2. ACCOUNTING POLICIES Continued 2.8 Significant accounting policies Continued (l) Impairment of non-financial assets Impairment of non-financial assets excluding goodwill The carrying amounts of assets such as investment in subsidiaries and associate, equipment, right-of-use- assets, and intangible assets are assessed at each reporting date to determine whether there is any indication of impairment. Whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, the asset is subject to impairment. The recoverable amount of the asset is estimated, being the higher of the asset’s net selling price and its value in use, to determine the extent of the impairment loss, if any, and the carrying amount of the asset is reduced to its recoverable amount. The impairment loss is recognised in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. Goodwill For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (CGUs). Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (m)Post employment benefits (i) State plan and defined contribution pension plans A defined contribution plan is a pension plan under which the Group and the Company pay fixed contributions into a separate entity. The Group and the Company have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Contributions to the National Pension Scheme and the Group’s and the Company’s defined contribution pension plan are expensed to profit or loss in the period in which they fall due. (ii) Defined benefit pension plans and other retirement benefits The following pension benefits are also in place: • The Group and the Company contribute to a pension plan in respect of some employees who have a No Worse Off Guarantee (NWOG) that their benefits would not be worse than what they would have earned under a previous defined benefit plan. • The Group and the Company recognise a net liability for employees whose benefits under the current pension plan are not expected to fully offset the retirement gratuity obligations under the Mauritian Workers Rights Act 2019. • The Group and the Company recognise a liability in respect of employees who are not members of any supplementary pension plan and are entitled to retirement gratuities under the Mauritian Workers Rights Act 2019. • The Group and the Company recognise a liability in respect of pensions paid out of the Group’s and Company’s cashflow for some former employees. EXPLANATORY NOTES 30 SEPTEMBER 2023 118 CIM FINANCE ANNUAL REPORT
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