26. Commitments

Commitments for expenditures

As at December 31, 2018, the Company had committed to, but not yet incurred, $1,151,000 in capital expenditures for property, plant and equipment and intangible assets (December 31, 2017: $1,612,000).

Commitment for inventory purchase

The Company entered into a two-year non-rolling stock surplus contract with the U.S. Government Defense Logistics Agency (the “DLA”) in December 2017 with the option to extend for up to four-years. Pursuant to the contract the performance period commenced in April 2018 and concludes in March 2020.

The Company has committed to purchase between 150,000 and 245,900 units of property with an expected minimum value of $11,104,000 and up to $51,028,000 annually to the extent that goods are available from the DLA over the initial 12 month period relating to the purchase of inventory. At December 31, 2018, the Company has purchased $35,900,000 pursuant to the initial 12 month period of this contract which commenced in April 2018.

Operating lease commitments – the Company as lessee

The Company has entered into commercial leases for various auction sites and offices located in North America, Central America, Europe, the Middle East and Asia. The majority of these leases are non-cancellable. The Company also has further operating leases for computer equipment, certain motor vehicles and small office equipment where it is not in the best interest of the Company to purchase these assets.

The majority of the Company‘s operating leases have a fixed term with a remaining life between one month and 20 years with renewal options included in the contracts. The leases have varying contract terms, escalation clauses and renewal rights. There are no restrictions placed upon the lessee by entering into these leases, other than restrictions on use of property, sub-letting and alterations. In certain leases there are options to purchase; if the intention to take this option changes subsequent to the commencement of the lease, the Company re-assesses the classification of the lease as operating.

The future aggregate minimum lease payments under non-cancellable operating leases, excluding reimbursed costs to the lessor, are as follows:



2019	$	15,988
2020		13,276
2021		10,554
2022		8,317
2023		6,560
Thereafter		42,333
	$	97,028

As at December 31, 2018, the total future minimum sublease payments expected to be received under non-cancellable subleases is $1,187,000 (2017: $1,936,000; 2016 $577,000). The lease expenditure charged to earnings during the year ended December 31, 2018 was $27,734,000 (2017: $21,956,000; 2016: $20,075,000).

26. Commitments (continued)

Capital lease commitments – the Company as lessee

The Company has entered into capital lease arrangements for computer and yard equipment. The majority of the leases have a fixed term with a remaining life of one month to four years with renewal options included in the contracts. In certain of these leases, the Company has the option to purchase the leased asset at fair market value or a stated residual value at the end of the lease term.

As at December 31, 2018, the net carrying amount of computer and yard equipment under capital leases is $14,976,000 (December 31, 2017: $10,692,000), and is included in the total property, plant and equipment as disclosed on the consolidated balance sheets.

The future aggregate minimum lease payments under non-cancellable finance leases are as follows:



2019	$	5,480
2020		4,564
2021		3,327
2022		2,023
2023		814
Thereafter		-
	$	16,208

Assets recorded under capital leases are as follows:



As at December 31, 2018		Cost		Accumulated depreciation		Net book value
Computer equipment	$	9,428	$	(3,992)	$	5,436
Yard and others		12,125		(2,585)		9,540
	$	21,553	$	(6,577)	$	14,976



As at December 31, 2017		Cost		Accumulated depreciation		Net book value
Computer equipment	$	8,699	$	(3,604)	$	5,095
Yard and auto equipment		6,493		(896)		5,597
	$	15,192	$	(4,500)	$	10,692