Constance Hotels Services Limited | Annual Report 2025

175 ANNUAL REPORT 2025

Notes to the Financial Statements Year ended December 31, 2025

Notes to the Financial Statements Year ended December 31, 2025

3. FINANCIAL RISK MANAGEMENT (CONT’D) 3.1 Financial Risk Factors (cont’d)

3. FINANCIAL RISK MANAGEMENT (CONT’D) 3.1 Financial Risk Factors (cont’d)

Credit risk

Interest rate risk (cont’d)

Credit risk arises from cash and cash equivalents and credit exposures to customers, including outstanding receivables.

The Group’s operating cashflows are exposed to interest risk as it borrows at variable rates. At December 31, 2025, 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 23.2 million (2024: MUR 24.9 million) mainly as a result of higher/ lower interest expense. In order to manage the risk, the Group has some borrowings at fixed rate.

Credit risk is managed on a Group basis.

For banks and financial institutions, only independently rated parties and reputed financial institutions are accepted.

Liquidity risk

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.

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 Group considers credit risk on cash and cash equivalent to be minimal as these are held with reputed banks with good credit ratings.

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

THE COMPANY

The Group

Maximum exposure to credit risk

2025

2024

2025

2024

Less than

Between 1 Between 2

Over

MUR'000 421,839 551,478 227,428 1,200,745

MUR'000

MUR'000

MUR'000

1 year and 2 years and 5 years Total MUR ‘000 MUR ‘000 MUR ‘000 MUR ‘000 MUR ‘000 5 years

20,345

Cash and cash equivalents Trade and other receivables Financial assets at amortised cost

375,013 545,673 185,528

18,469

-

At December 31, 2025 Trade and other payables

-

715,098 735,443

1,310,119

- -

- -

- -

1,310,119

1,017,094 1,035,563

137,746

137,746

1,106,214

Bank overdraft Borrowings* Lease liabilities

2,034,373

1,395,815

2,839,986 1,234,991 4,074,977

1,715,311 5,647,277 7,362,588

7,985,485 7,753,553 17,186,903

458,414

412,871

Interest rate risk

3,940,652

1,808,686

The Group’s borrowings as shown in the financial statements are exposed to interest rate risks as it borrows mainly at variable rates.

Less than

Between 1 Between 2

Over

The interest rate profile of borrowings for the Group at December 31, 2025 and December 31, 2024 were:

1 year and 2 years and 5 years Total MUR ‘000 MUR ‘000 MUR ‘000 MUR ‘000 MUR ‘000 5 years

2025

2024

At December 31, 2024 Trade and other payables

Interest rate 7.11%-8.05% 8.13%-9.53% 1.50%-8.05%

Interest rate 8.05%-8.89% 9.98%-10.51% 1.50%-7.85%

1,404,783

- -

- -

- -

1,404,783

EUR USD MUR

Bank overdraft Borrowings* Lease liabilities

302,556 835,287 411,408

302,556

3,315,360

1,338,526 1,242,637 2,581,163

637,304

6,126,477 6,486,826 14,320,642

413,294

4,419,487 5,056,791

2,954,034

3,728,654