CFSL Integrated Report 2025

149

Introduction

Group Overview

Leadership

Strategy & Performance

Explanatory Notes 30 September 2025 2.

ACCOUNTING POLICIES (CONTINUED) 2.7 Accounting Policies (continued) (ii) Income related to card activities

The Group and the Company provide its customers with credit card processing services (i.e., authorisation and settlement of transactions) where it is entitled to a fee for each transaction. These services represent a single performance obligation comprised of a series of distinct daily services that are substantially the same and have the same pattern of transfer over the contract period. The fees vary based on the number of transactions processed and are structured as either a fixed rate per transaction processed or at a fixed percentage of the underlying cardholder transaction. The variable income is allocated to each distinct day, based on the number and value of transactions processed that day, and the allocated revenue is recognised as the entity performs. Revenue from these fees is recognised at a point in time. (iii) Income related to factoring activities The Group and the Company provide factoring services to its customers and receive fees at a percentage for each transaction agreed with the counterparties. Factoring fees can be with or without recourse. Factoring of assets with full recourse are ones where the risks and rewards of collecting the amount due from the receivables’ (end customer) will remain with the transferor. As such the Group and the Company will bear no credit risk towards the end customer since the transferor has given full guarantee to compensate CIM for all credit losses that are likely to occur in relation to the amount disbursed. However, CIM bears credit risk towards the transferor and this is treated separately and accounted as a loan receivable from the transferor. In a non-recourse factoring arrangement, the transferor does not provide any guarantee about the total receivables performance. As such, the Group and the Company obtain credit insurance on the portfolio of receivables prior to factoring them. On factoring, the Group and the Company become the beneficiary of the credit insurance. The Group and the Company do not disburse any amount higher than the credit insurance received. Furthermore, the Group and the Company take credit insurance and then charge those costs to the transferor within its commission receivables. These costs form part of the commission charge to the transferor. The performance obligation is satisfied at the acceptance of the invoice for which it provides the factoring service and the For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. Income that the Group and the Company consider to be an integral part of these financial instruments are recognised in the EIR. Earnings from finance leases are recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return. Income or discounts received from merchants on financing of credit agreements, commitment fees and signing fees are initially recognised and presented in net investment in leases and other credit agreements, other liabilities in the statement of financial position. The release to profit or loss is recognised in interest income line in the statement of profit or loss. (v) Rental income Rental income is derived from operating leases. Rental net of value added tax is recognised on a straight line basis over the lease term. (vi) Penalty and late payment fees Penalty and late payment fees on card activities are recognised over the period to which they accrue. Also included in penalty and late payment fees, contingent rent arising on leases and other credit agreements which are recognised as income in the period they are incurred. (vii) Dividend Income Dividend Income is recognised when the Group’s and the Company’s right to receive the payment is established. (viii) Management and administration fees Revenue from management and administration services are recognised over time as the services are received and consumed simultaneously, measured at the transaction price as per agreements. revenue is recognised at this point. (iv) Interest and similar income