Constance Hotels Services Limited | Annual Report 2025

169 ANNUAL REPORT 2025

Notes to the Financial Statements Year ended December 31, 2025

Notes to the Financial Statements Year ended December 31, 2025

2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (CONT’D) 2.2 Material accounting policies (cont’d)

2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (CONT’D) 2.2 Material accounting policies (cont’d)

(n) Retirement benefit obligations (cont’d)

(o) Revenue recognition (cont’d)

(i)

Revenue from contracts with customers (cont’d)

Gratuity on retirement (cont’d)

Food & Beverage revenue

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

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 performance 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.

Determining the transaction price

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.

Most of the revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract is determined by reference to those fixed prices.

Other long term benefits

Allocating amounts to performance obligations

Vacation leave are accrued as a liability, as stipulated under long term benefits in IAS 19, as these benefits are earned by eligible employees based on past service and it is probable that the employer will compensate these employees for the benefits through paid time off or cash payments. The assessment of this provision is carried out annually by management for eligible employees. Such employees are those who fall under the definition of a worker under The Workers’ Rights Act 2019 and have covered a qualifying period of service. The liability is measured using forecasted salary rates of the workers at the time of entitlement, which is then reduced by the average staff turnover applicable to the Company. The present value of the vacation leave provision is determined by discounting the estimated future cash flows using rates of government bonds.

For most contracts, there is a fixed unit price for each product sold, with reductions given to tour operators for confirmations 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.

(o) Revenue recognition

In cases where the Group has received considerations for services not yet provided, this is treated as a contract liability until the performance obligation is met

(i)

Revenue from contracts with customers

Financing component

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.

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.

Hotel Revenue

Commission paid to Tour operator

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.

The Group also sells accommodation packages and Restaurants packages to tour operators’ customers via its online selling platform or via its agencies in Mauritius. The Group does not have control of over these services before it is being transferred to the customer. The Group is acting as an agent and recognises revenue at the net amount that is retained for these arrangements. Revenue is recognised over time because this is when the customer benefits from the Group’s services.

Room Revenue

Recognised as revenue when performance obligation is performed. Revenue is recognised over the duration of stay of the guests. Where the Group acts as the principal, the gross revenue is recognised as income.

(ii)

Dividend income

Dividend income is recognised when the shareholder’s right to receive payment is established.