Annual Report 2011 - Food Junction

Notes to the Financial Statements (cont’d)
31 December 2011
23. Contingent liabilities and commitments
(a) Operating lease commitments in respect of the Group’s food court premises as lessee
The Group has various operating lease agreements in respect of its food court premises. Most
leases contain renewable options. Some of the leases contain escalation clauses and provide
for contingent rentals based on percentage of sales in excess of base rent. Lease terms do
not contain restrictions on the Group’s activities concerning dividends, additional debt or further
leasing.
Group
2011 2010
$’000 $’000
Future minimum lease payments
Within 1 year 17,066 19,416
Between 2 to 5 years 15,477 24,071
32,543 43,487
(b) Operating lease commitments in respect of the Group’s license agreement to the use of the food
stalls as lessor
The Group licenses the use of the F&B stalls within the food courts to individual third party
stallholders and a subsidiary company.
The licenses with third party stallholders are typically for a period of one to two years and are
not cancellable. In the course of a financial year there may be terminations and renewals of
such licenses. The Group has accounted for license fee in respect of non-cancellable leases as at
annual balance sheet date. Licenses that expire during the course of a financial year and have
not been renewed will not be accounted for from their respective dates of expiration.
All the leases provide for contingent rentals based on a percentage of sales derived from assets
held under operating leases. During the year, the contingent rentals amounted to $3,859,511
(2010: $3,106,131).
Future minimum lease rentals receivable (after group elimination):
Group
2011 2010
$’000 $’000
Within 1 year 13,360 15,988
Between 2 to 5 years 2,913 4,709
(c) Corporate guarantee
16,273 20,697
As at 31 December 2011, the Company has provided a corporate guarantee of $2,500,000
(2010: $2,500,000) to a bank on subsidiary company’s rent and service charge payable to the
landlord.
Annual Report 83