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EC World Real Estate Investment Trust ANNUAL REPORT 2016
NOTES TO THE
Financial Statements
For the Financial Year ended 31 December 2016
23. Financial risk management (continued)
(d) Capital risk
The Group is subject to the aggregate leverage limit as defined in Appendix 6 of the CIS (“Property Funds
Appendix”). The Property Funds Appendix stipulates that the total borrowings and deferred payments
(collectively, the “Aggregate Leverage”) of a property fund should not exceed 45.0% of the fund’s deposited
property at the time the borrowing is incurred, taking into account deferred payments including deferred
payments for assets whether to be settled in cash or in Units.
The Group has complied with the Aggregate Leverage requirements for the financial year ended
31 December 2016 and for the financial period ended 31 December 2015:
Group
2016
2015
S$’000
S$’000
Total borrowings and deferred payment
408,964
267,140
Total assets
1,482,343
1,623,756
Aggregate leverage ratio
27.6%
16.5%
The Manager aims to optimise the capital structure and cost of capital, within the Aggregate Leverage
limit the Property Fund Appendix. Such strategy involves adopting and maintaining appropriate Aggregate
Leverage level to ensure optimal returns to Unitholders, while maintaining flexibility in respect of future
capital expenditures or acquisitions.
The Manager will periodically review ECW’s capital management policy and modify the policy as the Manager
deems prudent with regards to prevailing market conditions. As and when appropriate, the Manager may
consider diversifying its sources of debt financing in the future by way of accessing the public capital markets
through the issuance of bonds to further enhance the debt maturity profile of ECW.
(e) Financial instruments by category and fair value measurements
The table below presents its financial assets and liabilities measured and carried at fair value and classified
by the following level of fair value measurement hierarchy:
(i)
quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
(ii)
inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and
(iii) inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3).