Integrated Report 2020

INTEGRATED REPORT 2020 CIM FINANCIAL SERVICES LTD Explanatory Notes 30 SEPTEMBER 2020 1. GENERAL INFORMATION CIM Financial Services Ltd is a public company limited by shares, incorporated on 15 July 2005 and domiciled in Mauritius. The principal activity of the Company is the holding of investments. The activities of the Group consist mainly of financing businesses. As at 30 September 2020, its holding company is Cim Holdings Ltd and its registered address is Taylor Smith House, Old Quay D Road, Port Louis. The Company’s place of business is at cnr Edith Cavell & Mere Barthelemy Streets, Port-Louis. These financial statements have been prepared for the year ended 30 September 2020. 2. ACCOUNTING POLICIES 2.1 Basis of preparation The financial statements include the consolidated financial statements of the parent company and its subsidiary companies (the “Group”) and the separate financial statements of the parent company (the “Company”). The financial statements are presented in Mauritian Rupees and all values are rounded to the nearest one decimal place of million (MUR m), except when otherwise indicated. These policies have been consistently applied to all the years presented, unless otherwise stated and where necessary, comparative figures have been amended to conform with changes in presentation in the current year. The financial statements are prepared under the historical cost convention except that: • Relevant Financial assets and financial liabilities are stated at their fair value. • Relevant Financial assets and financial liabilities are carried at amortised cost. The Company and the Group present their statements of financial position in order of liquidity. An analysis regarding recovery or settlement within 12 months after the reporting date (current) and more than 12 months after the reporting date (non–current) is presented in note 40 of the financial statements. 2.2 Impairment of investment in subsidiaries An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators as available. The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. A long-term growth rate is calculated and applied to project future cash flows after the fifth year. For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. 2.3 Going Concern and COVID-19 outbreak In 2020, with the outbreak of the highly contagious form of Corona virus (“COVID-19”), the world has experienced global disruptions in its economic and social activities. Locally, the authorities imposed an immediate lockdown on the 20 March 2020 as soon as the first cases of COVID-19 appeared. A few days later, a more stricter curfew was imposed to stop the transmission of the virus within the local population. The restriction was lifted on 30 May and by mid-June 2020, all businesses and activities were allowed to operate, albeit with all the appropriate sanitary precautionary measures in place. However, with international borders remaining closed, sectors of the economy such as hospitality and tourism are far from returning to pre-COVID era. 72