Constance Hotels Services Limited | Annual Report 2025

171 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)

3. FINANCIAL RISK MANAGEMENT 3.1 Financial Risk Factors

(p) Borrowing costs

The Group’s activities are exposed to a variety of financial risks: market risk (including currency risk and price risk), credit risk, interest risk and liquidity risk. The Board provides guidelines for overall risk management, and seeks to minimise potential adverse effects on the Group’s financial performance.

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.

A description of the significant risk factors is given below together with the risk management policies applicable.

All other borrowing costs are expensed.

Currency risk

(q) Dividend distribution

The Group operates both locally and in the region, and derives most of its income in foreign currencies namely Euros (EUR), Pound Sterlings (GBP) and American Dollars (USD). In order to manage the currency risks, the Group enters into forward and swap contracts and where possible and borrows in the currency in which it operates.

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statement in the period in which the distribution is authorised by the Board.

(r) Provisions

The Group has certain investments in financial operations, whose net assets are exposed to foreign currency translation risk.

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources that can be reliably estimated will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

THE GROUP

CURRENCY PROFILE

EUR TOTAL MUR’000 MUR’000 MUR’000 MUR’000 MUR’000 MUR’000 USD GBP MUR OTHERS

2025 Financial Assets Net trade receivables

233,945 99,325 162,096 495,366

165,171 14,804 55,078 235,053

79,680

72,174 113,299 104,496 289,969

508

551,478 227,428 421,839

-

-

Financial assets at amortised cost

82,355 162,035

17,814 18,322

Cash and cash equivalents

(s) Segment reporting

1,200,745

Segment information presented relate to operating segments that engage in business activities for which revenues are earned and expenses incurred.

Financial Liabilities Borrowings

166,978

3,785,240 1,979,776

- -

2,480,179 1,562,400

- -

6,432,397 3,542,176

(t) Convertible bond

-

Lease liabilities Trade payables *

4,043

133,233

638 638

248,952

29,538 29,538

416,404

For the classification and measurement of the funds received from the Mauritius Investment Corporation Ltd (“MIC”), a policy choice is available, that is, the Group can either treat the convertible bonds as an equity instrument or a compound financial instrument with an embedded derivative. The Directors have opted to treat the convertible bonds as equity where both the principal and interest components have been classified as equity on initial recognition based on the subscription proceeds received, net of transaction costs, and is not subsequently remeasured. Finance costs pertaining to the convertible bonds are treated as an equity transaction costs and hence adjusted in retained earnings.

171,021

5,898,249

4,291,531

10,390,977

*Trade payables excludes accruals