ADDENTAX GROUP CORP. Leases Disclosure
18. LEASES
As a lessee
Right-of-use asset and lease liabilities
The Company implemented a new accounting policy according to the ASC 842, Leases, on April 1, 2019 on a modified retrospective basis and did not restate comparative periods. Under the new policy, the Company recognized approximately $0.06 million lease liability as well as right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. Lease liabilities are measured at present value of the sum of remaining rental payments as of March 31, 2025, with discounted rate of 4.9%. A single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease cost are classified within operating activities in the statement of cash flows.
The Company leases its head office. The lease period is 5 years with an option to extend the lease. The Company leases its plant and dormitory for 4.5 years with an option to extend the lease. The Company leased several floors in a commercial building for its sublease and property management services business for 16 years with an option to extend the lease.
The following table summarizes the components of lease expense:
| 2025 | 2024 | |||||||
| Operating lease cost | 993,600 | 699,998 | ||||||
| Short-term lease cost | 131,520 | 131,679 | ||||||
| 1,125,120 | 831,677 | |||||||
The following table summarizes supplemental information related to leases:
| 2025 | 2024 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Operating cash flow used in operating leases | $ | 1,125,120 | $ | 831,677 | ||||
| Right-of-use assets obtained in exchange for new operating leases liabilities | 20,146,774 | |||||||
| Weighted average remaining lease term - Operating leases (years) | 13.5 | 14.4 | ||||||
| Weighted average discount rate - Operating leases | 4.90 | % | 4.90 | % | ||||
The following table summarizes the maturity of operating lease liabilities:
| Years ending March 31 | Lease cost | |||
| 2026 | $ | 996,533 | ||
| 2027 | 996,533 | |||
| 2028 | 1,481,082 | |||
| 2029 | 2,062,089 | |||
| 2030 and there after | 22,887,269 | |||
| Total lease payments | 28,423,506 | |||
| Less: Interest | (9,706,848 | ) | ||
| Total | $ | 18,716,658 | ||
As a lessor
The Company subleased its leased commercial building by entering into operating leases to third party garment wholesalers and retailers. These leases are negotiated for terms ranging from one to five years. All leases include the term to enable upward revision of the rental charge on an annual basis according to prevailing market conditions.
Rental income form from subleasing is disclosed in Note 16 segment data.
The future minimum rental receivable under non-cancellable operating leases contracted for the reporting period are as follows:
| Years ending March 31 | Lease income | |||
| 2026 | $ | 206,803 | ||
| 2027 | 262,770 | |||
| 2028 | 200,390 | |||
| 2029 | ||||
| 2030 and there after | ||||
| Total | $ | 669,963 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jun 30, 2025 | Showing above |
| 2024 | Jul 15, 2024 | |
| 2023 | Jun 29, 2023 | |
| 2022 | Jun 23, 2022 | |
| 2021 | Jun 29, 2021 | |
| 2020 | Jun 29, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.