Constance Hotels, Resorts and Golf | Annual Report 2023

148

Financial Statements

Constance Hotels Services Limited

Annual Report 2023

149

Financial Statements

Constance Hotels Services Limited

Annual Report 2023

Notes to the Financial Statements Year ended December 31, 2023

Notes to the Financial Statements Year ended December 31, 2023

2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (continued)

2.2

SIGNIFICANT ACCOUNTING POLICIES (continued)

2.2

SIGNIFICANT ACCOUNTING POLICIES (continued)

Retirement benefit obligations (continued) Defined benefit plan (continued)

Revenue recognition (contined)

(n)

(o)

Revenue from contracts with customers (continued) Hotel Revenue

i.

The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. Remeasurement of the net defined benefit liability, which comprises actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest) is recognised immediately in other comprehensive income in the period in which they occur. Remeasurements recognised in other comprehensive income shall not be reclassified to profit or loss in subsequent period. The Group determines the net interest expense/(income) on the net defined benefit liability/(asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability/(asset), taking into account any changes in the net defined liability/(asset) during the period as a result of contributions and benefits payments. Net Interest expense/(income) is recognised in profit or loss. Service costs comprising current service cost, past service cost, as well as gains and losses on curtailments and settlements are recognised immediately in profit or loss. Gratuity on retirement The employee benefit scheme is unfunded and its liability relates to employees who are entitled to statutory benefits prescribed under parts VIII and IX of the Workers’ Rights Act 2019 (WRA). The latter provides for a lump sum on withdrawal, at retirement or death, whichever occurs earlier, based on final salary and years of service. The assets of the plan are invested in the Portable Retirement Gratuity Fund (PRGF). Pension costs are assessed using the projected unit credit method. Actuarial gains and losses are recognised immediately in the statement of profit or loss and other comprehensive income under the heading “other comprehensive income”. Past service costs are recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The employee benefit obligation recognised in the statement of financial position represents the present value of the defined benefit obligation. The Group carries out an actuarial valuation every year. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined liability or asset. Defined benefit costs are categorised as follows: - service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); - net interest expense or income; and - remeasurement For employees who are not covered by a pension plan, the net present value of retirement gratuity payable under the Workers’ Rights Act is calculated and provided for, where material. The obligation arising under this item is not funded.

It corresponds to all the revenues received from guests by the hotels. The services rendered (including room rentals, food and beverage sales and other ancillary services) are distinct performance obligations, for which prices invoiced to the guests are representative of their stand-alone selling prices. These obligations are fulfilled over time when they relate to room rentals, along the stay in the hotel, and at a point in time for other goods or services, when they have been delivered or rendered. Room Revenue Recognised as revenue when performance obligation is performed. Revenue is recognised over the duration of stay of the guests. Where the Group act as the principal, the gross revenue is recognised as income. Food & Beverage revenue Food & Beverage revenue is recognised upon consumption at the different restaurants or bars (i.e at a point in time). Performance obligations and timing of revenue recognition The revenue is mostly derived from selling goods or services in terms of hotel rooms, with revenue recognised at a point in time when control of the goods or services has transferred to the customer. Determining the transaction price Most of the revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract For most contracts, there is a fixed unit price for each product sold, with reductions given for to tour operators for confirmation placed at a specific time. Therefore, there is no judgement involved in allocating the contract price to the confirmation of such contracts. The revenue is measured at the transaction price agreed under the contract. In most cases, the consideration is due when legal title has been transferred. While deferred payment terms may be agreed in rare circumstances, the deferral is usually within twelve months. The transaction price is therefore not adjusted for the effects of a significant financing component. Financing component The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money. ii. Dividend income Dividend income is recognised when the shareholder’s right to receive payment is established. Borrowing costs Borrowing costs directly attributable to major developments of hotels are capitalised for the period until the assets are substantially ready for their intended use or sale. All other borrowing costs are expensed. is determined by reference to those fixed prices. Allocating amounts to performance obligations (p)

Revenue recognition

(o)

Revenue from contracts with customers The Group is in the business of hotel operation. Revenue is recognised at an amount that reflects the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer.

i.