notes to the financial statements - Far East Orchard Limited

NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2008
30. Retained earnings
Movement in retained earnings for the Company is as follows:
The Company
2008 2007
$’000 $’000
Beginning of financial year 10,274 (30,282)
Net profit 23,607 40,556
Dividend paid to shareholders (7,015) -
End of financial year 26,866 10,274
Movement in accumulated losses for the Group is shown in the Consolidated Statement of Changes in Equity.
31. Contingent liabilities
Subsequent to the sale of an investment property by a subsidiary in 2002, an injunction was obtained by the
previous tenant of the investment property against the two existing owners and the subsidiary. The injunction
prevents the existing owners and the subsidiary from disposing of the investment property until the conclusion
of the trial. In the event the injunction is successful, the subsidiary will have to void the sale of the investment
property and refund $3.0 million to the purchaser with a corresponding decrease of $0.7 million to the Group and
subsidiary’s net profit.
Based on legal advice on this matter, the directors are of the opinion that the outcome of the trial will be favourable
to the subsidiary, and no significant liabilities will be incurred. Hence, no provision has been made in respect of
the lawsuit.
32. Commitments
(a) Corporate guarantees
Corporate guarantees issued by the Company to banks in respect of banking facilities granted to the subsidiaries
are disclosed in Note 33(b).
In addition, a corporate guarantee issued by a subsidiary of the Company is disclosed in Note 25(b).
(b) Capital commitments
The Group The Company
2008 2007 2008 2007
$’000 $’000 $’000 $’000
Capital expenditures contracted for:
(i) Property under development (Note 18) 80,525 87,234 - -
(ii) Property, plant and equipment - 123 - 123
80,525 87,357 - 123
ORCHARD PARADE HOLDINGS LIMITED ANNUAL REPORT 2008 71