NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020
(a) Foreign currency risk (continued)
The following is the sensitivity analysis of a 5% strengthening/weakening of each foreign currency against the Mauritian Rupee with all other variables held constant from translation of financial assets and liabilities:
THE GROUP Exchange Rate Movement
Effect on Profit Before Tax
THE GROUP Exchange Rate Movement
Effect on Profit Before Tax
2020
2019
MUR
MUR
EURO
+/- 5% +/- 5% +/- 5% +/- 5%
1,389,483
EURO
+/- 5% +/- 5% +/- 5% +/- 5%
1,995,830
USD ZAR GBP
55,348 410,065
USD ZAR GBP
51,294
374,313
15,253
10,188
(b) Interest rate risk
Interest rate risk arises f rom the possibility that changes in interest rates will affect future cash flows or the fair values of the assets. The Group/Company’s policy is to maximise returns on interest-bearing assets.
The Group/Company’s interest rate risk arises f rom cash and cash equivalents, bank loans and overdrafts which bear interest at variable rates.
The interest rate profile of the financial assets and financial liabilities at 31 December was:
Variable interest rate 2020 2019
Variable interest rate 2020
2019
THE GROUP
Rs
Rs
THE COMPANY
Rs
Rs
Financial asset Cash at bank
Financial asset Cash at bank
-
-
-
-
Financial liabilities Bank overdraft Secured bank loans
Financial liabilities Bank overdraft Secured bank loans
119,883,730 631,442,194 473,657,388
116,523,794 434,551,755 391,713,502
32,972,310 150,000,000
15,388,645 88,727,743
Borrowings
(c) Equity price risk
The Group/Company is not exposed to equity price risk.
Credit risk
Credit risk arises fromcash and cash equivalents as well as credit exposures to customers including outstanding receiv- ables. For cash and cash equivalents, the Group/Company manages credit risk by banking with reputable financial institutions.
With regards to rental income from investment properties, the directors assess the credit quality of the customer, taking into account its financial position, past experience and overall reputation on the local market.
With regards to sales of property to corporate and individual customers, these are conducted under the rules of specific Mauritian laws regulating sales of property, involving a minimum non-refundable deposit of 25% and thereafter partial payments as and when the phase of completion is achieved.
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