CFSL - Annual report 2018

EXPLANATORY NOTES 30 SEPTEMBER 2018 25. POST EMPLOYMENT BENEFIT ASSETS/LIABILITIES (CONT’D) GROUP Sep-18 Sep-17 MUR m MUR m (c) Other retirement benefits (cont’d) (iii) Movements in liability recognised in Statements of Financial Position: At 1 October 37.5 45.1 Current service cost 4.6 3.5 Past service cost - (1.0) Interest expense 2.4 2.3 Other benefits paid - (0.8) Liability experience loss/(gains) 0.4 (0.4) Liability loss due to change in financial assumptions 1.1 (0.1) Acquisition of subsidiary (note 34) 0.7 - Disposal of subsidiaries (note 35) - (11.1) At 30 September 46.7 37.5 (iv) Sensitivity Analysis on defined benefit obligation at end of period Increase due to 1% decrease in discount rate 9.6 8.0 Decrease due to 1% increase in discount rate 7.9 2.1 The above sensitivity analysis has been carried out by recalculating the present value of obligation at the end of the period after increasing or decreasing the discount rate while leaving all other assumptions unchanged. Any similar variation in the other assumptions would have shown smaller variations in the defined benefit obligation. The sensitivity analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. In relation to the residual retirement gratuities, the results are particularly sensitive to a change in the discount rate due to the nature of liabilities being the difference between the pure retirement gratuities under the Employment Rights Act 2008 and the deductions allowable, being five times the annual pension provided and half the lump sum received by the member at retirement from the pension fund with reference to the Company’s share of contributions. The latter’s amount is MUR 78.4m as at 30 September 2018. (v) Future cashflows - The funding policy is to pay benefits out of the Group’s cashflow as and when due. - Expected employer contributions to post-employment benefit plans for the year ending 30 September 2019 are MUR 0.8m. - The weighted average duration of the defined benefit obligations ranges between 11 years and 29 years. GROUP Sep-18 Sep-17 (vi) Principal actuarial assumptions at end of year: MUR m MUR m Discount rate 6.20%-6.60% 6.5% Future salary increases 4.00%-4.70% 5.0%-6.0% Future pension increases 0.50% 2.0% Average retirement age (ARA) 60 60 Average life expectancy for: - Male at ARA 19.5 years 19.5 years - Female at ARA 24.2 years 24.2 years (d) Contribution to the defined contribution plans amounted to MUR 15.5 m (2017: MUR 24.5m). 121 CIM FINANCIAL SERVICES LTD ANNUAL REPORT 2018