Constance Hotels, Resorts and Golf | Annual Report 2023

168

Financial Statements

Constance Hotels Services Limited

Annual Report 2023

169

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

8.

INVESTMENTS IN SUBSIDIARY COMPANIES (continued)

(d) The recoverable amount has been determined by calculating the value in use of each cash generating unit. The discount rate has been determined using a capital asset model to calculate a post-tax rate that reflects market assessment of the time value of money. The post-tax cash flow projection is based on financial budgets approved by management covering a six-year period. The post-tax discount rate applied represents the current market assessment of the risks specific to each CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Group and its operating segments and is derived from its weighted average cost of capital (WACC) which ranges between 12.2% to 12.9% (2022: 9.5% to 12.6%) for the various entities of the Group. The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors. The cost of debt is based on the interest-bearing borrowings the Group is obliged to service. The growth rates are consistent with the industry in which each CGU operates.

Constance Hotels International 100 100 - - Mauritius Mauritius Investment Holding and Services Limited 87,509 Management Company Constance Hospitality Training Centre Ltd 37,025 100 100 - - Mauritius Mauritius Training Centre Constance Hotels

Investment Limited 1,741,933 100 100 - - Mauritius Mauritius Investment Holding Hotels Constance (UK) Limited 1 100 100 - - United United Marketing Representative Kingdom Kingdom

Management Limited 550,032 100 100 - - Mauritius Mauritius Management Company LRM Company Ltd (a) - - - 75 75 Mauritius Mauritius Management Company Moofushi Development Ltd - - - 100 100 Maldives Mauritius Hotel Industry The Waterfront PVT Ltd - - - 100 100 Maldives Maldives Hotel Industry

Cost Proportion of of ownership interest Country of Country of Name of corporation investment Direct Indirect operation incorporation Main business MUR’000 2023 2022 2023 2022 % % % % Constance Industries Limited 964,475 100 100 - - Mauritius Mauritius Hotel Industry Beauport Industries Limited 500,000 100 100 - - Mauritius Mauritius Hotel Industry White Sand Paradise Ltd (a) 310,030 86 86 - - Mauritius Mauritius Hotel Industry

Ariatoll Services Ltd - - - 100 100 Mauritius Mauritius Management Company Constance Hospitality

Halaveli Development Ltd - - - 100 100 Mauritius Mauritius Investment Holding Mourouk Ebony Management Ltd (c) - - - 60 - Mauritius Mauritius Hotel Industry

2022 Investee

Discount rate

Constance Hospitality Management Limited

9.50%

The table below sets out the outcome of the sensitivity analysis and the resulting hypothetical additional impairments that would result from this modelling. It is the Directors’ and management’s view that the appropriate impairment charge has been recognised as at 31 December 2023. Additional impairment to be recognised for a reasonable change in key assumptions 2022 Decrease of 1% in the Discount rate CGU MUR’000 Impact on impairment Constance Hospitality Management Limited N/A* * At 1% change in discount rate the investment would still be fully impaired. The disclosure has been made for those investments in subsidiaries where there was an indication of impairment. At 31 December 2023, the Directors have assessed the recoverable amount of the investments to be higher than the carrying amount.

9.

INVESTMENTS IN ASSOCIATES

2023

2022

THE COMPANY

MUR’000

(a)

MUR’000

Unquoted - cost At January 1,

184,687

187,000

-

Total cost of investments 4,191,005 Impairment as at December 31, 2023 (1,247,152) investments in subsidiary companies as at December 31, 2023 2,943,853 (a) The proportion of ownership held by non controlling interest for LRM Company Ltd and White Sand Paradise Ltd are 25% and 13.6% respectively, for the years 2023 and 2022. (b) The shares held in the above subsidiaries are ordinary shares. The reporting date for all the above companies is December 31. (c) During the year, an investment of MUR 90 million was made to acquire 60% of the issued share capital of Mourouk Ebony Management Ltd. The proportion of ownership held by non controlling interest for Mourouk Ebony Management Ltd for the year 2023 is 40%. The acquisition was made through Constance Hospitality Management Limited. Interest waived Investment in associate At December 31, Analysed as follows: Equity Quasi-investments Carrying amount of 290,000 54,687 344,687 160,000 344,687

(2,313)

-

184,687

130,000 54,687

184,687

8. INVESTMENTS IN SUBSIDIARY COMPANIES (continued) The Company’s subsidiaries are as follows: