7. Other short-term interest-bearing liabilities

As of 31 December 2022, the short-term liabilities consist of four loans from shareholders in the amount of CHF 4.4 million. The loans have an interest rate of 6 %. The position also includes two loans from shareholders in the amount of EUR 1.0 million each (total CHF 2.2 million) and one loan from shareholder in the amount of EUR 0.5 million (CHF 0.5 million). The loans bear interest at 4.5 % and 4.0 % and the agreed repayments will be made in 2023 up to and including December 2023. In addition to the loans, accumulated accrued interests due to shareholders of CHF 6.1 million are presented as accrued interest expenses against shareholders.

Going Concern – Debt restructuring / refinancing

The company has significant financial liabilities that are due and payable within the next 12 months and there are no clear indications that the company will be able to meet these obligations without additional financing. Due to the circumstances, the liquidity of the group is currently under pressure.

Based on the liquidity plan prepared by the Board of Directors and Management, the company is expected to generate sufficient cash to be able to operate for the next twelve months until December 2023. However, based on the liquidity plan, the company will face difficulties in fulfilling its obligations from financing activities. Therefore, the Board of Directors is closely monitoring the company’s solvency situation.

The company is taking steps to address the uncertainties and improve its liquidity position, including reviewing its cost structure, exploring additional sources of financing, and seeking to refinance its debt obligations. Measures that have been initiated but not yet completed include:

• Discussion with current loan lenders to extend short term due loans for at least additional 12 months,
• Increase capital-band at the next AGM to give future investors the possibility of equity investment,
• Consider sale of assets (e.g. Land with concession leaseback),
• Contact with potential new investors

The company’s ability to continue as a going concern is dependent on its ability to generate sufficient cash flows from operations and obtain additional financing to meet its obligations as they come due. The Board of Directors has not yet been able to raise sufficient additional financing to meet the financial obligations that will be due in 2023. Consequently, there is a material uncertainty that raises significant doubts about the company’s ability to continue as a going concern. If the company is unable to address these material uncertainties and to secure its liquidity position, it may be unable to continue as a going concern. If such a situation arises, the financial statements would need to be prepared based on liquidation values.

The Board of Directors and Management expects that the proposed measures will be successful, and their effects will be to strengthen the liquidity of the Group and assure its financial stability in the long term. Therefore, the Board of Directors and Management believe the going concern assumption of the Precious Woods Group is given. The company will continue to monitor and assess its liquidity position and take necessary actions to mitigate these risks and will provide updates to stakeholders as appropriate. The board of directors is committed to act with the required urgency.