ANNUAL REPORT

64Middle East Development Singapore ltdannual report 2007NOTES TO FINANCIALSTATEMENTS30 June 200713. FINANCE LEASES LIABILITIES (Cont’d)It is the Group’s policy to lease certain of its plant and equipment under finance leases. The lease terms range from 3 to 5 years.The rates of interest for finance leases are about 2.4% to 7.2% per year. There is an exposure to fair value interest risk becausethe interest rates are fixed at contract date. All leases are on a fixed repayment basis and no arrangements have been enteredinto for contingent rental payments. All lease obligations are denominated in Singapore dollars except for certain lease obligationsamounting to $42,971 (2006: $33,356) that are denominated in Malaysian Ringgit. The obligations under finance leases aresecured by the lessor’s charge over the leased assets. The carrying amount of the lease liabilities approximates the fair value.14. SHARE CAPITALGroup and CompanyNumber Issuedof shares share capital$Ordinary shares of no par valueBalance at beginning and end of year 30 June 2006 108,600,000 4,311,012Issuance of ordinary shares for cash 285,087,500 14,254,375Share issue expenses – (659,418)Exercise of share options 3,990,000 319,200Transfer from share option reserve (Note 15) – 70,956Balance at end of year 30 June 2007 397,677,500 18,296,125During the year, the company issue: -(a)(b)(c)(d)(e)3,990,000 ordinary shares at $0.08 per share for cash totalling $319,200 under the Hitchins Employee Share OptionScheme;20,000,000 ordinary shares at $0.05 per share for cash totalling $1,000,000 under a placement exercise;120,000,000 ordinary shares at $0.05 per share for cash totalling $6,000,000 pursuant to a subscription agreement withMiddle East Development LLC (“MED”);125,087,500 ordinary shares at $0.05 per share for cash totalling $6,254,375 pursuant to a right issue exercise wherebyeach existing shareholder is entitled to one right issue for every 2 existing shares held by the shareholder; and20,000,000 ordinary shares at $0.05 per share for cash totalling $1,000,000 in relation to the options to subscribe for sharesat $0.05 each granted by the company to MED under the subscription agreement.The holders of ordinary shares are entitled to receive dividends as and when declared by the company. The ordinary shares of nopar value carry no right to fixed income and are fully paid. All ordinary shares carry one vote per share without restriction. Thecompany is not subject to any externally imposed capital requirements. There is no restriction to issue shares.Option to subscribe for ordinary sharesDuring the year, the company granted an option to MED under a subscription agreement to subscribe for 120,000,000 ordinaryshares at $0.05 each. MED had exercised part of this option to subscribe for 20,000,000 ordinary shares during the year. As at 30June 2007, there were outstanding options to subscribe for 100,000,000 ordinary shares at $0.05 each.