Annual Report 2019

Given the focus of our funding strategy, as stated above we decided that the best debt instruments to execute against the funding strategy would be bonds. Cim Finance Ltd raised MUR 3.5bn in fixed rate 2-year and 5-year bonds from MCB Bank during the financial year. Given the recent development of the Mauritian debt capital markets, along with our desire to be a price maker when issuing debt and to build out a yield curve for Cim Financial Services Ltd bonds, we have decided to embark on a structured sequence of Medium Term Note (MTN) programmes. Cim Financial Services Ltd launched its first MTN programme in November 2019. The issue was assigned an AA credit rating by CARE Ratings Africa and was the first fixed rate senior unsecured and listed bond issue in Mauritius. We had targeted a raise of MUR 1.2bn, with a Board approved oversubscription of up to MUR 2bn. We had oversubscriptions by a significant amount demonstrating the recognition of the strength of our business and brand. Bank debt will continue to be a very important part of our funding mix and as such we will continue to work closely with our key banking partners. We have invested a significant amount of management time in reviewing Cim Finance’s technology strategy with the arrival of our new Group Chief Technology Officer. We have finalised the process of selecting vendors for a new core lending system, as well as key support systems, and will look to implement the new systems during the course of the 2020 and 2021 financial years. We rolled out the implementation of a digital platform for our consumer finance focussed retail merchant partners that will enable a more efficient and customer centric process for the over 800 merchants where we do not have a point of sale presence. We have defined a well-articulated digital transformation strategy that we will start implementing in the 2020 financial year. In the first instance we will look to roll out an app to our customers, as we have done in Kenya, to enable them to originate loans digitally on their mobile phones. We completed our first full year of operations in Kenya during 2019, with our Kenyan business branded as Aspira. We have deployed a fintech-enabled hire purchase (HP) business model through an app that leverages Kenya’s unique mobile digital ecosystem and high consumer awareness of mobile phone app-based lending platforms. Customers can download the Aspira app onto their phone, apply for an HP loan and be granted a credit decision within two minutes. They can then use their loan to purchase consumer durable goods at Aspira’s consumer electronic and furniture retail partners. Customers are then sent an in-App payment reminder each month and can settle their monthly instalment via an in-App link to M-Pesa (Kenya’s digital money system). Though conditions are certainly more challenging in Kenya than Mauritius, we are very excited about the opportunity that Kenyan market represents for our consumer finance business. Structure-wise,wearenearingcompletionoftheamalgamation of Cim Finance Ltd, Mauritian Eagle Leasing Company Ltd, Cim Agencies Ltd, Cim Management Services Ltd and Cim Shared Services Ltd with and into Cim Financial Services Ltd (‘CFSL’). Subject to obtaining the final relevant regulatory approvals, we expect the amalgamation to be completed by the second quarter of financial year 2020. We believe that the amalgamation will simplify decision making and create an organisation focussed on its core businesses, supported by a strong and unitary governance and management structure. The amalgamated CFSL will leverage on the positive brand equity associated with the ‘Cim Finance’ brand, which will be kept as its customer facing brand. Looking ahead Wehavehada very strong2019 financial year. Ashighlighted, we are looking to continue investing significantly in our core businesses in Mauritius through significant technology investments, as well as continuing the work we have started in further enhancing our scorecards and process automation as well as our advanced analytics capabilities. With the recruitment of a new Group Head of HR we are looking to increase our investment in our own people to further enhance our capabilities as well as employee value proposition. The investment in our people will complement the technology investment and continue to better serve evolving customer expectations. In the 2020 financial year we are looking to focus more on, and strengthen, our Kenyan business where we feel we have core capabilities and strengths, namely in consumer finance for the time being and potentially leasing in the future. We believe that a well-executed Mauritian and regional strategy will reward shareholders with attractive returns and a strong growth story. Above all, I would like to thank our valued customers for placing their business with us, our Board and shareholders for their support and our staff for their skill and hard work to make Cim an attractive employer and valued partner to our customers. MARK VAN BEUNINGEN Executive Director and Group CEO CIM FINANCIAL SERVICES LTD / ANNUAL REPORT 2019 23