2. MATERIAL ACCOUNTING POLICY INFORMATION (continued) 2.1 Basis of preparation (continued) (a) Going concern (continued) ECW’s current liabilities include loans from subsidiaries of S$331,943,000 (2023: S$343,615,000) which are repayable on demand and will require repayment from ECW if the Offshore Facility is not refinanced as the Offshore Facility was drawn down by the subsidiary for the purpose of funding ECW and the Group. Notwithstanding the above, the Manager has assessed that the Group and ECW are able to continue as going concerns, on the following basis: (i) the Group’s net operating cash flows has improved through 2024 in conjunction with the novation of the underlying subleases from the Sponsor Group’s master leases and related party leases to the Group; (ii) the restructuring of the existing Onshore Facility has been completed following the entry into of a supplementary agreement to the Onshore Facilities dated 16 July 2024 (the “Onshore Supplementary Agreement”) which will allow the Group to defer part of the interest expense payments and principal instalment repayments to April 2026; (iii) although the Manager has received the Pre-enforcement Notice to allow up to 31 May 2025 for the Group to divest its assets in such amount sufficient to repay the Offshore Facility, the Manager has not received any indication from the lenders that they intend to accelerate the existing bank loans under the ECW facilities; (iv) the Manager has appointed two established consultants, Savills Property Services (Shanghai) Co., Ltd. and Cushman & Wakefield (HK) Ltd. in relation to sourcing for potential purchaser(s) of the properties and continuously exploring other options concurrently; (v) the Manager has appointed a financial adviser, KPMG Services Pte Ltd, to explore various options for the Group to address its ongoing challenges; and (vi) the Manager intends to pare down existing facilities with cash proceeds from potential divestments through ongoing marketing efforts so as to aid the active negotiations with the lenders of the Offshore Facility on a possible refinancing package. The validity of the going concern assumption on which these financial statements have been prepared is dependent on the favourable outcome of the various measures set out above. If the Group and ECW are unable to continue in operational existence for the foreseeable future, adjustments may have to be made to reflect the situation that assets may need to be realised other than in the normal course of business and at amounts which could differ significantly from the amounts currently stated in the statements of financial position of the Group and ECW. In addition, the Group and ECW may have to provide for further liabilities which may arise, and to classify the non-current assets as current assets. The accompanying financial statements do not include the effect of any of these adjustments. (b) Interpretations and amendments to published standards effective in 2024 On 1 January 2024, the Group adopted the new or amended FRS and Interpretations of FRS (“INT FRS”) that are mandatory for application for the financial year. Changes to the Group’s accounting policies have been made as required, in accordance with the relevant transitional provisions in the respective FRS and INT FRS. The adoption of these new or amended FRS and INT FRS did not result in substantial changes to the accounting policies of the Group and ECW and had no material effect on the amounts reported for the current and prior financial years. EC WORLD REIT 84 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024
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