| CIM FINANCE. INTEGRATED REPORT 2022 106 EXPLANATORY NOTES 30 SEPTEMBER 2022 2. A CCOUNTING POLICIES (CONT’D) 2.4 Amalgamation of entity under common control In financial year 2021 CIMFinancial Services Ltd (“CFSL”), [Ex-] CimFinance Ltd, [Ex-] Mauritian Eagle Leasing Company Limited, [Ex-] Cim Agencies Ltd, [Ex-] Cim Management Services Ltd and [Ex-] Cim Shared Services Ltd were amalgamated with and into the surviving company, CIM Financial Services Ltd. The amalgamation was done in line with the objective to streamline the group structure and to improve performance, efficiency, dynamism and creativity. Common control transactions fall outside the scope of IFRS 3 Business Combinations because there is no change in control over the assets by the ultimate parent. As a result, the Company adopted accounting principles similar to the pooling-of-interest method based on the predecessor values. No consideration was paid to any shareholders as effect of the amalgamation. Assets and liabilities transferred to the surviving company, were not stepped up to fair value andwere amalgamated at their actual carrying values as at 1 October 2020. Effective 1 October 2020, the stated capital of the company was MUR 680,522,310. The amalgamation resulted in a positive amalgamation reserve of MUR 587.4mwhich is shown under other reserves. Identifiable assets and liabilities on amalgamation are as follows: 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 Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company’s CGUs towhich the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years unless a longer period can be justified. A long-termgrowth rate is calculated and applied to project future cash flows after the fifth year. MUR m ASSETS Non current assets 8,629.4 Current assets 7,400.4 Total assets 16,029.8 LIABILITIES Non current liabilities 5,570.6 Current liabilities 6,126.1 Total liabilities 11,696.7
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