CIM FINANCE. INTEGRATED REPORT 2022 | 177 23. RIGHT-OF-USE ASSETS (CONT’D) GROUP COMPANY Sep-22 Sep-21 Sep-22 Sep-21 MUR m MUR m MUR m MUR m Interest expense (included in finance cost) 10.9 11.3 10.6 11.1 Extension and termination options Extension and termination options are included in a number of property leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. Lease term In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. For leases of administrative buildings the following factors are normally the most relevant: If there are significant penalties to terminate, the Group is typically reasonably certain not to terminate. If any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably certain to extend. Otherwise, the Group considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset. As at 30 September 2022, no potential future cash outflows in respect of termination and extension of lease has been recognised. The lease term is reassessed if an option is actually exercised or the Group becomes obliged to exercise it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee. During the current financial year, there is no financial effect of revising lease terms to reflect the effect of exercising extension. The total cash outflow for leases in Group in 2022 was MUR42.5m (2021: MUR39.4m); made of capital MUR31.6m (2021: MUR28.1m) and interest MUR10.9m (2021: MUR11.3m); and in Company was MUR42m (2021:MUR39m): made up of capital MUR31.4m (2021: MUR27.9m) and interest MUR10.6m (2021:MUR11.1m). COMPANY Sensitivity Number of Lease Contracts Variable payments % Sep-22 Sep-21 Sep-22 Sep-21 Sep-22 Sep-21 MUR m MUR m Property leases with payments linked to inflation 9.8 10.0 16 16 76% 76% Property leases with periodic uplifts to market rentals 0.7 0.9 5 5 24% 24% 10.5 10.9 21 21 100% 100% (b) LEASE LIABILITIES (CONT’D) Variable lease payments (CONT’D) EXPLANATORY NOTES 30 SEPTEMBER 2022
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