100 C I M F I N A N C I A L S E R V I C E S L T D 2. ACCOUNTING POLICIES (CONT’D) 2.5 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. 2.6 Going Concern and COVID-19 outbreak In June 2020, after no cases were detected for several weeks within the community, the Government lifted the first lockdown and the population resumed a new ‘normal’ life, albeit with the borders still remaining closed. With the vaccines developed by leading pharmaceutical conglomerates having received the green light by the World Health Organisation in the back end of 2020, the Mauritian Government embarked on a national vaccination programme as from the first quarter of 2021, with a target of 60% population to be vaccinated before the borders are reopened fully. Globally, several countries suffered from new bouts of contamination and Mauritius was unfortunately not spared with a second wave of spread in the community noted in late February 2021 resulting in an eventual lockdown coincidentally 1 year after the first lockdown. In response to the second wave of COVID-19 outbreak, on 10 June 2021 the Bank of Mauritius announced the extension of the following specific measures under the Bank of Mauritius COVID-19 Support Programme to help Mauritian households and the business community at large in this midst of testing times: (i) Moratorium on loans: The moratorium on loans granted to economic operators, SMEs, households and individuals impacted by COVID-19 has been extended to 30 June 2022. The moratorium on loans are given through commercial banks on a case to case basis. (ii) S pecial relief amount: The Special Relief Amount facility of MUR 5.0 Billion made available to banks since the first wave of COVID-19 in 2020 by the Bank of Mauritius has also been extended to 30 June 2022. This amount aims at meeting cash flow and working capital requirements of economic operators directly impacted by COVID-19. Disbursement will continue to be effected through commercial banks and interest rate on these advances to impacted economic operators remains capped at the fixed rate of 1.5% per annum. (iii) C ash reserve ratio: The reduction of the Cash Reserve Ratio applicable to commercial banks from 9% to 8% has equally been extended to 30 June 2022. This reduction will further support banks to assist businesses which are being directly impacted by COVID-19. (iv) K ey Repo Rate (“KRR”): The benchmark KRR has remained unchanged at 1.85% since April 2020 with an aim to stimulate and support the domestic economic activity. On the back of several measures initiated during the year 2020, the Group has been able to navigate through the challenges posed by the pandemic. Management has reinforced the existing measures when re-assessing the impact of COVID-19 on the going concern of Cim Group. Explanatory Notes 30 SEPTEMBER 2021 E x p l a n a t o r y N o t e s
RkJQdWJsaXNoZXIy MzQ3MjQ5