Independent Auditor’s Report To the Shareholders of CIM Financial Services Ltd REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS Opinion We have audited the consolidated financial statements of Cim Financial Services Ltd (the “Company”) and its subsidiaries (together the “Group”), and the Company’s separate financial statements set out on pages 116 to 213 which comprise the consolidated and separate statements of financial position as at September 30, 2024, the consolidated and separate statements of profit or loss and other comprehensive income, the consolidated and separate statements of changes in equity, the consolidated and separate statements of cash flows for the year then ended, and the notes to the consolidated and separate financial statements, including material accounting policy information. In our opinion, the accompanying consolidated and separate financial statements give a true and fair view of the financial position of the Group and of the Company as at September 30, 2024, and of their financial performance and their cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) and comply with the Mauritian Companies Act 2001. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (the “IESBA Code”). We have fulfilled our other ethical responsibilities in accordance with the IESBA code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. IMPAIRMENT OF NET INVESTMENT IN LEASES AND OTHER CREDIT AGREEMENTS AND LOANS AND ADVANCES Key Audit Matter As at September 30, 2024, the Group and the Company have net investment in leases and other credit agreements, and loans and advances (collectively referred to as “Facilities”) amounting to MUR 22,351m and MUR 21,102m, representing 87% and 84% of the Group’s and Company’s total assets respectively. These facilities are measured at amortised costs under IFRS 9, less an allowance for the expected credit loss, amounting to MUR 1,484m and MUR 1,616m for credit impaired facilities and MUR 462m and MUR 449m for non-credit impaired facilities of the Group and Company respectively. IFRS 9 requires the Group and the Company to recognise expected credit losses (ECL) on financial instruments which involves significant judgements and estimates to be made by the Group and the Company. The determination of ECL on facilities which are not credit impaired involves the highest level of management judgement, thus requiring greater audit attention. Specific areas of judgement and estimation uncertainty include: • Identification of significant increase in credit risk (SICR), and in particular the selection of criteria to identify a SICR. These criteria are highly judgemental and can materially impact the ECL recognised for certain portfolios where the life of the facilities is greater than 12 months. • Complexity of the ECL model involving a number of critical assumptions in the determination of probabilities of default (PD), loss given default (LGD) and exposure at default (EAD). • Use of forward-looking information to determine the likelihood of future losses being incurred. • Qualitative adjustments made to model driven ECL results raised to address model limitations, emerging risks and trends in underlying portfolios which are inherently judgemental. Facilities are considered to be credit impaired in accordance with IFRS 9 when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Failure to recognise adequate allowance for credit impairment can result in a potential overstatement of the net investment in leases and other credit agreements, loans and advances balance in the consolidated and separate financial statements. Identification of credit-impaired facilities (i.e. those classified in Stage 3) and determination of the expected credit losses thereon involves significant judgements, estimates and assumptions regarding (i) determination of whether a facility is credit impaired and (ii) estimation of the forecasted cash flows the Group and the Company expect to receive from the obligors. This includes an estimate of what the Group and the Company can realise from the collaterals they hold as security on the impaired facilities. Given the inherent risk associated, use of the management overlays and the nature of the business and size of the facilities, we deemed the expected credit loss allowance to be a key audit matter. 112
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