23. LEASES – THE GROUP AS A LESSOR Nature of the Group’s leasing activities – Group as a lessor The Group has leased out its owned investment properties to related parties and non-related parties for monthly lease payments. The lease contracts have varying terms, escalation clauses, renewal rights and do not contain any variable lease payment. They are classified as operating leases because the risk and rewards incidental to ownership of the assets are not substantially transferred. The Group is exposed to changes in residual value of properties at the end of current lease arrangement. The residual value risk borne by the Group is mitigated by active management of its property portfolio with the objective of optimising tenant mix in order to: – Achieve the longest weighted average lease term possible; – Minimise vacancy rates across all properties; and – Minimise the turnover of tenant with high quality credit ratings. Lease agreements may include a clause requiring the tenant to reinstate the leased space to its original state when the lease expires and the tenant decides not to renew the lease agreement. This contributes to the maintenance of the property and allows for the space to be re-let quickly once a tenant has departed. In addition, the Group has an annual capitalised expenditure plan reviewed periodically as situations arise for ad hoc improvement works to keep properties in line with market standards. Rental income from investment properties is disclosed in Note 4. The following table shows the maturity analysis of the undiscounted lease payment to be received. Group 2024 2023 S$’000 S$’000 Less than one year 26,092 45,343 One to two years 7,609 13,633 Two to three years – 5,037 Three to four years – 4,436 Four to five years – 3,860 More than five years – 1,601 Total undiscounted lease payments 33,701 73,910 24. CONTINGENT LIABILITIES As at 31 December 2024, the only unauthorised mortgages that has yet to be discharged is the mortgages imposed over Fuzhou E-Commerce (“FZDS”). The relevant mortgages was imposed by ECW’s ultimate holding corporation and sponsor, Forchn Holdings Group Co., Ltd. without the consent or knowledge of the Manager or Trustee. Group Mortgage Amount per mortgage agreement RMB’000 S$’000 Hangzhou Fuyang Futoufa Zhenfu Equity Investment LLP 120,000 22,368 Zhejiang Fuyue Finance Lease Co., Ltd. 148,610 27,701 268,610 50,069 ANNUAL REPORT 2024 111 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024
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