2. MATERIAL ACCOUNTING POLICY INFORMATION (continued) 2.1 Basis of preparation (continued) The financial statements are prepared on the historical cost basis, except as disclosed in the accounting policies below. The preparation of these financial statements in conformity with RAP 7 requires the Manager to exercise its judgement in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions. Information about an area involving a higher degree of judgement, where assumptions and estimates are significant to the financial statements, is disclosed in Note 3. (a) Going concern As at 31 December 2024, the current liabilities of the Group and ECW exceeded their current assets by S$569,480,000 (2023: S$588,045,000) and S$113,510,000 (2023: S$126,336,000) respectively. The Group’s current liabilities include bank borrowings with a carrying value of S$473,260,000 (2023: S$476,779,000) (Note 18), comprising S$347,396,000 (2023: S$342,983,000) of offshore loans (the “Offshore Facility”) and S$125,864,000 (2023: S$133,796,000) of onshore loans (the “Onshore Facility”), both of which are repayable on demand due to the occurrence of a number of events of default under the Offshore Facility as detailed in Note 18(f). As set out in ECW’s announcement on SGXNet dated 11 June 2024, the facility agent under the Offshore Facility (the “Offshore Facility Agent”) has on 10 June 2024 issued a letter to the Group (the “Pre-enforcement Notice”) stating, among others, that: a) The majority lenders are prepared to instruct and authorise the Offshore Facility Agent to commence enforcement actions (the “Enforcement Actions”) against the Group if certain conditions and milestones are not fulfilled within the time prescribed. b) In this regard, the Enforcement Actions includes, but are not limited to: (i) accelerating the loans under the Offshore Facilities (as defined in the Offshore Facility Agreement); (ii) appointing a receiver and/or exercising the power of sale pursuant to the terms of the Security Documents (as defined in the Offshore Facility Agreement); (iii) exercising or directing the exercise of the voting and other rights attached to the shares subject to the Share Charges (as defined in the Offshore Facility Agreement); (iv) commencing legal proceedings to recover the loans and any unpaid sums under the Offshore Facilities; and (v) applying for the borrower and the guarantors under the Offshore Facility Agreement to be placed into winding up or judicial management (or any analogous procedure in any jurisdiction). In addition, the Pre-enforcement Notice also stated that the conditions and milestones are not exhaustive, and the Lenders may at any time at their sole discretion add to, amend and/or substitute the conditions and milestones set out therein as they deem fit. For the avoidance of doubt, notwithstanding that the conditions and milestones set out in the Pre-enforcement Notice may be fulfilled in whole or in part within the time prescribed therein, the majority lenders shall nonetheless remain entitled to exercise any and all of their rights and remedies. ANNUAL REPORT 2024 83 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024
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