CFSL - Annual report 2018

70 CIM FINANCIAL SERVICES LTD ANNUAL REPORT 2018 EXPLANATORY NOTES 30 SEPTEMBER 2018 2. ACCOUNTING POLICIES (CONT’D) 2.6 Significant accounting policies (Cont’d) (e) Foreign currencies (i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using Mauritian Rupee, the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated and separate financial statements are presented in Mauritian Rupees, which is the Company’s functional currency. All amounts are in million, rounded to one decimal place except as otherwise stated. (ii) Transactions and balances Foreign currency transactions are translated into Mauritian Rupees using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date the fair value was determined. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensive income. (iii) Group companies The results and financial position of the Group entities that have a functional currency different fromMauritian Rupee are translated into the presentation currency as follows: • assets and liabilities for each statement of financial position presented are translated at the closing rate at the reporting date; • income and expenses for each statement representing profit or loss and other comprehensive income are translated at average exchange rates; • all resulting exchange differences are recognised in other comprehensive income; • goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate; • on disposal of foreign entities, such translation differences are recognised in the profit or loss as part of the gain or loss.