Powering growth - Aztech Group Ltd - Investor Relations

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98a z t e c h a n n u a l r e p o r t 2 0 0 9F i n a n c i a l S t a t e m e n t s32 CONTINGENT LIABILITIES AND COMMITMENTS(a)Operating lease commitmentsThe Group as lesseeGROUP2009 2008$’000 $’000Minimum lease payments under operating leasesincluded in the profit or loss 2,631 2,892At the end of the reporting period, the commitments in respect of non-cancellable operating leases for office and factory were as follows:GROUPCOMPANY2009 2008 2009 2008$’000 $’000 $’000 $’000Future minimum leasepayments payable:Within one year 2,491 2,568 2,232 2,232In the second to fifthyears inclusive 4,873 7,230 4,717 6,949After five years - - - -Total 7,364 9,798 6,949 9,181Operating lease payments represents rentals payable by the Group for certain of its office properties. Leases are negotiated for an averageterm of 2 years and rentals are fixed for an average of 2 years except for the Company whereby leases are negotiated for a term of 7 yearswith 5% increase in rentals on 3 rd and 5 th year.The Group as lessorThe Group sublets its leased property and leases its investment properties in Singapore and PRC under operating leases. Property rentalincome earned during the year was $2,273,000 (2008 : $1,909,000). The investment properties are expected to generate rental yields of4% on an on going basis. The properties held for rental income have committed tenants for the next 1 to 5 years.At the end of the reporting period date, the Group has contracted with tenants for the following future minimum lease payments:GROUP2009 2008$’000 $’000Within one year 1,874 2,143In the second to fifth year inclusive 1,744 1,326After five years - -3,618 3,469
F i n a n c i a l S t a t e m e n t sa z t e c h a n n u a l r e p o r t 2 0 0 99932 CONTINGENT LIABILITIES AND COMMITMENTS(b)Contingent liabilitiesGROUPCOMPANY2009 2008 2009 2008$’000 $’000 $’000 $’000Banker’s guarantees - unsecured 2,225 2,174 2,015 1,928Corporate guarantee given bythe Company to banks inconnection with banks facilitiesutilised by subsidiaries- unsecured - - 48,219 66,484In addition to the guarantees disclosed above, the Company has given undertakings to provide continuing financial support to certain of itssubsidiaries with capital deficiencies amounting to $8,537,000 (2008 : $3,792,000) to enable them to continue as going concerns and tomeet their obligations for at least 12 months from the date of this report.(c)Capital expenditure commitmentsGROUPCOMPANY2009 2008 2009 2008$’000 $’000 $’000 $’000Contracted for acquisition ofproperty, plant and equipmentbut not provided for in thefinancial statements 5,809 18,065 - -(d)Pursuant to a land use right agreement dated June 15, 2002, a subsidiary of the Company is committed to pay to the local authority inPeople’s Republic of China land management fee of approximately $20,000 (RMB 100,000) per annum with an increment rate of 10%every five years till September 30, 2052.
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Powering GrowthAnnual Report 09
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