36 BUSINESS COMBINATION Acquisition of subsidiary On 17 July 2023, CIM Financial Services Ltd acquired 75% of the issued share capital of Loinette Capital Limited. Loinette Capital Limited is an asset-based finance provider present across multiple African regions, which offers tailored funding solutions to SMEs across sub-Saharan Africa. The Company expects to expand its business in the African regions with the acquisition of Loinette Capital Limited. The following table summarises the purchase consideration and the fair value of the identifiable amounts of the assets acquired and liabilities assumed at the acquisition date: Identifiable assets acquired at 30 June 2023 (effective date) based on Audited Financial statement of Loinette Capital Limited. Group MUR m Cash at bank 21.0 Loans and advances 602.9 Other assets 69.6 Investment securities 174.9 Fair value of dealer relationships 48.5 Equipment 0.1 Right of use Asset 3.2 Net deferred tax asset 15.9 Other liabilities (50.8) ROU liability (3.2) Total idenfiable assets acquired and liabilities assumed 882.1 75% 661.6 Gain on bargain purchase (18.5) Total consideration 643.1 Satisfied by: Cash 629.1 Deferred Contingent Consideration (Earnout) 14.0 Total consideration transferred 643.1 Net cash outflow arising on acquisition: Cash consideration 644.6 Less: cash and cash equivalent balances acquired (21.0) Net cash outflow on acquisition 623.6 The fair value of the financial assets includes loans and advances, other assets, investment securities and fair value of dealer relationships with a fair value of MUR 911.0m. Gain on bargain purchase arises principally due to the intangible assets pertainning to the dealer relationships which was not identified at the time of the transaction. The potential undiscounted amount of all future payments that CFSL is required to make under the contingent consideration arrangement is MUR 15.5m. The fair value of the contingent consideration arrangement of MUR 14.2m was estimated by applying a Weighted Average Cost of Capital of 9.4%. The outflow is dependent on future outcome. EXPLANATORY NOTES 30 SEPTEMBER 2023 192 CIM FINANCE ANNUAL REPORT
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