CFSL - Annual report 2018

EXPLANATORY NOTES 30 SEPTEMBER 2018 43. FAIR VALUE OF FINANCIAL INSTRUMENTS Except for the available for sale investment and financial assets and liabilities at fair value through profit or loss, the Group does measure its financial assets and financial liabilities at fair value. The table below shows, by class of financial instruments, the comparison of their carrying amounts with their fair values. These fair values are calculated for disclosure purposes only. The table excludes those financial assets and financial liabilities for which their carrying amounts approximate their fair values. Carrying amounts Fair value 30 September 2018 Level 1 Level 2 Level 3 Total MUR m MUR m MUR m MUR m MUR m Financial assets measured at fair value Available for sale investment 1.2 - - 1.2 1.2 Debt instruments at fair value through profit and loss 1,589.7 1,589.7 1,589.7 Financial assets not measured at fair value Net investment in leases and other credit agreements 7,637.7 - - 7,663.4 7,663.4 Loans and advances 2,865.6 - - 2,879.8 2,879.8 Government bonds 8.0 - 8.0 - 8.0 12,102.2 1,589.7 8.0 10,544.4 12,142.1 Financial liabilities measured at fair value Foreign currency derivatives 20.0 - 20.0 - 20.0 Financial liabilities not measured at fair value Deposits from customers 3,426.6 - - 3,561.6 3,561.6 Other borrowed funds 5,949.8 - - 5,919.1 5,919.1 9,404.7 1,159.0 - 9,480.7 10,639.7 Carrying amounts Fair value 30 September 2017 Level 1 Level 2 Level 3 Total MUR m MUR m MUR m MUR m MUR m Financial assets measured at fair value Available for sale investment 1.8 - - 1.8 1.8 Foreign currency derivatives 12 - 12.0 - 12.0 Financial assets not measured at fair value Net investment in leases and other credit agreements 5,661.0 - - 6,078.7 6,078.7 Loans and advances 2,367.6 - - 2,317.2 2,317.2 Investments in financial assets 8.0 - 8.0 - 8.0 8,050.4 - 20.0 8,397.7 8,417.7 Financial liabilities not measured at fair value Deposits from customers 3,134.3 - - 3,182.7 3,182.7 Other borrowed funds 4,184.2 - - 4,167.2 4,167.2 7,318.5 - - 7,349.9 7,349.9 For financial assets and financial liabilities that have a short-term maturity, the carrying amounts, which are net of impairment, represent a reasonable approximation of their fair value. Such instruments include cash and bank balances, deposits with banks, factoring and card receivables and other liabilities. The fair value of the net investment in leases and and other credit agreements, credit facilities, corporate credit facilities (included in loans and advances), deposits from customers and other borrowed funds are estimated using cash flow models discounted at the relevant discount rate taking into consideration credit risk, foreign exchange risk, of default and loss given default estimates. As a result, these balances fall under Level 3 of the fair value hierarchy. Market observable data is used when appropriate and when such data is not available, the company uses historical experience. The discount rates used represent the market rates. Refer to Note 17 for further details regarding financial assets measured at fair value. 137 CIM FINANCIAL SERVICES LTD ANNUAL REPORT 2018