CFSL Integrated Report 2025

FINANCIAL

150

Risk Management

Corporate Governance

Statutory Disclosures

(f) Foreign currencies

(i) Functional and presentation currency Items included in the financial statements of each of the Group’s and the Company’s entities are measured using Mauritian Rupee, the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated and separate financial statements are presented in Mauritian Rupees, which is the Company’s functional currency. (ii) Transactions and balances Foreign currency transactions are translated into Mauritian Rupees using exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in statement of profit or loss. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date the fair value was determined. (iii) Group companies The results and financial position of the Group entities that have a functional currency different from Mauritian Rupee are translated into the presentation currency as follows: • assets and liabilities for each statement of financial position presented are translated at the closing rate at the reporting date; • income and expenses for each statement representing profit or loss and other comprehensive income are translated at average exchange rates; • all resulting exchange differences are recognised in other comprehensive income; • goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate; • on disposal of foreign entities, such translation differences are recognised in the profit or loss as part of the gain or loss. (g) Inventories Inventories are valued at lower of cost and net realisable value. Net realisable value is determined based on the estimated selling price in the ordinary course of business less any estimated costs associated with the sale. When an inventory item is initially recognised, it is measured at cost. In subsequent periods, inventory is measured at the lower of cost and net realisable value. (h) Leases Accounting for leases - where Group and Company is the lessor Lease income from operating leases where the Group and the Company are a lessor is recognised in income on a straight line basis over the lease term. Initial direct costs incurred in obtaining the lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as lease income. On the other hand, lease income from finance leases where the Group and the Company are a lessor is recognised as disclosed in Note 2.7 (e)(iv). The respective leased assets are included in the statement of financial position based on their nature. The leased assets are moveable assets (mainly motor vehicles). Accounting for leases - where Group and Company is the lessee From 1 October 2019, all leases are accounted for by recognising a right-of-use asset and a lease liability, except for: • Leases of low value assets; and • Leases with a duration of 12 months or less. Identifying Leases The Group and the Company account for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria: a) There is an identified asset; b) The Group and the Company obtain substantially all the economic benefits from use of the asset; and c) The Group and the Company have the right to direct use of the asset.