Constance Hotels Services Limited | Annual Report 2025

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181 ANNUAL REPORT 2025

Notes to the Financial Statements Year ended December 31, 2025

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D) 4.1 Critical accounting estimates and assumptions (cont’d)

(f) Determining the lease term of contracts with renewal and termination options - Group as lessee (cont’d)

(j) Impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated in Note 2(h). These calculations require an estimation of the ‘value in use’ of the cash generating units (CGU) to which goodwill is allocated. Management makes estimates of the future cash flows from the CGU and the selection of discount rate in order to compute the present value of the expected cash flows. Refer to note 7 for disclosures on goodwill.

The Group included the renewal period as part of the lease term for leases of plant and machinery with shorter non cancellable period (12 months). The Group typically exercises its option to renew for these leases because there will be a significant negative effect on production if a replacement asset is not readily available. The renewal periods for leases of plant and machinery with longer non-cancellable periods are not included as part of the lease term as these are not reasonably certain to be exercised. In addition, the renewal options for leases of motor vehicles are not included as part of the lease term because the Group typically leases motor vehicles for not more than five years and, hence, is not exercising any renewal options. Furthermore, the periods covered by termination options are included as part of the lease term only when they are reasonably certain not to be exercised. Refer to Note 6 for information on potential future rental payments relating to periods following the exercise date of extension and termination options that are not included in the lease term. The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities in Note 6. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary’s functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating).

(k) Fair Share Contribution

The determination of the deferred tax amount pertaining to effect of fair share contribution involves judgement, particularly in assessing whether temporary differences are expected to reverse during the period in which the Fair Share Contribution applies. Changes in the timing of capital expenditure, capital allowances or future taxable profits could result in a different allocation of temporary differences between the FSC period and subsequent periods.

(g) Estimating the incremental borrowing rate

5. PROPERTY, PLANT AND EQUIPMENT

Vessels and motor vehicles

Furniture, fittings & linen

Freehold

Computer equipment

Plant and machinery

Work in progress

(a)

THE GROUP

land Buildings Total MUR’000 MUR’000 MUR’000 MUR’000 MUR’000 MUR’000 MUR’000 MUR’000

COST/VALUATION At January 1, 2025

3,084,020 8,563,756

411,489 1,931,478

89,395 1,655,689

47,484 15,783,311

- - -

174,315 (3,548) 41,114

27,953

111,055 (17,408)

9,647

105,265 (27,573)

33,681

461,916 (68,988)

Additions Disposals Transfers

(h) Impairment of non-financial assets

(13,252)

(7,207)

Investment in subsidiaries are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the investment’s carrying value exceeds its recoverable amount, which represents the investment’s fair value less cost to sell, which require the use of assumptions. The calculations use cash flow projections of the subsidiary based on financial forecasts prepared by management covering a five-year period. The carrying amount of the investment as at 31 December 2025 amounted to MUR 2.9 billion (2024: MUR 2.9 billion). Refer to Note 8 for more information.

510

384

(42,008)

- (103,945)

(3,057)

(19,771)

(1,011)

(14,889)

(313) (142,986) 38,844 16,033,253

Exchange differences

At December 31, 2025

3,084,020 8,671,692

423,643 2,005,738

90,824 1,718,492

DEPRECIATION At January 1, 2025 Charge for the year Disposal adjustment Exchange differences

- 4,128,782

344,000 1,577,435

63,906 1,183,164

- 7,297,287

Simultaneously, Property plant and equipment and rights of use assets are tested for impairment using the cash flow projections derived from the Cash Generating Unit.

- - -

268,891 (3,016) (57,772)

25,007

69,469

7,780

93,196

- - -

464,343 (66,152) (90,210)

(12,713) (2,598)

(16,579) (17,638)

(7,151)

(26,693) (11,537)

(665)

(i)

Convertible bonds

At December 31, 2025

- 4,336,885

353,696 1,612,687

63,870 1,238,130

- 7,605,268

The Group entered into an agreement with the Mauritius Investment Corporation Ltd (“MIC”), a wholly owned subsidiary of the Bank of Mauritius, to issue redeemable convertible bonds. The Group has the option to classify the funds received from the MIC as an equity instrument or compound financial instrument. The Directors have applied judgement for the accounting treatment of these funds and have opted to treat the convertible bonds as equity. The Convertible bonds have been settled as at December 31, 2025. Refer to Note 20 for further details.

NET BOOK VALUES At December 31, 2025

3,084,020 4,334,807

69,947

393,051

26,954

480,362

38,844 8,427,985

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