITAL COMMITMENTS2012 2011HK$’000 HK$’000Capital expenditure in respect of the acquisition of property, plantand equipment contracted for but not provided in the consolidatedfinancial statements 1,610 158Other commitmentsThe Group also has the following commitments:(i)(ii)New Coast Hotel, Inc. (“NCHI”), an indirect subsidiary of the Company, entered into a license agreement on12 December 2003 with Hotel Project Systems, Pte. Limited (“HPSL”), a wholly-owned subsidiary of HyattInternational Corporation, to lease the technology and know-how of hotel technical systems and related services,and license the name “Hyatt” and related trademarks for use in the hotel to be owned by NCHI. In considerationthereof, NCHI will pay a royalty during the operating term based on a certain percentage of the gross operatingprofit as agreed by NCHI and HPSL. The license agreement is effective for an initial term from 12 December 2003to the fifth anniversary date of the formal opening of the hotel (“Initial Period of HPSL”). Each of NCHI and HPSLwill have the option to extend the agreement for an additional period of five years after the Initial Period of HPSL,and thereafter for another additional period of three years. On 3 April 2009, HPSL exercised its rights to extendthe agreement for an additional period of five years. The royalty charges paid or payable by NCHI for the yearended 31 March 2012 was approximately HK$1,701,000 (2011: HK$1,639,000).NCHI entered into a sale and marketing agreement on 12 December 2003 with Hyatt International – SEA (Pte)Limited (“HISPL”), a wholly-owned subsidiary of Hyatt International Corporation, pursuant to which HISPL agreedto provide (a) appropriate sale and marketing services and (b) advertising and promotional services for the hoteloperation. In consideration thereof, HISPL will be entitled to receive a certain percentage of the total revenue ofthe hotel operation as a sale and marketing fee. The agreement is effective from 12 December 2003 to the fifthanniversary date of the formal opening of the hotel (“Initial Period of HISPL”). Each of NCHI and HISPL will havethe option to extend the agreement for an additional period of five years after the Initial Period of HISPL, andthereafter for another additional period of three years. On 3 April 2009, HISPL exercised its rights to extend theagreement for an additional period of five years. The sale and marketing fee paid or payable by NCHI for the yearended 31 March 2012 was approximately HK$2,836,000 (2011: HK$2,694,000).International Entertainment Corporation - Annual Report 2011/12 85
Notes to the Consolidated Financial StatementsFor the year ended 31 March 201234. DISPOSAL OF A SUBSIDIARYOn 7 May 2010, the Company entered into a conditional sale and purchase agreement (the “Agreement”) pursuant towhich the Company conditionally agreed to sell and assign, and the purchaser, Power Link Fortune Limited (“PowerLink”), an independent third party, conditionally agreed to purchase the entire issued share capital of Fortune Gate andto accept the assignment of the entire amount of the interest free shareholder’s loan owing from Fortune Gate to theCompany as at the Completion (as defined in the Agreement) (the “Sale Loan”) at a consideration of HK$1,830 million,subject to adjustments set out in the Agreement. The Group received the cash consideration of HK$1,830 million byNovember 2010.The transaction was completed on 5 November 2010. The finalised consideration after taken into account theadjustments as set out in the Agreement was approximately HK$1,589,603,000. Details of the disposal are set out inthe announcements of the Company dated 11 May 2010, 31 May 2010, 27 August 2010 and 5 November 2010 andthe circular of the Company dated 30 July 2010.Analysis of assets and liabilities over which control was lost is as follows:HK$’000Investment in an associate 810,819Amount due from an associate 87,907Sale Loan (87,907)Net assets disposed of 810,819Gain on disposal of a subsidiary:Adjusted cash consideration received 1,589,603Net assets disposed of (810,819)Assignment of the Sale Loan (87,907)Direct attributable costs paid (18,057)Contingent consideration (Note i) (16,600)Cumulative exchange differences in respect of the net assets of a subsidiary reclassifiedfrom equity to profit or loss in loss of control of a subsidiary 1,653657,873Cash inflow arising on disposal:Cash consideration received 1,830,000Direct attributable costs paid (18,057)Cash consideration refundable to the purchaser (Note ii) (240,397)1,571,54686International Entertainment Corporation - Annual Report 2011/12
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Annual Report 2011/12 - International Entertainment Corporation

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