(a) Incremental Borrowing rate The Group and the Company apply a number of significant judgements to estimate the Incremental Borrowing Rate for leases, such as: a the credit risk; b the term of the lease, and c the economic environment (the country, the currency and the date that the lease is entered into) in which the transaction occurs. Refer to note 23 (b) Amalgamation of entities Effective 1 October 2022, Tsusho Capital (Mauritius) Ltd has been amalgamated with and into a single entity, CIM Financial Services Limited. The amalgamation meets the definition of a business combination under common control, hence scoped out IFRS3 Business Combinations. In line with IAS8 Accounting Policies, Changes in Accounting Estimates and Errors, management has used its judgement in developing an accounting policy choice which reflect the substance of the transaction. Management has therefore applied the pooling of interests method to the amalgamation as it is more of a business re-organisation. The following steps were applied: • The assets and liabilities of the amalgamation entities are reflected at their carrying amounts with no adjustments made to reflect fair values. • No new assets or liabilities were recognized, at the date of the amalgamation that would otherwise be done under the acquisition method in compliance with IFRS3. • No goodwill or gain on bargain purchase were recognized as a result of the amalgamation. Refer to note 2.5 and 20(a)(i) (c) Calculation of ECL allowance The Group and the Company apply a number of significant judgements in applying the accounting requirements for the calculation of ECL, such as: • Determining criteria for significant increase of credit risk: ECL are measured as an allowance equal to 12-month ECL for stage 1 assets, or lifetime ECL for stage 2 or stage 3 assets. An asset moves to stage 2 when its credit risk has increased significantly since initial recognition. IFRS 9 does not define what constitutes a significant increase in credit risk. In assessing whether the credit risk of an asset has significantly increased the Group and the Company take into account qualitative and quantitative reasonable and supportable forward-looking information. • Choosing appropriate models and assumptions used: The Group and the Company use model and assumptions in measuring fair value of financial assets as well as in estimating ECL. Refer to note 10,15,16,17 and 18. Judgement is applied in identifying the most appropriate model for each type of asset, as well as for determining the assumptions used in these models, including assumptions that relate to key drivers of credit risk. • Establishing groups of assets with similar credit risk characteristics: When ECLs are measured on a collective basis, the financial instruments are grouped on the basis of shared risk characteristics. The Group and the Company monitor the appropriateness of the credit risk characteristics on an ongoing basis to assess whether they continue to be similar. This is required in order to ensure that, should credit risk characteristics change, there is appropriate re-segmentation of the assets. This may result in new portfolios being created or assets moving to an existing portfolio that better reflects the similar credit risk characteristics of that group of assets. Re-segmentation of portfolios and movement between portfolios is more common when there is a 127 OUR YEAR AT A GLANCE OUR PEOPLE GOVERNANCE FINANCIAL STATEMENTS
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