26. FINANCIAL RISK MANAGEMENT (continued) Financial risk factors (continued) (d) Capital risk The Group is subject to the aggregate leverage limit as defined in Appendix 6 of the CIS Code (“Property Funds Appendix”). The Property Funds Appendix stipulates that the total borrowings (collectively, the “Aggregate Leverage”) of a property fund should not exceed 45.0% of the fund’s deposited property. Below is the table shows the Aggregate Leverage ratios for the financial years ended 31 December 2024 and 31 December 2023: 2024 2023 S$’000 S$’000 Group Total borrowings 500,785 581,970 Total assets 887,079 1,005,280 Aggregate Leverage ratio 56.5% 57.9% As a result of the decline in the property valuations of ECW, the Aggregate Leverage of the Group is 56.5%. Pursuant to paragraph 9.4(a) of the Property Funds Appendix, the Aggregate Leverage Limit of ECW will not be considered to be breached given that the change in the Aggregate Leverage of the Group was due to circumstances beyond the control of the Manager, such as the depreciation in the asset value of the properties of ECW. Nevertheless, under the existing Offshore Facility agreement, the leverage ratio has been breached. In such a scenario, the Manager shall not incur additional borrowings or enter into further deferred payment arrangements. The Manager intends to resolve these issues by restructuring the ECW Group’s existing Offshore Facility. The Manager aims to optimise the capital structure and cost of capital, within the Aggregate Leverage limit in the Property Funds Appendix. Such strategy involves adopting and maintaining an 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 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). ANNUAL REPORT 2024 119 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024
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