Annual Report 2019

Explanatory Notes 30 SEPTEMBER 2019 2. ACCOUNTING POLICIES (CONT’D) 2.4 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (CONT’D) New and amended standards and interpretation (Cont’d) IFRS 9 - Financial Instruments (Cont’d) Changes to classification and measurement (Cont’d) The investments in equity instruments previously classified as available for sale investments were reclassified as financial assets at fair value through profit or loss. The debt instruments which were previously classified at fair value through profit or loss continued to be recognised as such under IFRS 9. The Group also held currency forwards and swaps which are continued to be recognised as derivatives and recognised as financial assets or financial liabilities at FVTPL. Net finance lease receivables, hire purchase and other credit agreements are not impacted as they are not in the scope of the recognition and measurement under IFRS 9. Changes to the impairment calculation The adoption of IFRS 9 has fundamentally changed the Group’s accounting for loan loss impairments by replacing IAS 39’s incurred loss approach with a forward-looking expected credit loss (ECL) approach. IFRS 9 requires the Group to record an allowance for ECLs for all loans and other debt financial assets not held at FVTPL, together with loan commitments, financial guarantee contracts and lease receivables under IAS 17 Leases. The allowance is based on the ECLs associated with the probability of default in the next twelve months unless there has been a significant increase in credit risk since origination. Impact on IFRS 9 adoption THE GROUP IAS 39 Measurement Re-measurement IFRS 9 Category Amount ECL Others Amount Category Financial assets MUR M MUR M MUR M MUR M Cash and bank balances L&R 526.1 - - 526.1 AC Deposit with banks L&R 1,026.0 (1.3) - 1,024.7 AC Net investment in leases and other credit agreements N/A 7,637.7 (10.9) - 7,626.8 N/A Loans and advances L&R 2,865.6 15.3 - 2,880.9 AC Investment in financial assets Equity investments AFS 1.2 - - 1.2 FVTPL Government bonds L&R 8.0 - - 8.0 AC Debt instruments FVTPL 1,589.7 - - 1,589.7 FVTPL Other assets Trade and other receivables L & R 605.5 (0.2) - 605.3 AC 14,259.8 2.9 - 14,262.7 Deferred tax impact (0.1) Impact on retained earnings 2.8 Financial liabilities Deposits from customers AC 3,426.6 - - 3,426.6 AC Other borrowed funds AC 5,949.8 - - 5,949.8 AC Other liabilities Trade and other payables AC 1,200.6 - - 1,200.6 AC Foreign currency derivatives FVTPL 20.0 - - 20.0 FVTPL 10,597.0 - - 10,597.0 L&R: Loans and receivables N/A: Not applicable AFS: Available for sale FVTPL: Fair value through profit or loss AC: Amortised cost CIM FINANCIAL SERVICES LTD / ANNUAL REPORT 2019 74