Constance Hotels, Resorts and Golf | Annual Report 2023

154

Financial Statements

Constance Hotels Services Limited

Annual Report 2023

155

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

3.

FINANCIAL RISK MANAGEMENT (continued)

3.

FINANCIAL RISK MANAGEMENT (continued)

3.1

Financial Risk Factors (continued) Currency Profile (continued) Impact on equity

3.1

Financial Risk Factors (continued) Interest rate risk (continued) The interest rate profile of borrowings for the Group at December 31, 2023 and December 31, 2022 were: 2023

THE GROUP

THE COMPANY

2023

2023

2022

2022

2022

MUR’000

MUR’000

Interest rate

MUR’000

MUR’000

Interest rate

USD EUR GBP

513,413 (20,932) (17,303)

(28,749) (1,017)

7.75%-8.89% 7.98%-10.51% 1.50%-8.35%

504,864 (27,665) (15,476)

(55,792) (1,648)

EUR USD MUR

4.48%-7.50% 4.35%-7.88% 1.50%-8.20%

(180)

-

Credit risk Credit risk arises from cash and cash equivalents and credit exposures to customers, including outstanding receivables. Credit risk is managed on a Group basis. For banks and financial institutions, only independently rated parties and reputed financial institutions are accepted. Risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are based on internal or external ratings in accordance with limits set by the Board. The compliance with credit limits by customers is regularly monitored by line management. Sales to direct customers are required to be settled in cash or using major credit cards, mitigating credit risk. There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/ or regions. The Group considers credit risk on cash and cash equivalent to be minimal as these are held with reputed banks with good credit ratings. THE GROUP THE COMPANY 2023 2022 2023 2022 MUR’000 MUR’000 MUR’000 MUR’000 Maximum exposure to credit risk Cash and cash equivalents 566,100 431,788 128,540 22,384 Trade and other receivables 478,101 467,984 - - Financial assets at amortised cost 116,460 181,897 936,610 843,221 1,160,661 1,081,669 1,065,150 865,605 Interest rate risk The Group’s borrowings as shown in the financial statements are exposed to interest rate risks as it borrows mainly at variable rates. The Phase 2 Amendments require, as a practical expedient, for changes to cash flows that relate directly to the reform to be treated as changes to a floating interest rate, i.e., the EIR is updated to reflect the change in an interest rate benchmark from IBOR to a Risk Free Rate (RFR) without adjusting the carrying amount. As at 31 December 2023, loans with LIBOR‐linked exposures were transitioned to RFR namely Term Secured Overnight Financing Rate (TSOFR). In effect, the change is treated as akin to a movement in the market rate of interest. The Group’s and the Company’s averarge interest rate have increased by 0.43% as a result of a credit adjustment margin following the transition from LIBOR to TSOFR.

The Group’s operating cashflows are exposed to interest risk as it borrows at variable rates. At December 31, 2023, if interest rate on variable rates borrowings had been 50 basis points higher/lower with all variables held constant, post-tax profit and equity for the year would have decreased/increased by MUR 29 million (2022: MUR 35 million) mainly as a result of higher/lower interest expense. In order to manage the risk, the Group has some borrowings at fixed rate. Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivery of cash or another financial asset. Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, the availability of funding from an adequate amount of credit facilities and the ability to close out market positions. The Group aims at maintaining flexibility in funding by keeping committed credit lines available. The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date. The figures disclosed below are undiscounted.

THE GROUP

Less than

Between 1 and 2 years

Between 2 and 5 years

Over

At December 31, 2023

1 year

5 years

Total

MUR’000

MUR’000

MUR’000

MUR’000

MUR’000

1,308,823

- -

- -

- -

1,308,823

Trade and other payables

187,146 547,133 414,338

187,146

Bank overdraft

605,807 415,885

4,501,033 1,257,492 5,758,525 Between 2 and 5 years MUR’000

11,381

5,665,354 7,758,684 14,920,007

Borrowings

5,670,969 5,682,350

Lease liabilities

2,457,440

1,021,692

Less than

Between 1 and 2 years MUR’000

Over

At December 31, 2022

1 year

5 years

Total

MUR’000

MUR’000

MUR’000

Trade and other payables

1,091,217

- -

- -

- -

1,091,217

Bank overdraft

88,241 570,497 439,728

88,241

Borrowings

557,359 408,412

5,328,551 1,233,558

57,635

6,514,042 7,939,410

Lease liabilities

5,857,712

2,189,683

965,771

6,562,109

5,915,347

15,632,910