Annual Report 2011

Transcription

Annual Report 2011

CONTENTS
AGENDA
4
STANDING ORDERS
5
THE CREDIT UNION PRAYER
6
COB CARES FEATURE
7
OUR MEMBERS IN FOCUS
8
OUR THEME
10
CORPORATE INFORMATION
11
BOARD OF DIRECTORS
13
SUPERVISORY COMMITTEE
14
CREDIT COMMITTEE
15
OTHER TEAMS
16
WHO WE ARE
FIVE YEAR FINANCIAL HIGHLIGHTS
20
ECONOMIC REVIEW FOR 2010 AND PROSPECTS FOR 2011
27
PRESIDENT’S MESSAGE
28
BOARD OF DIRECTORS’ REPORT
30
TREASURER’S REPORT
39
INCOME STATEMENT
40
BALANCE SHEET
42
RISK MANAGEMENT POLICIES
44
FINANCIAL STATEMENTS
22
47-83
MEET OUR OPERATIONAL TEAM
84
CITY OF BRIDGETOWN CO-OPERATIVE CREDIT UNION LTD • ANNUAL REPORT 2010-2011
3
AGENDA
1.
Ascertainment of Quorum and Call to Order
2.
Prayers
STANDING ORDERS
1.
a. A member to stand when addressing the Chair.
b. Speeches to be clear and relevant to the subject before the meeting.
3.
Welcoming Remarks
4.
Apologies for Absence
2.
A member shall only address the meeting when called upon by the Chairman to do so, after which he shall immediately take his seat.
5.
Greetings from Other Organisations
3.
No member shall address the meeting except through the Chairman.
6.
Adoption of Standing Orders
4.
A member may not speak twice on the same subject except:
7.
Minutes of Previous Meetings
a. The Mover of a Motion - who has the right of reply.
a) Minutes of Special Meeting held on February 21, 2011
b) Matters arising from minutes of meeting held February 21, 2011
c) Minutes of Annual General Meeting held on August 21, 2010
d) Matters arising from minutes of annual general meeting held on August 21, 2010
e) Minutes of Special Meeting held August 8, 2009
f) Matters arising from minutes of annual general meeting held on August 8, 2009
g) Minutes of the Special General Meeting held on August 10, 2009
h) Matters arising from the minutes of the meeting held on August 10, 2009
i) Minutes of the Special General Meeting held January 23, 2010
j) Matters arising from the minutes of meeting held January 23, 2010
b. He raises to object or to explain (with permission of the Chair).
5.
The Mover of a Procedural Motion - (Adjournment laid on the table, Motion to postpone) to have no right of reply.
6.
No speeches to be made after the “Question” has been put and carried or negatived.
7.
A member rising on a “Point of Order” to state the point clearly and concisely. (A “Point of Order” must have relevance to the “ Standing Order”)
8.
Reports
a) Board of Directors
b) Credit Committee
c) Supervisory Committee
d) Adrian Griffith Members’ Assistance Fund
e) COB CARES Scholarship Fund Committee
b. In no event can a member call the Chair “to Order”.
9.
A “Question” should not be put to the vote if a member desires to speak on it or move an amendment to it - except, that a “ Procedural Motion”. “ The Previous Question”, “Proceed to the next Business” or the “Closure”: That the Question be “NOW PUT”, may be moved at any time.
9.
Auditor’s Report and Financial Statements
10. Only one amendment should be before the meeting at one and the same time.
10.
Appointment of Auditor
11. When a motion is withdrawn, any amendment to it fails.
11.
Fixing of Maximum Liability
12. The Chairman to have the right to a “casting vote”.
12.
Appropriation of Surplus
13. If there is equality of voting on an amendment, and if the Chairman does not exercise his casting vote, the amendment is lost.
13.
Elections
14.
Any Other Business
15.
Adjournment
8. a. A member should not “call” another member “ to order” - but may draw the attention of the Chair to a “breach of order”.
14. Provision to be made for protection by the Chairman from vilification (personal abuse).
15. No member shall impute improper motives against another member.
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5
THE CREDIT UNION PRAYER
COB C.A.R.E.S. Feature
Donna Roach
COB Cares Scholarship Recipient
LORD, make us instruments of Thy peace
Where there is hatred, let us sow love,
Where there is injury, pardon;
Where there is doubt, faith;
Where there is despair, hope;
Where there is darkness, light
And where there is sadness, joy.
O Divine Master, grant that we may not
So much seek to be consoled as to console;
To be understood as to understand;
To be loved, as to love;
For it is in giving that we receive;
It is in pardoning that we are pardoned;
And it is in dying that we are born to eternal life.
AMEN
I have been a member of the COB Credit Union for just over
five years. I became a member shortly after completing
my undergraduate degree in Environmental Biology at
UWI, Mona. I joined on the advice of my mother who
thought that signing up for a Cares account with the
organisation would be a good start for developing
some financial security. Out of all the savings plans
I had looked into, the Cares programme offered
a very attractive package with many benefits
for persons within my age group who were
interested in investing in their financial future.
Shortly after attaining membership I was
awarded a grant for outstanding academic
achievement in my field of study. It is always
a source of encouragement when your
achievements are recognised by others, but it
was both surprising and heartening for it to be
recognised by my financial institution. It gives one
a sense of really belonging to an organisation, of
being more than an account number as well as
an assurance that there was a real interest in my
future. I have since gone on to complete my Masters
in Natural Resource and Environmental Management
with a specialisation in Waste Management. I have
always wanted to work within the environmental field
and it is gratifying to be able to so.
By offering the opportunity for its members to receive academic
scholarships and for awarding those who have worked hard and
achieved some degree of success, COB has really shown evidence of a
commitment to invest in its members. That is a legacy of which the credit
union should be most proud; being willing to invest in those who have been willing
to invest in them. There are not many financial institutions that can make that boast.
This is the Prayer of St Francis of Assisi. It is used almost
universally throughout the world as a Credit Union opening
prayer at Board Meetings & Shareholder Meetings.
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OUR MEMBERS IN FOCUS
Anthony Robinson
Morris Lee
Business: ROBBY’S TYRE REPAIR & VALET SERVICE
When one speaks about entrepreneurship, no better person epitomizes
this than Anthony Robinson, the proprietor of the recently opened
ROBBY’S TYRE REPAIR & VALET SERVICE on Upper Collymore Rock,
St. Michael. When asked why this location, he remarked that he saw
the need for such services in what can be considered the busiest
artery into Bridgetown and also to fulfill his life long dream.
This would make his third business venture, having started two
other enterprises over the twenty-three years prior. This husband
and father of two is also involved in the rental of Construction
Equipment such as cement mixers, power drills and other electrical
tools as well as scaffolding.
Located at the rear of the Shell Service Station compound
and Chanell Supermarket on Upper Collymore Rock,
ROBBY’S TYRE REPAIR & VALET offers the latest in tyre
repair technology. Service technology is complimented
by vulcanizing and regrooving of truck tyres both
new and used tyres, battery sales, wheel balancing
and valet services starting at $29.99.
From all reports the service and ambience of
ROBBY’S TYRE REPAIR & VALET SERVICE has
received rave reviews. The icing on the cake for
many of their clientele is their extended opening
hours: Monday to Saturday 7.00 a.m. – 7.00
p.m. and Sundays 7.00 a.m. – 1.00 p.m.
The City of Bridgetown Co-operative Credit
Union Ltd compliments Anthony Robinson
on his latest endeavour and encourages our
members to support this excellent initiative.
Entrepreneur /Visionary
Morris lee’s first venture into the realm of business was in
1982 as a trucker and Gas Station Operator. After the
changing ownership of Mobil to Shell, the small Gas
Stations were phased out which necessitated a change
in career direction.
Morris, who has been married for twenty-two
years and has two children, admits that to stay
in business successfully one has not only to be
innovative and literally think outside the box but
also dare to dream BIG.
After his shift in fortunes, Morris saw Mini
Bus operation as a viable venture and during
1987 he moved into the business of public
transportation.
He strongly believes that going green for
Barbados would benefit the island in a myriad
of ways, for example retrofitting buses to use
solar energy would reduce the country’s reliance
on fossil fuel as well as its carbon foot print.
Such innovation he believes will open new employment
opportunities and make better use of an ever-present
resource - the SUN. From this paradigm he believes our
polytechnic would be able to turn out more entrepreneurs
(technicians in the solar related industry) and Barbados could
gradually convert our housing stocks, outfitting them with the
ability to utilize this sustainable energy source in the not too
distant future.
Morris is the President of APTO (Association of Public
Transport Operators) and informs us that there are five
hundred (500) Public Service Vehicles on the Road, three
hundred Route Taxis (ZR) and two hundred Mini Buses.
He credits C.O.B Credit Union with making the difference in
his business. Small businesses need to be properly capitalized
in order to maximize on opportunities and C.O.B has been with
him all the way. He expresses his gratitude for the support and
admonishes other small businesspersons to see COB Credit Union
Ltd as a viable option.
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OUR THEME
P.R.O.S.P.E.R.I.T.Y. - Our Vision, Your Way of Life
Board Of Directors
In September 2005, The City of Bridgetown Co-operative Credit Union re-branded and revitalized its products, and
launched the ‘Prosperity Suite of Savings’. Comprised of the basic Share and Deposit accounts, it incorporated a blend of
products and services to assist and encourage the membership toward financial success.
Mr. James Paul, B.Sc
Mr. Peter Earle, B.Sc. (Hons) LLM
Mr. Lindell Earle, B.Sc. (Hons), C.G.A., MBA, FCA
Mr. Adlai Stevenson, B. Sc, MBA
Mr. Elridge Dixon, JP, B.Sc. (Hons)
Mr. Adrian Griffith, B.Sc., F.C.B.A
Mr. David Jean-Marie, MBA, FCA
Prosperity brings to mind wealth and good fortune to the average person or member. But what does it mean to C.O.B? Take
a look at how deeply committed the Credit Union is to providing and promoting guaranteed success to our members.
P – Products. Our products are geared at ensuring that our members from all generations (young and old) can benefit from the practice of good saving habits, guaranteeing growth from the smallest deposit to the largest investment.
R – Rewards. Through the Maxine McClean Scholarship program and other initiatives, our juniors can reap rewards for their hard work academically, from primary to tertiary levels. Regular members can benefit from discounts and services via corporate allegiances between the credit union and several business houses across Barbados.
O – Options. You choose! Our knowledgeable staff will ensure that your decision is a sound one – budget-friendly and profitable.
S – Service. Service excellence is our #1 priority. Our Service Guarantee Specialists are trained to provide quality service. Remember, our mission is to be ‘the preferred financial institution’ in Barbados.
P – Peace of mind - Sound investments to ensure the highest return on your savings.
E – Experience. After twenty-five years built on knowledge and expertise, we are confidently weathering the current economic crisis, affecting the region and the world.
R – Relationship – Our relationship with our members is our ultimate objective – ‘Measuring Success One Member At A Time’.
I – Innovation. Find us on Facebook or access your accounts via Internet Banking. Transfer money to your loan while on the go with Telephone Banking.
T – Technology – With just a swipe of your ATM card, access your account on our new Verifast system; makes Supervisory Committee
Mr. Drayton J. Carter, FCA
Mr. Bryden Springer
Mrs. Rhondda Walcott
Mr. Noel P. Welch, B.Sc.
Ms. Karene Harris, B. Sc. (Hons)
- Chairman
- Vice Chairman
- Secretary
- Member
- Member
Credit Committee
Mr. Audley Grimes, A.C.I.S, Mist.BA
Ms. Lynette P Holder Dip. Mgmt, MBA
Mr. Christopher Oliver, B.Sc. Dip.Ed
Mr Gregory Holder, B.Sc. (Hons), M.Sc
Mr. Glyne Pilgrim, C.G.A., C.A
- Chairman
- Vice Chairman
- Secretary
- Member
- Member
Registered office
COB Business Centre
Lower Broad Street
Bridgetown
purchases at Point-of-Sale locations; and withdraw funds from any ATM island-wide via CARIFS.
Y – Youth. C.O.B understands that our children are our future. This is evident in the fact that our C.A.R.E.S account - President
- Vice President
- Treasurer
- Secretary
- Assistant Secretary
- Director
- Director
boasts the highest interest rate offered for children by any other financial institution in Barbados.
“The abundance you desire to experience must first be an experience in your mind” – Ernest Holmes
P.R.O.S.P.E.R.I.T.Y. – Our Vision, Your Way of Life!!
Conceptualized by Anmaria Hutson - Member Services Officer
Bankers
Barbados National Bank Inc.
Independence Square
Bridgetown
FirstCaribbean International Bank (Barbados) Ltd.
Broad Street
Bridgetown
Bank of Butterfield (Barbados) Ltd.
Broad Street
Bridgetown
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BOARD OF DIRECTORS
Auditors
Skeete, Best & Co.
Chartered Accountants
Tudor Bridge
St. Michael
Attorneys-at-law
Junior Allsopp
“Ingleside”
Corner of Pine Road and 7th Avenue Belleville
St. Michael
Ms. Sherry-Ann Batson
The Gables
# 20 Croton Avenue
Pine Hill
St. Michael
Messrs. Griffith, Cato and Associates
Suite #2 Sunshine Apartment Complex
Hastings
Christ Church
Mr. Cecil McCarthy Q.C.
Equity Chambers
Roebuck Street
Bridgetown
Ms. Rita Evans
# 19 Spry Street
Bridgetown
Mr. Michael Yearwood
“Ingleside”
Corner of Pine Road and 7th Avenue
Belleville
St. Michael
Ms. Mia Mottley, Q.C.
Shenstone
Strathclyde
St. Michael.
Lindell Earle
Treasurer
Peter Earle
Vice President
Mr. Edmund Hinkson
Equity House
Pinfold Street
Bridgetown
James Paul
President
Adlai Stevenson
Secretary
Elridge Dixon
Assistant Secretary
Ms. Liesel Weekes
Aegis Chambers
Heritage House
Pinfold Street
Bridgetown
Adrian Griffith
Director
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David Jean-Marie
Director
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SUPERVISORY COMMITTEE
CREDIT COMMITTEE
Rhondda Walcott
Secretary
Bryden Springer
Vice Chairman
Christopher Oliver
Secretary
Lynette Holder
Vice Chairman
Drayton Carter
Chairman
Patrick Welch
Member
14
Andley Grimes
Chairman
Karene Harris
Member
Glyne Pilgrim
Member
Gregory Holder
Member
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SENIOR MANAGEMENT
Glendon Belle
Chief Executive Officer
MIDDLE MANAGEMENT
Ronnie Norville
Internal Auditor
Henderson Williams
Human Resources Manager
Alison Lynch
Manor Lodge Branch Manager
Barbara Langdon-Thompson
Member Care Manager
Judie Gill
Financial Controller
Winston Alleyne
Member Relations Executive
Susanna Thompson
Legal Counsel
Algernon Yearwood
Loans Manager
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EXECUTIVE SECRETARIES
ATM MACHINE
FUTURE SERVICES
Angela Beckles
Fran Haynes
Evelina King-Harper
Deborah Payne
SENIOR SUPERVISORY
CONTACT CENTRE
Elon Miller
IT Coordinator
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Suzanne Brice-Haynes
Senior Collections Officer
Joseph Holder
Senior Loans Officer
MEMBER SERVICES
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WHO WE ARE
Our Vision
COB’s vision is to become the ‘preferred financial institution for our members’.
Our Mission
• To deliver the most comprehensive financial products of the highest quality and services that would attract
membership.
• To influence the personal development and commitment of all employees and members to the co-operative principles
of the movement.
• All members of ‘Team COB’ have a sound understanding of our members’ financial needs.
• Every member of ‘Team COB’ is provided with the opportunity to influence how work is done and is provided with information relative to the cost of such work.
• We know and continuously measure member and employee satisfaction.
• We communicate constantly and effectively with all team members.
• We encourage and accept ideas openly.
• To treat our employees fairly and equitably within an atmosphere of teamwork.
• We systematically analyse and improve business processes.
• To engage in sound financial practices, building strong linkages to cultivate community development.
• All members of ‘Team COB’ are provided with on-going training and development appropriate to the business.
In attaining our mission we will hold steadfast to our values.
• Best practices are applied to corporate governance and business processes.
Our Values
We believe in and are strongly committed to:
• Respect for our valued members: At COB we hold in the highest regard, the opinions of every member.
Our decisions are truly influenced by the wishes and needs of our members.
• Integrity and Transparency: Trust, candor, honesty and sincerity constitute the principles that pervade all of our decisions.
We encourage our employees and officers to live by these values in their personal and working lives.
• Service Quality: We are committed to satisfying our members by delivering products and services and achieving results
which exceed their expectations. We seek to “Do The Right Things Right, On Time The First Time, Every Time”.
• Innovation: We encourage and reward innovation, creativity and resourcefulness. We invest in training and education
of our employees to make them leaders in their fields.
• Teamwork and Co-operation: At COB we promote and adopt policies and practices that support the attainment of the
organisation’s vision, mission and goals through team effort. We recognise the importance of the contribution of every
member of “Team COB” to our success.
COB’s values will be achieved because we seek to ensure that:
• All members of ‘Team COB’ understand the vision, mission, values and priorities of the organisation.
• All members of ‘Team COB’ enjoy coming to work and take pride in their jobs.
• All members of ‘Team COB’ are treated with respect.
• All Leaders of ‘Team COB’ model the value of employee involvement and member satisfaction.
• All members of ‘Team COB’ are committed and loyal to the Credit Union and its objectives.
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FIVE-YEAR FINANCIAL HIGHLIGHTS
BALANCE SHEET
Mar-08
Mar-07
Total assets
320,172,525
305,887,009
292,032,604
278,171,075
Total Loans
260,898,573
244,746,209
236,236,101
212,620,213
Total investments and savings
41,052,705
42,881,241
37,035,519
46,411,247
accounts balances
Fixed assets
11,883,367
12,530,224
13,596,211
14,206,130
Other assets
4,785,862
5,729,335
5,164,773
4,933,485
Other liabilities
1,975,446
2,961,282
5,276,366
5,756,214
External borrowings
6,277,778
6,944,445
761,111
8,277,779
Total savings
277,343,338
263,957,476
257,296,951
239,940,261
Total capital after dividends
32,282,470
30,046,716
23,359,702
20,763,103
247,640,967
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Mar-11
Mar-10
Mar-09
194,711,471
34,708,511
14,838,428
3,382,557
5,068,795
8,944,445
217,428,249
21,239,865
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STATEMENT OF
Mar-11
Mar-10
Mar-09
Mar-08
COMPREHENSIVE INCOME
Total comprehensive income
24,264,678
30,272,423
25,552,352
24,303,689
Loans interest
21,194,254
21,561,238
21,690,651
20,501,835
Investment/ investment
1,706,747
7,197,141
2,033,517
2,514,468
related income
Other income
1,363,677
1,514,044
1,828,184
1,287,386
Extraordinary income
0
0
0
0
Cost of funds
6,898,598
6,963,172
7,776,082
7,725,970
Loan losses
700,000
3,753,000
1,000,000
600,000
Total operating expenses
12,003,601
12,129,351
11,994,373
9,946,136
Net Comprehensive Surplus
4,662,479
7,426,900
4,959,781
6,107,419
Before Dividends
Dividends accruals
2,300,000
1,977,090
3,243,241
3,900,000
Net comprehensive surplus
2,362,479
5,449,810
1,716,540
2,207,419
retained
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Mar-07
21,466,313
18,070,937
OTHER MEASURES
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Membership
48,000
47,337
46,738
46,139
# of employees
104
104
99
99
# of branches
2
2
2
2
44,001
92
2
2,338,274
1,057,102
12,184,356
5,767,125
600,000
9,589,225
17,791,793
3,829,509
13,962,284
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ECONOMIC REVIEW FOR 2010
AND PROSPECTS FOR 2011
The economy leveled out in 2010, and a balance of external payments and receipts was achieved, with the benefit of
some market borrowing and official inflows. Preliminary estimates suggest that the economy contracted by just 0.4%,
compared to a decline of 4.7% in 2009. However, the anaemic performance of North Atlantic economies meant that
tourism and international business and financial services (IBFS) did not live up to expectations, and the knock-on effects
depressed cash flows throughout the economy. As a result, unemployment increased somewhat.
The current account deficit widened to 7.4% of GDP in 2010, from 6.6% in 2009. A 29% percent increase in the price of
fuel drove up fuel imports by one third. In addition, imports of food and beverages grew by 8% and imports of motor cars
increased by 22%. In contrast, imports of construction materials fell by 11% and imports of machinery were down 9%.
Inflation was somewhat higher in 2010, mainly as a result of import prices. The 12-month moving average inflation rate
was estimated at 5.4% at the end of October, compared with 4.4% a year earlier. Other factors contributing to rising
inflation were higher prices for food, housing and transportation.
Domestic interest rates edged downwards, as US short term interest rates appear to have settled at minimum levels for
the near future. The average rate on domestic 3-month Treasury bills fell by 0.09 percentage points to reach 3.35% in
December, narrowing the gap with the US Treasury bill rate by 0.14 percentage points. Loan rates have slipped, reducing
the spread between the loan and deposit rates to 6.4% in October, from 7% a year earlier.
Reflecting the overall economic stagnation, there has been little movement on either side of commercial banks’ balance
sheet. Deposits registered a 2% decline and loan amounts outstanding were up 1%. Liquidity in the system dipped by
$50 million, with excess bank reserves in cash and with the Central Bank at $129 million.
The commercial banking sector faced increasing loan delinquency during the first three quarters of 2010. The ratio of nonperforming loans to total loans reached 11% at the end of September 2010, compared to 5% one year earlier and 8% at
the end of 2009. The worsening in credit quality is broad based across the commercial banking sector, with some banks
reporting non-performing loan rates above 5%, mainly on account of large commercial loans. Nevertheless, commercial
banks all remained adequately capitalized. At September 2010, the capital adequacy ratio (CAR) for the banking system
was 18%, well above the regulatory minimum of 8%.
OUTLOOK
The Barbadian economy should expand by approximately 2% during 2011, as tourism continues to improve and other
key sectors rebound. Beyond 2011, the economy is expected to achieve a 3% rate of growth, as the effects of the global
crisis abate.
This outturn is dependent on a number of factors. First, a full recovery in the tourism sector, which is possible in 2011,
provided that arrivals increase as projected from the main source market, the UK. All Barbados’ source markets will benefit
from intensified marketing initiatives, along with additional seat capacity out of the US West Coast and South America.
Secondly, the international business sector should benefit from the general revival in global activity, as well as the signing
of new tax treaties.
Thirdly, private capital inflows are expected to pick up, to fund projects such as the Four Seasons, Port Ferdinand, Merricks,
Palisades and the new Barbados Light and Power plant. These projects should serve to boost activity in the non-traded
sectors, particularly wholesale and retail, as well as construction.
With the resumption in economic activity, the unemployment rate is not expected to widen further during 2011 and prices
are expected to stabilise, as oil and international commodity prices moderate.
(Extracts from the Central Bank of Barbados Economic Report- December 2010)
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PRESIDENT’S MESSAGE
POSITIONING FOR SUCCESS
Success in today’s world is measured by the amount of frills and
thrills that can be generated. However, the hard reality of the
Credit Union movement is that people remain at the centre
of its existence. Hence, Credit Union organisations have
to measure their success in terms of the difference they
make in the lives of their members. In positioning
the organisation for success it is important that
we recognise the needs of the members and
equip the Credit Union to fulfil those needs. By
aligning savings, expenditures, service delivery,
loan quality and investments with goals
and objectives, the probability of success
dramatically increases, transforming the
dreams and aspirations of our members into
reality.
I am pleased therefore to report that COB
continues to create value for our members
and to position them for success while
manoeuvring through one of the worst
recessions our country has seen. During
the financial year COB continued to provide
progressive tools and resources to our members
to assist them in managing their personal and
business finances. Whenever our members faced
challenges at other institutions, whether these
challenges resulted from threats of losing their
homes or vehicles as a result of pending foreclosures
or a significant increase in fees, we provided humane
and practical solutions to the issues they faced. Our Credit
Union has come through a difficult time for many businesses
and continues to display great fortitude despite the challenges
from within and without.
Combined Stability and Growth
In a year where many financial institutions experienced significant declines in fortunes, COB grew its membership and
deposit base in a safe and sound manner. Our back to basics approach positioned us to focus on our core strengths
and by making adjustments to our overall operations, we experienced a successful year. In particular we welcomed
more of our family, friends and neighbours into the COB family’s growing membership to the tune of more than two
thousand individuals. This can be attributed to our partial retreat to our core cooperative philosophy which emphasises the
importance to the individual of obtaining rational, sound and responsible decision making.
Back to the Basics
In 2011, we continued to strengthen our overall risk management processes while also helping our members find solutions
to their financial challenges, many of these facing credit problems for the first time. By redoubling our focus towards our
members who experienced reductions in their disposable incomes occasioned by increased inflation, taxes and jobs losses,
we have been successful in saving the homes and other valued assets of over one hundred members.
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During the year, we also noticed existing members adding more products and services to their accounts, which is a positive
result of comparing the service and value received at COB with their previous providers. If our fast-paced Web Interactive
society has taught us anything, it is that customer convenience is an ever changing concept and businesses must adapt to
survive. At COB, we have always offered our member- owners multiple automated ways to do business at our institution.
Some of our options include our Easy Teller, Interactive Voice Recognition Solution Easy Voice and our online banking
solution all of which saw significant increases in activity during the year.
Corporate Governance
At the heart of our long, sterling record of success is a strong foundation of corporate governance and a well developed
culture of accountability, openness and integrity. We have a tradition of working together to maintain our core values
which have been the heart and soul of our operations since coming into existence some twenty- seven years ago. Our
strength in this area has not only contributed to our stability in uncertain economic times, it has helped us to build, balance
and maintain strong, enduring relationships with our varied and valued stakeholders.
Everyone at COB shares responsibility for protecting and maintaining the culture starting with me and my colleagues on
the Board of Directors as well as our associates on the Credit and Supervisory Committees. The Board’s role is to supervise
management’s operation of the Credit Union for the benefit of its many stakeholders. Our policies are designed to ensure
the Board’s independence and its ability to carry out its mandate. We are constantly reviewing our policies in this area,
bench-marking them against best practices in Board governance.
Looking to the Future
The coming year will continue to bring changes to our Credit Union. One of the changes anticipated is the review of the
organisation’s governance process in relation to the election of members to the Board of Directors as well as the Credit
and Supervisory Committees. During the year two attempts were made by this Board without success to change the
organisation’s by-laws to comply with best practice as well as existing legislation. While these attempts have failed for
various reasons, it is imperative that this matter be addressed and settled during the coming year. The Board is obligated
to continue supporting processes which address any perceived weakness in the organisation’s governance process during
the new financial year.
As we head into 2012 and beyond, COB pledges to continue to enhance our technologies to better serve and communicate
with our members. Overall we will maintain our cautious optimism and push forward as a strong organisation that offers
everything you need in a co-operative financial institution. Again I emphasise we must remind ourselves of our roots and
seek to stay close to our philosophical moorings. It is these same principles which emphasise a sense of thrift and industry
which remains the enduring legacy of this great movement of which we are a part. It is a commitment to remain relevant
to the needs of people regardless of class, race or creed. This is our enduring legacy and I ask that you permit us to
continue to be faithful to our membership in being the “Financial Institution with a Difference”.
I thank you.
Yours co-operatively,
James Paul
President,
Board of Directors.
29
BOARD OF DIRECTORS’ REPORT
MOVING FORWARD
Life is seldom constant and the same is true for your finances. They are forever evolving, influenced by a fluctuating
economy, changes in family dynamics, major events and new goals. The City of Bridgetown Co-operative Credit Union
Limited (COB) is here for you through it all, providing service and financial support for every aspect of your changing life.
We are the one constant on which you can rely.
Dear Members
During the year we continued to make improvements in our operations notwithstanding the challenging economic
environment in which we operated. We have a vision for our Credit Union, a strategy to achieve that vision and well
defined operating principles to help guide our work in pursuing our goals.
Consistent with this, our work in 2011 focused on generating improved results in the following critical areas:
• Finance
• Membership
• Internal business
• Learning and Growth
FINANCE
Our expectations in this area for the year under review were influenced by the economic challenges occasioned by recessions
within the North American and European markets, with consequential trickle-down effects in the Caribbean. Our focus
was therefore directed primarily towards efficiency and expenses management as well as improved risk management of
the organisation’s loan portfolio. In this regard the following financial goals were set by the Board for the year:
• To pay from current year surplus a minimum dividend of 0.5% points above the average minimum savings rate.
• To attain a minimum capital ratio after dividends of 9.9%.
• To reduce loan delinquency marginally to 6.9 %.
• To increase our loan portfolio by a minimum of 5.0%.
• To increase our deposit portfolio by a minimum of 5.0%
• To generate a return on asset of 1.4%
Dividends
Our members through the purchase of shares have been the major risk bearers of the Society. In recognition of this fact,
the Board, consistent with previous years, has adopted a dividend policy which seeks to provide the holders of the Society’s
share capital with returns in excess of the rates paid on savings and other short term deposits held with commercial
banks. This is achieved whilst ensuring that not more than 60 % of the Society’s surplus for the year is appropriated as
dividends.
Your Board has therefore decided to recommend a dividend payment of 3.0% for the year. This proposal which is 0.5%
points above the average minimum savings rate for the year and in line with our target will cost approximately $2.2 million
30
(2010 - $2.0 million). The recommended dividend payment represents 49% of the net comprehensive surplus for the
year.
Capital Management
Optimizing the use of capital is a critical component of our strategy. Dynamic capital management supports our day to
day operations, allows us to take advantage of growth opportunities aligned with our strategy, cushions our risk exposure,
and ensures that we are able to meet increasing regulatory demands and changes, while providing our members with a
solid return on their investment.
During the year, the Credit Union continued to improve its capital position. This was achieved while improving our proposed
dividends to our shareholder members. At year end the capital position net of proposed dividends stood at $32.0 million
or 10% of assets. This compared favourably with the targeted position of $31.0 million or 9.7% of total assets and with
$29.7 million or 9.7% of total assets recorded at the end of the previous year.
Loan Management
As anticipated, our members continued to be negatively affected by the declining economic environment as increases
in the cost of living occasioned by increased costs of commodities and oil prices continued to impact harshly on their
finances. Your Board remained focused in its thrust to ensure that members continued to benefit from the solid support
of the organisation through these trying times.
We are therefore happy to report that during the year we were able to provide additional financial cushion to eightyfour of our members who suffered significant reductions in their income levels, consequently saving their homes and
other prized possessions. Notwithstanding our success in this area, we remain very concerned as to the increase in the
level of loans delinquent over 90 days. At year end loans delinquent over 90 days had increased to 8.5% up from 6.9%
recorded at the end of the previous year. Further, your Board recognises the importance of improving the overall quality
of the loan portfolio. In this regard your Board has continued to monitor monthly the performance of the loan portfolio,
subjecting it to regular stress testing which considers the impact of plausible but extreme scenarios on the performance
of the portfolio.
Your Board has also strengthened the capacity of the Collections unit by providing relevant training in the area of financial
counselling and collections management in a concerted effort to provide more effective credit assistance to our members.
However, to allow for more proactive delivery of assistance in this area, we are once again requesting that members who
experience negative changes in their financial circumstances contact the Society in advance of their loans falling into
arrears. Prompt action will provide for more timely intervention by our capable staff thus reducing the possibility of a
negative credit rating with the Society.
While our focus during the year has primarily been directed towards improving the quality of our loans portfolio, we
continued to experience growth in carefully selected areas of the loan portfolio. The growth strategies applied during the
year have generated positive results with the loan portfolio growing by 6.6% which compares favourably with targeted
results of 5.0% and actual growth of 3.5% attained in the previous year.
Savings Mobilization
Stemming from the modest growth in savings of 3.7% achieved in the previous year, total savings showed improved
results with registered growth of 4.5% marginally above the targeted result of 4.0%.
Your Board remains concerned about this continued weakened performance. In addition with the removal of the various
tax concessions for credit union savings effective January 1, 2011, it is envisaged that savings with the Society will be
31
further negatively affected. Consequently, your Board will seek to address these challenges through the following strategic
measures:
• Adoption of an effective member education initiative focusing on the Society as an indigenous organisation that is owned and operated for the benefit of its members.
• Redesigning, rebranding and increased marketing of our savings products directed towards the following market segments:
MEMBERSHIP
During the year, your Board of Directors sought to achieve the following targets in this area:
• Increase youth membership by a minimum of 5.0%
• Undertake a membership satisfaction and awareness survey and attain a minimum membership satisfaction score of 85%
• Reduce the number of members who terminate membership due to service issues and/or who transfer to another financial institution by a minimum of 30%.
1. Retirement planning
2. Our youth
3. Young professionals
4. Micro, small and medium sized Businesses
5. Members aged over 50 years
Our youth - The Agents of our Future Growth
6. Barbadian Diaspora in the UK and USA.
During the year, your Board continued to focus on our youth through increased attention to the COB CARES Programme.
Since its conceptualization some three years ago, this programme has grown by leaps and bounds contributing significantly
to growth in membership and total savings.
• Increased linkage of our savings and loans products with value added products and services of carefully selected strategic partners.
Assets productivity
For the first time this year the Board has implemented a measure to assess the level of productivity of the total assets
employed in the Society. This measurement which is calculated as the ratio of net comprehensive surplus before dividends
to the average total assets under management for the year will be used as a gauge to determine the extent to which the
Society’s assets have been effectively employed for the year under review. A lower than expected ratio can be linked to a
higher than anticipated level of concentration in low yielding or non-performing assets and or a higher than anticipated
level of expenses.
During the year, the average return on assets attained was 1.4%, in line with target. Your Board is committed to achieving
a long term target of 2.5% in this area and as such has agreed to the following strategies to achieve this:
• Grow membership by a minimum of 4%
• Reduce number of members with less than $150 by 3.0%
• Grow liaison programme to a minimum of 100 members.
At year-end this strategic segment of membership accounted for 7,612 or 16 % of members representing an increase of
7.2% from the 7,100 which existed at the end of the previous year. Total savings held by these members were $9.3 million
or 3.7 % of total savings representing an increase of 33% from the $7.0 million held at the end of the previous year.
Consistent with the previous year, the annual Maxine Mc Clean CARES Awards Ceremony was held at the Lloyd Erskine
Sandiford Convention Centre. The marquee event of our youth program saw a record number of our youth being rewarded
through scholarships and grants for their dedication and commitment to success at the various stages of study. A total of
37 scholarships and 22 grants were awarded during the year at a total cost of $102,000, as compared to 28 scholarships
and 16 grants awarded last year at a total cost of $73,000.00.
The COB CARES Work Attachment Programme was re-launched with great success. The Programme which exposed ten of
our brightest youth to the operations of the Society over an eight week period, received over three hundred applications
from eager youth. It is envisaged that this programme will not only provide the opportunity for our youth to have hands-on
experience about the world of work but will act as a pool from which we can draw future potential employees.
• Effective capital management
• Competitive advantage through effective leadership
• Prudent risk management and appetite
• Efficiency and expenses management
Member Satisfaction, the Fuel that Drives our Success
• Quality advice and service to ensure sustainable and profitable revenue growth.
Our success is totally dependent on the value that our members place on how we interact and deliver our services to them.
In the second quarter we signed on to the National Customer Satisfaction Index. The survey which covered 16 institutions,
gathered empirical evidence of customer satisfaction with regard to the service delivered by the surveyed organizations.
The results placed COB fifth with an overall score of 78%. The score attained fell short of the 85% attained by the leading
organisation surveyed. The Board is committed to improved performance by the next survey period and as such has agreed
on a number of initiatives directed towards this objective.
32
This segment of membership will continue to be of critical importance to the Society. In this regard, your Board has
established very aggressive growth targets which will see this segment contributing at least 10% of the Society’s growth
levels within the next five years.
33
Membership Retention and Increased Penetration
Efforts continued during the year to increase membership as well as the level of their savings held with the Society by
reducing the number of members who closed their accounts with the Society as a result of dissatisfaction with the service
delivered to them transferred their accounts to other financial institutions.
During the year, a total of 203 members for a value of $323,000 closed their accounts as a result of dissatisfaction with
the service provided and or transferred to other institutions, representing a decrease of 24% from the 269 accounts closed
for the same reasons in the previous year.
Strategies which were implemented to increase the number of new members as well as reduce the number of members with
less than $150 on their share accounts have begun to show results. We are therefore pleased to report the following:
• Number of new members recruited for the year was 3,108 representing an increase of 20% over the previous year’s performance in this area.
• Number of members with total savings of less than $150 at the end of the year, reduced by 6 % and amounted to 12,436.
Your Board remains very concerned about the high concentration of members with less than $150 in savings in the Society
and as such has agreed to a number of initiatives with education as its pivotal theme to address this area of concern.
• To ensure that all documents to be presented at the meetings of members are distributed at least seven days prior to the meetings.
• To convene at least three meetings with the members of the Credit and Supervisory Committees.
Regulatory Compliance and Corporate Governance
During the year, the Board of Directors met monthly to provide strategic leadership and guidance and also to monitor the
operating performance and the proper functioning of our systems of internal control and governance. The focus of the
Board encompasses the definition of strategy for our Credit Union and the creation and optimization of value and services
for our varied membership, all within the risk control and governance framework. Your Board remains confident that this
mandate is being effectively executed and that we have been able to maintain our strategic momentum.
In recognition of the proposed changes to the regulatory framework with the establishment of the Financial Services
Commission, your Board has attended various sessions directed towards ensuring that persons involved are equipped
with knowledge of the new regulatory requirements. In addition your Board has mandated that management implement
a comprehensive training programme for all staff, other elected officials and interested members in connection with the
new requirements.
We are happy to report that once again we have maintained positive relations with all regulatory authorities during the
year and have met with the Credit and Supervisory Committees in joint sessions twice during the year to discuss matters
of strategic importance.
Improved Wealth Accumulation through Initiatives directed towards our Member Entrepreneurs
Consistent with previous years, your Board continued to reinforce previously articulated strategies directed towards our
member entrepreneurs through the enhancement of the COB Business.net initiative. In this regard we are now pleased to
report the following achievements:
The training of the Board is critical to the effectiveness of our corporate governance systems. In this regard, a number of
members of the Board were exposed to relevant training. In particular we have a number of individual members of the
Board currently registered in the ISP programme sponsored by the League.
• We are at the advanced stage of developing a dynamic web solution which will provide members with the capability to register their businesses on line.
Your Board convened two Special General Meetings with members to address matters relating to relevant By-Law changes.
These changes which are deemed necessary for full and effective compliance with the law relating to the nomination and
appointment of persons to the Board of Directors as well as the Credit and Supervisory Committees were not approved.
Because of the critical nature of these changes, your Board has decided to have the matter addressed at a future meeting.
We therefore look forward to your participating in the debate and subsequent approval of the changes being proposed.
• The database increased to 248 members by year end.
The Board is especially pleased at the wide cross-section of businesses covered in the database.
INTERNAL BUSINESS
The capacity to attain our goals is directly influenced by the quality and effectiveness of the processing and delivery
systems which we have to support our products and services.
Consequently the following targets were set for the financial year:
• To introduce or significantly improve at least two (2) new channels for the delivery of products and services to our members.
• To update our By-laws and policies to provide for more effective corporate governance and accountability.
• To ensure that cordial relations are maintained with the regulatory authorities and that all of our regulatory and statutory requirements are met.
• To take action in connection with all matters arising from the meetings of members and, where not possible, provide sound reasons for not so doing.
34
Enhanced productivity, business processes and distribution systems
Our capacity to attain the optimum level of operating efficiency is determined by continuously enhancing and developing
our employees, business processes and distribution channels. To this end, your Board is happy to report on the following
achievements in this area during the year:
• Commissioning the Verifast system- This innovative system allows for the accurate and speedy retrieval of members’ accounts at the teller wicket with the swipe of the members’ Easy Access Card. Given the fact that the system is pin based it also improves the security attached to members’ accounts.
• Completed acquisition of the Accelerant Collections System- The programme will provide our Collections Unit with tools which will allow for greater productivity of the Unit. In addition it will enhance the department’s capacity to improve the quality and timeliness of service provided to members.
• Completed the acquisition of the Contact Centre Call Manager Programme- This upgrade will bring significant
improvement in the routing, management and quality control processes in the call centre. Once fully commissioned,
35
members will benefit from increased speed whilst attempting to contact any of Team COB’s members. In addition
to the synchronization of the call centre system with the Easy Voice Channel, members will be able to seamlessly
access their accounts utilising voice recognition technology.
It is a great disappointment that the Board was unable to launch the co-branded White Label Master Card with a potential
banking partner during the year. While work continued earnestly on this project during the year, we were unable to
overcome some challenges relating to the launch of the card. Your Board remains committed to the success of this
initiative and therefore has pledged to work feverishly during the coming year to ensure that it is brought to fruition.
the Society’s finances. During the year the Board after careful consideration, took the decision to write off the investment
of $277,000 in Sunbeach Communications Inc.
A further $500,000 was invested in COB Financial Services Inc. to assist with the financing of its various projects. At year
end, these projects were at various stages of completion. The following achievements were realised by the company
during the year:
• The infrastructural work relating to development of the land at Four Roads,St. Philip was completed. The
development which covers thirty two lots is available to members at a price of $23 per square foot and to nonmembers at $25 per square foot. To date, a total of four persons have given firm commitments for the purchase
of lots, while another seventy persons have expressed interest in acquiring lots. It is envisaged that, based on
costs incurred to date, the project will generate a net profit of $450,000 for an average return of 17% over the
period of the investment.
LEARNING AND GROWTH
Membership and Employee Education- the key to our ongoing success
Your Board remains ever cognisant of the importance of having a well informed and appropriately trained membership
and staff. If we are to achieve our goal of being your preferred financial institution, then we must migrate our processes
and systems from being transactional to advisory. Such a major shift will, however, only be attained if we enhance
the knowledge base of all members of Team COB. It is against this backdrop that we continued to make significant
investments in the training and development of our people. Our staff and executives were exposed to cutting edge
training opportunities at local, regional and international levels all directed towards the goal of sharpening our skills and
knowledge in the quest to be your trusted financial advisor.
• The insurance division generated $34,000 in income for the year. The strategies implemented in the previous
year have begun to bear fruit with gross income generated being 62 % higher than that achieved in the previous
year. Once again this year, we wish to remind our members of this business line and encourage them to take full
advantage of the very competitive premiums and quality services offered by COB FSI relative to their insurance
needs.
We continued our contribution to the Institutional Strengthening Project sponsored by the Barbados Co-operative & Credit
Union League and we are happy to report that several of our staff members, elected officials and general members were
able to benefit from this training. We are very proud that your Credit Union had the highest number of persons who were
awarded certificates of completion and or participation in this programme among all Credit Unions in Barbados.
• The continuation of work on the mutual fund initiative. At year end the legal process relating to registration of
the fund with the Financial Services Commission was at an advanced stage. It is envisaged that the fund will
be launched during the last quarter of the next financial year. The establishment of mutual funds by an entity
controlled by the Credit Union Movement is critical to the sustained growth of the movement given the recent
changes to the tax legislation which removed the tax benefits originally offered to credit unions coupled with
the proposed implementation of withholding taxes on income earned on members’ deposits held within credit
unions. Your Board anticipates the successful launch of the completed initiative.
We encourage all members to take advantage of this invaluable training which is provided at no cost.
A hallmark of our Credit Union is our attention to members’ financial education and well being. In previous years, we have
delivered our various training programmes utilizing the traditional class room settings. In recent times, this model has
generated very low attendance levels. With effect from this year, we have embarked on delivering these sessions utilising
radio. Overwhelmingly, the comments that we have received in respect of this new approach have been positive and
insightful. Members can look forward to such programmess continuing in the New Year.
Following on from the previous year, the fourth scholarship for a member to attend the Caribbean Confederation of Credit
Unions (CCCU) Convention to be held in Curacao was awarded to Mr. Clarence Chandler.
RELATIONS WITH THE BARBADOS CO-OPERATIVE & CREDIT UNION LEAGUE
The COB Credit Union Limited maintained very cordial relations with the League and contributed significantly to its
various programmes and initiatives. During the year, the League coordinated a series of educational training seminars and
workshops open to both members and employees of credit unions.
At year end the Credit Union was represented by Mr. Glyne Pilgrim as Vice President of the Board of Directors and Ms.
Lynette Holder, member of the League’s Credit Committee.
Condolences
We extend our sincerest condolences to all members of the COB family who have lost loved ones during the year. May
those departed rest in peace and may the Lord provide comfort to their surviving relatives.
Moving ahead in 2011
As we turn our sights towards 2012, we remain aware of the challenges which our members will continue to confront
given the expected weakness in the economy. We understand that our members will continue to be prudent as they work
with reduced incomes and a continually increasing cost of living. As your trusted financial partner we will be there with
you every step of the way. We will use this opportunity to become more relevant and effective. In this regard, we look
forward with great optimism to launching of the following initiatives during the coming year:
• Mobile banking services inclusive of bill payment services
• New loan products for business owners and retired members
INVESTMENTS IN CO-OPERATORS GENERAL INSURANCE LTD., SUNBEACH COMMUNICATIONS
INC. AND COB FINANCIAL SERVICES INC.
• Discount programme for our CARES members
• Signature and identification capture at teller wickets
These investments continued to engage the Board’s attention during the past financial year. Results for the year ended
March 31, 2011 show that Co-operators General Insurance Limited continues to be profitable, contributing $290,000 to
• Leadership camp for CARES members
36
37
TREASURER’S REPORT
• Expansion of services provided by contact centre
• Twenty-four hour turnaround time for salary and payroll remittances
• Loyalty programme for membership
• International credit card services
• Retirement and wealth management services
• Twenty-four hour loan by phone services
• Increased marketing and promotion of our services at our electronic touch points
• Revamping our Web site and launching a Face Book Web Page
• Launching our quarterly community promotional event.
The economic slowdown currently being experienced across the Caribbean
continues to test the resilience of the credit union. The pillars that the
City of Bridgetown Co-op Credit Union rests upon, such as customer
service excellence, prudent financial management and sustainable
growth remain at the forefront as management decisions were
executed to keep the Credit Union on a growth path.
We invite you to continue to share the gift of membership with all your friends, family and neighbours by inviting them
to join your Credit Union-COB.
Despite the challenges we are pleased to report that 2011
was another year of growth as our asset base continued
to grow. Your Credit Union has continued to provide
a secure and rewarding environment for all members
to invest and prosper. Once again, the Auditors
have issued an unqualified opinion on the financial
statements for the year ended March 31, 2011. The
challenging economic environment during the year
resulted in the continued focus on reducing expenses
and improved risk management processes, as well as
operational efficiencies to ensure profitable results.
In addition, as you need future financial services, check the value of the services offered at COB and minimise the time
spent in finding true financial value. We thank you, for allowing us to provide your financial services solutions and we
appreciate the opportunity to serve you. Finally we offer our sincerest thanks to the Management and staff as well as the
members of the Credit and Supervisory Committees, who have worked tirelessly to make this year a success for the Credit
Union.
The challenging economic environment did not
directly have an adverse impact on our loan services
since loans issued to members during the year ending
March 31, 2011 increased by $17 million compared
to the sum of $11 million for the corresponding year
ending March 31, 2010.
James Paul
President
Peter Earle
Vice President
Lindell Earle Treasurer An operating surplus of $3.9 million representing a decrease
of $3.3 million or 46% below last year’s position of $7.3
million was recorded. These results will afford the opportunity
for members to receive a satisfactory dividend yield on their shares
in the current economic climate.
Elridge Dixon
Assistant Secretary
David Jean-Marie
Director
Adrian L. Griffith
Director
38
Adlai Stevenson
Secretary
39
INCOME STATEMENT
Net Interest Income
EXPENDITURE
Net interest income of $14.2 million was 2.07% below that of the previous year with interest expense totalling $6.5
million on par with the previous year. The below table identifies the major factors which impacted on these results:
Gross Loans
Loan Interest
Investment income
interest expense on members’ savings
Interest on long term loan
Fair value gain on investment property
Other Income
Provision for impaired loans
Other expenditure
Net surplus before distributions
2011 Actual results2010 Actual results
$ millions
% change
$ millions
% change
266.8
6.8%
249.8
4.2%
21.1
(1.7%)
21.6
(0.6%)
1.0
(32.1%)
1.5
(24.6%)
6.5
(0.4%)
6.6
(10.6%)
0.4
(9.1%)
0.4
(8.4%)
0.0
(100.0%)
5.6
0.0%
1.4
(9.9%)
1.5
(17.2%)
0.7
(81.3%)
3.8
275.3%
12.0
(1.0%)
12.1
1.1%
4.2
(45.6%)
7.6
54.9%
The expenditure for the year totalled $12.7 million decreasing by $3.1 million or 20.1% over the corresponding period in
the previous year. The major contributors to the increase experienced were as follows:
Operating expenses
Operating expenses incurred for the year totalled $11.2 million with a decrease of $0.4 million or 3.7% compared with
the previous year. A positive variance was noted in the marketing and promotion, advertising and member relations of
$150,000, while there was a decline in professional fees by $155,000.
Provision for impaired loans and insurance reserve
The provision for impaired loans decreased by $3.0 million or 92% over that for the previous year.
Loans Income and Yields
The increased growth attained in the loans portfolio was not reflected in income from loans which decreased by 1.7% or
$366,000 for the year ended March 31, 2011, while the average loan yield increased marginally to 9.0% compared to
the 8.8% attained in the previous year in this sphere. The increase was occasioned by an increase in the interest rates on
loans granted during the year in line with reductions in the interest rates on savings as mandated by the Central Bank of
Barbados.
Interest Expense and Cost of Funds
There was not much variation in the interest expense relating to membership deposits which totalled $6.53 million when
compared to the amount paid in the previous year of $6.56 million. The interest expense on the long-term loan from
the National Insurance Department, which was granted to support the organization’s long-term mortgage programme
totalled $365,000.
Other Income
The total other income of $2.3 million was $6.2 million or 72.6% lower than the previous year’s total of $8.6 million. This
was attributed mainly to the prior year’s inclusion of a fair value gain on investment property of $5.6 million.
Equity Share of Associated Company’s Profit
As at March 31, 2011, Co-operators General Insurance Company Limited (CGICL) reflected a total asset base of $5 million.
Based on COB’s 17% interest in CGICL, an equity share adjustment of $289,978 was recorded, compared to $330,979
for the previous year.
The following is an analysis of “Other Income” and the “Equity Share of the Associated Company’s Profit” (CGICL).
2011 Actual results2010 Actual results
$ millions % change $ millions % change
Investment income
996,239 (32.1%)
1,469,133 (24.6%)
Rental Income
334,101 (0.6%)
336,258 (9.9%)
Processing Fees
479,081 (25.9%)
646,501 (35.1%)
Other fees and income
484,881 (5.0%)
510,560 27.5%
Share of profits (loss) in CGICL
289,978 (25.7%)
330,979 19.7%
40
41
BALANCE SHEET
Total Assets
Total assets at end of the year stood at $319 million with an increase of $14 million or 4.66% compared with the previous
year. The main contributor to this increase was Loans to members, which recorded an increase of $17 million, despite the
weakened economic environment. Of particular note is the fact that over 37% of the growth achieved in the loan portfolio
was directed to the provision of housing solutions for our members.
Total Liabilities
Total liabilities at the end of the year stood at $285 million representing an increase of $11 million or 4.28% over the
previous year. The primary growth achieved within the Society was in the area of savings and share deposits, which stood
at $200 million increasing by $16.1 million or 8.79% as compared with the previous year.
“rebranded and revitalized products we are in a position to help our members achieve Prosperity - our vision, your way of
life “(extract from annual report theme 2011).
..................................
Lindell Earle
TREASURER
BOARD OF DIRECTORS
Risk Management
Risk is a part of business that can be managed, though seldom avoided. During the year the Credit Union followed sound
business practices to protect its assets against risks. The Board of Directors and the Executive Managers worked together
as a team to identify, measure and control risk. Executive Managers focused on the operational area, paying particular
attention to liquidity and interest rate risk. Some of the risk management tools employed during the year included internal,
administrative and accounting controls as well as the deployment of stress testing models.
Liquidity Management
Liquidity management ensures that the demand for funds is met during the year. Executive Managers during the year
balanced the need to maintain adequate liquidity with the need to earn income. The Credit Union’s cash and convertible
assets were adequate to meet the demand for loans and withdrawals. Management is cognizant of the fact that economic
changes and government policies can affect interest rate movement and these interest rate fluctuations can seriously affect
liquidity and operating surpluses. Inflation is detrimental to the Credit Union; consequently management has factored in
the rate of inflation in the projected cash-flow analysis as part of its budgeting process.
In an effort to shore up the Society’s liquidity position as well as to address the asset liability mismatch occasioned by the
members’ increasing demand for loans with longer maturity profile, the Board, after undertaking a stress testing of the
Society’s balance sheet and operating surplus, secured a $15 million long term loan facility with the National Insurance
Department. To date, the full sum of this facility remains available.
OUTLOOK FOR THE FUTURE
Economic prospects in Barbados are brightening very gradually, and are forecast to improve by the end of 2011. According
to the Central Bank’s preliminary estimates, output contracted by 0.4% in 2010, following a deep decline of 4.7% in
2009. On the back of a gradual recovery in tourism – and consequently in the retail and construction sectors where the
majority of our membership is employed, we will continue to monitor these sectors closely.
The International Monetary Fund assesses that the financial sector in Barbados will remain healthy, though it sees further
room for strengthening bank oversight. While nonperforming loans (NPL) have increased, solid capital bases provide
effective cushions.
We believe that in the coming year our members from the young to the old will benefit from a wide range of saving
instruments that can be found at City of Bridgetown Co-operative Credit Union Limited. After twenty-seven years, we are
confidently weathering the current economic challenges.
We will continue in the coming months to work with our members who face financial difficulties so as not to increase
the delinquency portfolio. We believe that with our improved operating efficiencies within the Credit Union and with
42
43
RISK MANAGEMENT POLICIES
OVERVIEW
Risk management is a cornerstone of prudent banking practices. A strong organization-wide risk management culture
provides the foundation for the Credit Union’s risk management programme.
The City of Bridgetown Co-operative Credit Union Ltd. assumes credit and market risks to generate a return on its capital
and members’ shares. The objectives of the risk management process are to understand, evaluate and manage the
relationship between risk and return, establish appropriate limits and control, and ensure that the Credit Union’s activities
are conducted in a sound and prudent manner.
The Board of Directors is responsible for approving risk management policies and key limits for the Credit Union’s risk taking
activities. The Board delegates the implementation and day-to-day oversight to Senior Management; Senior Management
in turn reports monthly to the Board on the Credit Union’s operations and risk performance.
CREDIT RISKS
Credit risks are managed through policies and standards established by the Board and are routinely reviewed. In addition,
the Board routinely revises and sets all credit limits. The Credit Committee reviews the policy, standards and limits under
which the credit is controlled and makes recommendations to the Board on any changes to the stated policies that may
be required. The Credit Committee assigns loan approval limits to all lending officers. All credit decisions are made in a
manner to ensure compliance with credit policies and to establish limits.
To achieve this objective, the Credit Union measures and forecasts its cash obligations, applies controls to its cash flow gaps,
maintains diversified sources of funding, sets prudent limits and ensures immediate access to liquid assets. Maintaining a
strong credit rating provides the Credit Union with the capacity to access borrowings at favourable rates and on favourable
terms. The Credit Union uses scenario testing to evaluate its liquidity and its ability to sustain operations under duress.
The Board of Directors annually approves cash flow projections as an integral part of its budgeting process.
The Credit Union depends on a wide range of funding sources and applies prudent limits to avoid undue concentration.
The principal sources of funding are share capital and deposits from members and non-members.
The Credit Union maintains large holdings of liquid assets, which can be used to sustain operations in the event of
unexpected disruption. At March 31, 2011, liquid assets were $26.8 million (2010 – $25.3 million) which translated into
8.4% (2010 – 8.3%) of total assets. At March 31, 2011 liquid reserves were augmented by the availability of $15.0 million
of approved long term borrowing from the NIS. When considered, liquid assets would increase to $41.8 (2010 – $40.3)
million or 13.1% (2010 – 13%) at year end.
The Credit Union offers long-term mortgages as part of its suite of loan products. These loans carry a maximum maturity
profile of thirty years which is well in excess of the maximum maturity profile of the Credit Union’s deposit portfolio of five
years. To squarely address this asset liability mismatch the Credit Union applies the following strategies:
•
A set ceiling on the maximum concentration of long-term loans in the loan portfolio. This ceiling which is reviewed annually is determined based on the following factors:
• A thorough analysis of the core deposits held in the deposits portfolio.
In addition, monthly reports and recommendations are made to the Board with respect to loan quality. This allows the
Credit Union to curtail lending in various areas when significant or niggling problems are noticed and to increase limits in
those areas when the risks and reward profile reveals opportunities for generating profitable business.
• Deposit trends over a ten-year period.
• The level of institutional capital of the Credit Union.
MARKET RISKS
• Market opportunities for the mobilization of long-term borrowings.
Market risks relate to risks of loss arising from changes in interest rates, market prices and volatilities that arise from the
Credit Union’s funding and investment activities. Interest rate risks arise when there is a mismatch between positions that
are subject to changes in interest rates over a specified period.
• Restriction of long-term mortgages to adjustable rate loans.
The Credit Union’s credit policies and limits are structured ensure diversification across various types of credit risks.
Limitations are set for exposure to individual members. The loan portfolio is reviewed quarterly for emerging trends in
credit quality. Various tools including the CAMPARI model are used to assess the credit worthiness of members.
OPERATIONAL RISK
Market risks are managed through policies and standards established by the Board and are reviewed annually. The Board
approves all risk limits and periodically reviews the risks and performance levels of the Credit Union’s various lines of
business. The Credit Union currently utilizes the following techniques for identifying, measuring and controlling market
risks:
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, human behavior and
system failures from external events. Operational risk losses can be categorized into the following types:
•
Errors or breakdowns in transaction processing including payments made to members and non-members.
•
Sensitivity analysis and simulation modeling
•
Liability arising from the failure to meet legislative or contractual requirements.
•
Gap analysis
•
Fines and penalties incurred as a result of failure to comply with regulations or legislative requirements.
•
Funding and investment activities
•
Losses due to theft, fraud or unauthorized activities.
•
Loss or damage to assets due to natural disasters or other accidents.
LIQUIDITY RISKS
Liquidity risks arise from mismatches in cash flow. The objective of the liquidity management is to ensure that the Credit
Union is in a position to honour all of its financial obligations as they fall due.
44
45
Operational risk is managed and controlled by business activity; a comprehensive variety of checks and balances has been
developed to address operational risks. Some of the safeguards developed to minimize the potential for losses to the
Credit Union include:
CITY O F BRIDGETOWN
CO - O PERATIVE CREDIT
UNIO N LIMITED
•
Continuous identification, assessment, measurement and management of operational risks facing the Credit Union.
•
Trained and competent staff, including a knowledgeable team committed to risk management.
Consolidated Financial Statements
•
Segregation of duties and delegation of authority.
F o r t h e year en d ed 31 M arc h , 2011
•
An organization-wide business continuity plan.
•
Policies approved and reviewed annually by the Board.
In addition, an experienced, qualified and independent internal audit team performs continuous audits. These audits
include comprehensive reviews of the design and operation of internal control systems as well as providing checks on the
reliability and integrity of the Credit Union’s data processing processes.
46
47
Skeete, Best & Co. Chartered Accountants
Tudor Bridge, St. Michael,
Barbados W.I.
Tel. (246) 424-6626 Fax. (246) 425-5348
Email: [email protected]
INDEPENDENT AUDITORS’ REPORT
To the Members of
City of Bridgetown Co-operative Credit Union Limited
We have audited the accompanying consolidated financial statements of City of Bridgetown Co-operative Credit Union
Limited (“the Credit Union”), which comprise the consolidated statement of financial position as of 31 March 2011,
and the consolidated statements of comprehensive income, cash flows, changes in members’ equity and schedule to
consolidated statement of comprehensive income for the year then ended, and a summary of significant accounting
policies and other explanatory notes.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and
maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Credit Union as of 31 March 2011, and its financial performance and its cash flows for the year then ended in accordance
with International Financial Reporting Standards.
Consolidated Statement of Financial Position
As of 31 March 2011
(expressed in Barbados dollars)
Notes
2011
Assets
Cash and cash equivalents
5
$ 10,214,359 Accounts receivable and prepaid expenses
9
697,472
Deferred charges
65,206
Interest due and accrued
1,127,540
Investments
7
23,538,346
Investment in associated company
6
1,552,018
Loans to members
8 260,898,573
Property, plant and equipment
10 11,883,367
Investment property
11
7,300,000
Development land for resale
12
2,895,644
$320,172,525
Barbados, W.I.
7 June 2011
$ 19,027,366
624,212
49,913
1,440,523
16,553,875
1,345,797
244,746,209
12,530,224
7,300,000
2,268,890
$305,887,009
Liabilities
Accounts payable and accrued expenses
14
$ 1,411,339 $ 2,482,222
Interest payable
564,107
479,060
Members’ deposits
13 200,218,035
184,033,941
Loan payable
15
6,277,778
6,944,445
Liabilities qualifying as regulatory capital
16
77,125,303
79,923,535
285,596,562 273,863,203
Members’ equity
Statutory reserve
17
18,386,445
16,866,530
Special funds
18
7,908,440 7,879,058
Savings and loans benefit fund
19
647,039
532,086
Fair value reserves
490,087
(201,386)
Undivided surplus
7,143,952
6,947,518
34,575,963
32,023,806
$ 320,172,525 $ 305,887,009
The accompanying notes form an integral part of these consolidated financial statements
Approved on 7 June 2011 by the Board.
Chartered Accountants
Restated
2010
James Paul
PresidentSecretary
Adlai Stevenson
49
Year ended 31 March 2011
Notes
2011
Interest income (expenses)
Interest on loans
$ 21,194,254
Interest expense – member deposits
(6,533,413)
Interest expense – loan payable
15
(365,185)
Other income
11
Investment income
Rent
Income from direct services
Gain on disposal of plant and equipment
Commissions
Net interest and other income
Equity share of associated company’s profits
Distributions
50
Operating expenses (per schedule)
8
Savings and loan protection
19
Impairment loss on available-for-sale investment
Loan loss recovery expenses
Affiliation dues
Total expenditure
Total comprehensive surplus CITY OF BRIDGETOWN CO-OPERATIVE CREDIT UNION LTD • ANNUAL REPORT 2010-2011
Net surplus before the following items
6
Net surplus before distributions
20
Net surplus
Other comprehensive income
Change in fair value of available-for-sale investments
7
The accompanying notes form an integral part of these consolidated financial statements.
Restated
2010
$ 21,561,238
(6,561,320)
(401,852)
Expenditure
14,295,656
14,598,066
-
996,239
334,101
963,962
31,504
34,110
5,646,275
1,469,133
336,258
1,157,061
43
20,682
2,359,916
8,629,452
16,655,572
23,227,518
11,259,019
700,000
360,000
277,778
31,804
75,000
11,693,135
3,753,000
360,000
1,216
75,000
12,703,601
15,882,351
3,951,971
7,345,167
289,978
330,979
4,241,949
7,676,146
(1,977,090)
(3,243,241)
2,264,859 4,432,905
420,530
(249,246)
$ 2,685,389
$ 4,183,659
Statutory Special Savings & Loans Fair Value Undivided
Reserves Funds Benefit Fund Reserves Surplus Total
$
$
$
$
$
$
Balances at April 1, 2009 - previously stated 14,534,884 7,848,685 340,587 (18,214)
4,986,237 27,692,179
Prior year adjustment (note 27)
275,383 - - 65,749 (95,268)
245,864
Balances at April 1, 2009 - As restated
14,810,267 7,848,685 340,587 47,535 4,890,969 27,938,043
Transfer
1,891,040 381,789 - - (2,272,829)
Net surplus
- - - - 4,432,905 4,432,905
Other comprehensive income: -
Available-for-sale investments
- - - (249,246)
- (249,246)
Members’ shares below minimum requirement
42,916 - - - - 42,916
Entrance fees and fines
18,780 - - - - 18,780
Net claims incurred
- - 191,499 - - 191,499
Utilised during the year
- (351,416)
- - - (351,416)
Group’s share of associate’s reserves
- - - 325 - 325
Transfer of associate’s net earnings
103,527 - - - (103,527)
Balances at 31 March 2010 - As restated
16,866,530 7,879,058 532,086 (201,386)
6,947,518 32,023,806
Balances at April 1, 2010 - previously stated 16,487,620 7,879,058 532,086 (267,460)
7,034,323 31,665,627
Prior year adjustment (note 27)
180,115 - - 66,074 111,990 358,179
16,667,735 7,879,058 532,086 (201,386)
7,146,313 32,023,806
Transfer
1,600,546 282,600 - - (1,883,146)
Net surplus
- - - - 2,264,859 2,264,859
Other comprehensive income: -
Available-for-sale investments
- - - 420,530 - 420,530
Reclassification of cumulative loss on available-for-sale investment
- - - 270,222 (270,222)
Members’ shares below minimum requirement
60,072 - - - - 60,072
22,796 - - - - 22,796
Net claims incurred
- - 114,953 - - 114,953
Utilised during the year
- (253,218)
- - (78)
(253,296)
Group’s share of associate’s reserves
(78,478)
- - 721 - (77,757)
Transfer of associate’s net earnings
113,774 - - - (113,774)
Balances at 31 March 2011
18,386,445 7,908,440 647,039 490,087 7,143,952 34,575,963
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated Statement of Comprehensive Income
Consolidated Statement of Members’ Equity
51
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows (continued)
2011
Notes
Restated
2010
Operating Activities
Net surplus $ 2,264,859 Adjustments for:
Depreciation
10
1,211,343
Amortisation
11
-
-
Impairment loss on available-for-sale investment
277,778
Interest expense – members
6,533,413
Interest expense – loan payable
15
365,185
Interest on loans
(21,194,254)
Investment income
(996,239)
Equity share of associate’s profits
6
(289,978)
Gain on disposal of plant and equipment
(31,504)
(11,859,397)
Loans to members
(16,152,143)
Accounts receivable and prepaid expenses
(73,260)
Deferred charges
(15,293) Accounts payable and accrued expenses
(1,070,883)
Members’ deposits
16,184,094
(2,798,232)
22,796
Savings and loans benefit fund
19
114,953
Members’ shares transferred to statutory reserve
60,072
Special funds payments
18
(253,218)
(15,840,511)
Interest received on loans
21,382,022
Interest paid – member deposits
(6,448,376)
Interest paid – long term loan 15
(365,185)
Net cash (used in) from operating activities
52
(1,272,050)
$
4,432,905
1,298,022
30,703
(5,646,275)
6,561,320
401,852
(21,561,238)
(1,469,133)
(330,979)
(43)
Notes
2011
Investing Activities
Investment income received
$ 1,127,454 Investments maturing – net
2,658,281
Investments acquired
11
(9,500,000)
Addition to development land for resale
12
(626,754)
Plant and equipment acquired
10
(569,630)
Proceeds on disposal of plant and equipment
36,359
Net cash (used in) from investing activities
Financing Activities
Loan payable
15 Restated
2010
$
2,022,126
6,165,220
(340,807)
(232,035)
43
(6,874,290)
7,614,547
(666,667)
(666,666)
(666,667)
(666,666)
(8,813,007)
7,128,634
19,027,366
11,898,732
Cash and cash equivalents, end of year
$ 10,214,359 $ 19,027,366
Net cash used in financing activities
(16,282,866)
Net (decrease) increase in cash and cash equivalents
(8,510,108)
(43,075)
(49,913)
876,536
11,826,997
(2,522,469)
18,780
191,499
42,916
(351,416)
Cash and cash equivalents, beginning of year
(14,803,119)
21,938,664
(6,552,940)
(401,852)
180,753
53
Schedule to Consolidated Statement of Comprehensive Income (cont’d)
Schedule to Consolidated Statement of Comprehensive Income
Operating expenses
Personnel
Salaries and wages
Employee education
Employee social benefits
Pension contribution
Medical insurance
Staff uniforms
Employee recruitment
Office
Utilities
Computer supplies and services
Postage and stationery
Office supplies
2011
2010
$ 5,171,413
134,908
103,859
83,244
56,904
-
4,225
$ 5,181,041
246,743
111,330
80,100
46,179
102,283
6,799
5,554,553
5,774,475
507,720
445,311
95,423
27,674
493,541
467,255
102,260
51,808
1,076,128
1,114,864
Notes
2011
2010
Operating expenses (continued)
Other
Depreciation
10
$1,211,343
$1,298,022
Marketing and promotion 342,600
290,375
Value added tax
306,786
342,081
Member relations expenses
287,491
238,987
Repairs and maintenance
263,609
154,989
Direct cost of service
251,600
208,050
Insurance
247,402
244,806
Advertising
212,172
164,647
Rental
210,717
221,302
Professional fees
183,258
338,960
Motor vehicle
139,740
116,781
General meetings
139,373
213,584
Security
137,957
152,972
Executive honorarium
124,500
122,600
Conventions
118,832
165,929
Property tax
101,790
101,790
Cleanings
90,726
113,276
Committee meetings
57,904
73,277
Collection fees
52,540
10,499
Interest and bank charges
51,740
20,923
Entertainment
37,186
35,762
Subscriptions
26,735
23,064
Annual Winston Alleyne Lecture
18,885
32,668
Anniversary
6,856
23,847
Annual Community Outreach
4,236
39,370
Miscellaneous
2,360
1,156
Amortisation of investment property
11
-
30,703
Bad debts written off
-
23,376
Total operating expenses
54
4,628,338
4,803,796
$ 11,259,019 $ 11,693,135
55
Notes to Consolidated Financial Statements
1. Incorporation
City of Bridgetown Co-operative Credit Union Limited (“the Credit Union”) was registered on 20 October 1983 as Society No.71 under the Co-operative Societies Act of Barbados 1990-23 (“the Act”). The Credit Union, in
accordance with Section 241(1) of the Act submitted the necessary documents to the Registrar of Co operative
Societies for its Certificate of Continuance, which was issued on 22 June 1994.
4. New standards, amendments and interpretations to existing standards (continued)
b) New standards, amendments and interpretations to existing standards that are not yet effective and
have not been early adopted by the Group
Management has reviewed the new standards, amendments and interpretations to existing standards that are not
yet effective and have determined that the following are relevant to the Group’s operations. The Group has not early
adopted the new standards, amendments and interpretations.
IFRS 9 Financial instruments phase 1: Classification and measurement
IFRS 9 was issued in November 2009 and replaces those parts of IAS 39 relating to the classification and measurement
of financial assets. Key features are as follows:
The registered office of the Credit Union is located at Lower Broad Street, Bridgetown, St. Michael.
4. Principal activities
The Credit Union and its subsidiary (“the group”) exist principally to promote the economic interests of their members
in accordance with co-operative principles.
The Credit Union owns 100% of the issued and outstanding common shares of C.O.B Financial Services Inc., a
company that was incorporated under the Companies Act of Barbados on 21 May 2001. It commenced operations
on 1 June 2008. Details of the subsidiary’s financial position are shown in note 25.
4. New standards, amendments and interpretations to existing standards
The International Financial Reporting Interpretations Committee (IFRIC) has issued new or revised interpretations
which are effective from the 2011 reporting date. The new interpretations are as follows: -
IFRIC 18 Transfers of Assets from Customers
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
IFRIC 18 and 19 have no significant effect on these consolidated financial statements.
a) Standards, amendments and interpretations effective in the 2011 financial year
The following amendments are effective and have been adopted by the Group as of 1 April 2010.
• IFRS 7 (Amendments), “Financial instruments” – Disclosures
The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the
amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. As the
change in accounting policy only results in additional disclosures, there is no impact on retained earnings.
56
• Financial assets are required to be classified into two measurement categories: those to be measured subsequently
at fair value, and those to be measured subsequently at amortised cost. The decision is to be made at initial
recognition. The classification depends on the entity’s business model for managing its financial instruments and the
contractual cash flow characteristics of the instrument.
• An instrument is subsequently measured at amortised cost only if it is a debt instrument and both the objective of
the entity’s business model is to hold the asset to collect the contractual cash flows, and the asset’s contractual cash
flows represent only payments of principal and interest (that is, it has only “basic loan features”). All other debt
instruments are to be measured at fair value through profit or loss.
• All equity instruments are to be measured subsequently at fair value. Equity instruments that are held for trading will
be measured at fair value through profit or loss. For all other equity investments, an irrevocable election can be made
at initial recognition, to recognise unrealised and realised fair value gains and losses through other comprehensive
income rather than profit or loss. There is to be no recycling of fair value gains and losses to profit or loss. This
election may be made on an instrument-by-instrument basis. Dividends are to be presented in profit or loss, as long
as they represent a return on investment.
• While adoption of IFRS 9 is mandatory from 1 January 2013, earlier adoption is permitted.
57
4. New standards, amendments and interpretations to existing standards (continued)
4. Significant accounting policies
c) The following standards and amendments to existing standards are not yet effective and are not relevant
to the Group’s operations:
Statement of Compliance
These consolidated financial statements are prepared in accordance with International Financial Reporting Standards
(IFRS). These policies have been consistently applied to all years presented, unless otherwise stated.
Basis of accounting
IFRS 1 (Amendments) –
First time adoption of IFRS: Limited exemption from comparative IFRS 7.
Disclosure for first-time adopters was issued in January 2010 and is effective
from 1 July 2010.
Severe hyperinflation and removal of fixed assets for first-time adopters was issued in December 2010 and is effective from 1 July 2011.
The consolidated financial statements are prepared on the historical cost basis except for financial instruments
classified as available-for-sale, investment property and investment in the associated company.
IFRS 7 (Amendments) –
Disclosures: Transfers of financial assets. These created new disclosure requirements
in relation to derecognised financial assets and are effective from 1 July 2011.
Critical accounting estimates and judgments
The preparation of consolidated financial statements in accordance with IFRS requires management to make certain
critical accounting estimates and to exercise its judgment in the process of applying the group’s accounting policies
described below. Other than the routine loan loss and investment impairment provisions, no significant estimates or
judgments have been required in applying the accounting policies which may have a material impact on the group’s
reported assets, liabilities, revenues and expenses. Actual results may differ from these estimates and any resulting
differences are recognized in the period of occurrence.
Financial instruments
Financial assets and financial liabilities are recognized on the group’s balance sheet when the group becomes a party
to the contractual provisions of the underlying transactions and the basis of accounting are disclosed in the specific
item identified.
Cash and cash equivalents
Cash and cash equivalents comprise savings accounts, short term deposits with a maturity of less than or equal to
ninety (90) days and cash on hand.
Interest income on short term deposits is based on contractual principal and interest rate and is recorded in the
consolidated statement of income.
Accounts receivable
Accounts receivable are carried at original invoice amount less an estimate made for doubtful receivables based on
a review of all outstanding amounts at the year end. Bad debts are written off when identified.
–
IAS 12 (Amendments) –
58
Deferred tax: Recovery of Underlying assets. These amendments are effective
from 1 January 2012.
59
4. Significant accounting policies (continued)
Basis of consolidation
Investments (continued)
A subsidiary is an entity over which the group has the power to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from
the date on which control is transferred to the group.
Available-for-sale investments are initially recognised at cost (which includes transaction costs) and are subsequently
re-measured at fair value based on quoted prices. Unquoted available-for-sale investments for which fair values
cannot be measured reliably are recognised at cost less impairment. Unrealised gains and losses arising from
changes in the fair value of available-for-sale investments are reported in other comprehensive surplus.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of
an acquisition is measured as the fair value of the assets given and liabilities incurred plus costs attributable to the
acquisition.
When the available-for-sale investments are disposed of or impaired, the related accumulated fair value adjustments
are included in the consolidated statement of comprehensive income as gains and losses from investments.
Inter-company transactions, balances and unrealised gains on transactions between group entities are eliminated.
An investment is impaired if its carrying amount is greater than its estimated recoverable amount. Management
assesses impairment of investments at the end of each financial year.
Associated company
Interest earned whilst holding investments is reported as interest income.
An associated company is a company or other corporate entity, not being a subsidiary, in which the group has a
long-term interest of generally not less than 20% of the equity voting rights and over which it is in a position to
exercise significant influence, but not control.
All purchases and sales of investments are recognised at trade date, which is the date that the group commits to the
purchase or sale thereof.
Loans to members
Loans to members are stated at cost net of provision for impaired loans. The cost is assumed to approximate the
fair value. Interest is recorded on the accrual basis and the accrual of interest ceases when installments are unpaid
for ninety (90) days, and at such time all accrued interest is reversed. In subsequent periods, interest received on
non-accrual loans is recorded as income only if management has determined that the loans do not require specific
provisions for losses, otherwise all amounts received are credited to principal. Non-accrual loans are restored to
an accrual basis when principal and interest payments are current and there is no longer any reasonable doubt
regarding collectibility.
Investments in associated companies are accounted for under the equity method of accounting and are initially
recognised at cost.
The Group’s share of associates’ post-acquisition profits or losses is recognised in the consolidated statement of
comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of
the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
Investments
Investments with fixed maturity, where management has both the intent and the ability to hold to maturity, are
classified as held-to-maturity. Investments to be held for an indefinite period of time, which may be sold in response
to needs for liquidity or changes in interest rates, exchange rates or equity prices, are classified as available-for-sale.
Management determines the appropriate classification of an investment at the time of purchase.
Provision for impaired loans comprises a specific provision made on an individual basis where management is of
the opinion that collection is doubtful, and based on asset classification, determined in accordance with guidelines
established by the Board.
Held-to-maturity investments, which comprise government securities, fixed deposits and bonds, are stated at
amortised cost less any provision for impairment.
60
61
Property, plant and equipment
Accounts payable
Property, plant and equipment are stated at cost, net of accumulated depreciation and any recognised impairment
loss. Depreciation is provided on a straight-line basis, at rates sufficient to write off the cost of the assets over their
estimated useful lives. The annual rates used are:
Accounts payable are recognised initially at fair value and subsequently measured at amortised cost.
In accordance with the requirements of IAS32 Financial Instruments: Presentation and IFRIC 2 Members’ Shares
in Co-operative Entities and Similar Instruments, the Credit Union has classified the amounts contributed by its
members for shares as financial liabilities since the members have the right to demand full repayment thereof. The
shares qualify as capital for regulatory purposes despite their classification as financial liabilities. Distributions to
members are also recorded as financial expenses in the consolidated statement of comprehensive income.
Interest expense
Interest expense on members’ deposits is based on contractual principal and interest rates and is recorded in the
consolidated statement of comprehensive income.
Taxation
The Credit Union is exempt from corporation tax under Section 9(1) (g) of the Income Tax Act.
Foreign currencies
Transactions originating in foreign currencies are recorded in Barbados dollars at the exchange rates existing at
the dates of the transactions. Assets and liabilities denominated in foreign currencies are translated into Barbados
dollars at mid-market rates existing at the balance sheet date. Gains and losses on exchange transactions are
included in the determination of income.
Buildings
Computer equipment
Computer software
Office equipment
Motor vehicles
Leasehold improvement
Furniture and fittings
-
-
-
-
-
-
2%
20%
20%
10%
20%
33 1/3%
10%
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales
proceeds and the net book value of the asset and is recognised in the consolidated statement of comprehensive
income.
Investment properties
Investment properties comprise land and buildings owned but not occupied by the Credit Union and held to earn
rental income or held for capital appreciation with possible future development potential. Investment properties are
recorded at fair value.
Transfers to or from investment properties are recorded when there is a change in use of the property. If an investment
property becomes owner-occupied, it is reclassified as property, plant and equipment. If any actions are taken to
develop or sell investment property, it is reclassified as development property.
Rental income from investment properties is recognised on an accrual basis.
Pension contributions
Development Land for Resale
Land under development or held for sale is classified as development property when actions are taken to either
develop or sell the land. Development property included all land acquisition and development costs included prior
to sale. Gains and losses realised on the sale of development property are included in other income or expenses in
the consolidated statement of comprehensive income at the time of sale. Sale is recognised upon execution of the
conveyance.
Effective 1 January 2004, the Credit Union established a defined contribution plan for its employees. Total
contributions made by the Credit Union are recorded as a personnel expense and included in the operating expenses
in the consolidated statement of comprehensive income.
Taxation
The subsidiary follows the liability method of accounting for deferred tax, whereby the future tax liability resulting
from timing differences is provided for at the current corporation tax rate. Deferred tax assets are only recognised
when it is probable that taxable profits will be available against which the assets may be utilised.
62
63
5. Cash and cash equivalents
6. Investment in associated company (continued)
2011
Short term deposits
Savings and chequing accounts
Cash on hand
$ 3,484,590
5,190,960
1,538,809
$
$ 10,214,359
$ 19,027,366
2010
5,166,403
11,975,028
1,885,935
Short term deposits include $212,932 (2010 - $207,777), which are held as part of the segregated funds in relation
to the savings and loans benefit fund (Note 19).
The Group’s share of the results of its associate, which is unlisted, and its share of the net assets are as follows: Restated
2011
2010
2011
$
850,000
164,253
Share of net income less dividends received (see below)
Share of revaluation surplus & other reserves
1,345,797
283,978
(77,757)
1,014,253
324,979
6,565
1,552,018 1,345,797
$
4,915,653
3,655,940
3,383,509
330,979
The investment comprises 7,800 common shares (2010 – 7,800) and 1,000 cumulative, 5 year convertible, 6%
preferred shares in Co-operators General Insurance Company Limited, which represent 17% of total shares issued
(2010 – 17%). This investment is accounted for as an associated company on the basis that the Credit Union has
representation on the board of the Company. During 2011, the group recorded an equity share of net income of
$289,978 (2010 – $330,979).
850,000
495,797
5,447,722
3,929,253
3,302,989
289,978
The financial year end of Co-operators General Insurance Company Limited is 31 May. The results included in the
Group’s 2011 financial statements are based on that company’s audited financial statements for the year ended 31
May 2010 (2010 - year ended 31 May 2009).
Restated
2010
$
$
6. Investment in associated company
Original cost of investment
Increase in equity value over cost from acquisition to
end of previous year
Assets
Liabilities
Revenue
Net income
7. Investments
Held-to-maturity at amortised cost
2011
2010
Government securities
Bonds
Deposits $ 7,000,000 -
4,676,499
$ 6,900,000
1,000,000
6,334,780
11,676,499 14,234,780
11,861,847
2,319,095
$ 23,538,346 $ 16,553,875
Share of net income less dividends received for the year
is made up as follows:
Taxation
374,771
(84,794)
212,576
118,403
Share of net income
Dividend received during the year
289,978
(6,000)
330,979
(6,000)
Available-for-sale at fair value
Equities
283,978
324,979
The group recorded an unrealised gain of $420,530 (2010 - unrealised loss $249,246) on available-for-sale
investments on revaluation, representing the difference between their fair market value at the beginning and end
of the financial year.
64
65
8. Loans to members
9. Accounts receivable and prepaid expenses
2011
2010
2011
Land and housing
Other (including line of credit loans)
Vehicles
Debt consolidation
Personal
Business
Investments
$ 179,329,598 $ 159,382,596
38,390,390 36,058,955
9,797,902 11,710,521
28,067,768 31,017,768
8,557,347
8,380,692
2,543,101 3,011,822
196,414 223,023
266,882,520 (5,983,947) 249,785,377
(5,039,168)
Balances – beginning of year
Amounts charged-off Amounts recovered
Increase in provision
Balances – end of year
$ 260,898,573 $ 244,746,209
$
5,039,168
-
244,779
700,000
$
3,530,124
(2,412,612)
168,656
3,753,000
$
5,983,947
$
5,039,168
The provision has resulted from the identification of specific loans, which are in arrears of payments three (3)
months or over at the year-end and which accounts have shown no activity over the same period. Loans to members
include non-accrual loans of $24,985,850 (2010 - $17,569,868). Interest on non-accrual loans accumulated but not
recognised totaled $3,335,580 (2010 - $3,749,843).
At 31 March 2011, the maturity profile of loans to members was as follows:
Within 1 year
1 – 5 years
Over 5 years
66
2011
2010
$ 16,303,239
28,939,942
221,639,339
$ 18,251,695
30,407,987
201,125,695
$ 266,882,520 $ 249,785,377
Other receivables
Prepaid insurance
Computer services
Other prepaid expenses
Utility deposits
Staff loans
$
$
2010
143,590 82,314
178,659
202,305
21,911
68,693
$
155,536
84,450
81,976
226,578
21,911
53,761
697,472
$
624,212
67
10. Property, plant and equipment
10. Property, plant and equipment (continued)
Accumulated
Net book
Cost
depreciation
value
Land – Broad Street
Balances – At 31 March 2010 and 2011
$ 2,000,000
$
-
$ 2,000,000
Cost
Office equipment
Balances – At 1 April 2009 $ 925,729
Additions
27,470
Depreciation
-
Buildings – Broad Street
Balances – At 1 April 2009
Depreciation
$ 9,565,529
$
- Balances – At 31 March 2010
Depreciation
Balances – At 31 March 2011
9,565,529
-
1,367,248
191,384
$ 8,198,281
(191,384)
1,558,632
191,382
8,006,897
(191,382)
1,750,014
7,815,515
Additions
Disposals
Transfers
Depreciation
9,565,529
Accumulated
depreciation
$
953,199
6,723
(16,079)
(5,201) -
517,425
-
101,488
618,913
-
(16,079)
(3,294) 83,510 938,642
$
408,304
27,470
(101,488)
683,050
334,286
6,723
(1,907)
(83,510)
255,592
Computer equipment
Additions
Disposals
Depreciation
$ 2,963,265 101,751
(2,640)
-
Balances - 31 March 2010
Additions
Disposals
Depreciation
3,062,376
59,904
(16,162)
-
Computer software
$ 3,246,771 $ 1,788,953
Additions
81,907
-
Depreciation
- 478,797 $ 2,069,651
-
(2,640)
346,791
$
893,614
101,751
(346,791)
2,413,802
-
(11,018)
296,344
648,574
59,904
(5,144)
(296,344)
2,699,128
406,990
Motor vehicles
$
570,163 Depreciation
-
Balances - 31 March 2010
570,163
Additions
225,622
Disposals
(173,690)
Depreciation
-
622,095
Net book
value
3,106,118
Additions
Depreciation
3,328,678
147,801
- Balances – At 31 March 2011
3,476,479
2,267,750
-
469,220 2,736,970
$ 1,457,818
81,907
(478,797)
1,060,928
147,801
(469,220)
739,510
Additions
Transfers
Depreciation
68
Furniture and fittings
$ 1,008,874
Additions
20,907
Depreciation
-
Leasehold improvements
Balances – At 31 March 2009, 2010 and 2011
$
288,678 98,577
$
281,485
(98,577)
387,255
-
(173,690)
88,096
182,908
225,622
(88,096)
301,661
320,434
$
652,165
-
80,985
$
356,709
20,907
(80,985)
1,029,781
7,708
5,201
-
733,150
-
3,294
82,791
296,631
7,708
1,907
(82,791)
1,042,690
819,235
223,455
585,006
585,006
-
69
11. Investment property
10. Property, plant and equipment (continued)
Accumulated
depreciation
Cost
Work-in-progress
Balances – At 1 April 2009 and 2010
$
-
Additions
121,872
121,872
Summary
Additions
Disposals
Depreciation
Additions
Disposals
Depreciation
70
$
-
$ 20,865,337
232,035
(2,640)
-
21,094,732
569,630
(205,931)
-
$ 21,458,431
-
-
Net book
value
$
121,872
Land Balance – At 1 April 2009
Addition
Transfer to Development land for resale
Appreciation in fair value
$
Accumulated
amortisation
Net book
value
2,692,512
340,807
(2,268,890)
3,905,571
-
-
-
$ 2,692,512
340,807
(2,268,890)
3,905,571
4,670,000
-
4,670,000
1,535,160
-
1,094,840
615,161
30,703
(645,864)
$919,999
(30,703)
1,740,704
-
2,630,000
121,872
$ 7,269,126
-
(2,640)
1,298,022 $ 13,596,211
232,035
(1,298,022)
8,564,508
-
(200,787) 1,211,343 12,530,224
569,630
(5,144)
(1,211,343)
$ 9,575,064 Cost
$ 11,883,367
Balance – At 31 March 2010 and 2011
Building at Pinfold Street
Balance – At 1 April 2009
Amortisation
$
Balance – At 31 March 2010 and 2011
2,630,000
Summary
$
4,227,672
Transfer to Development land for resale
(1,928,083)
Amortisation
-
5,000,411
615,161
-
30,703
(645,864)
$
3,612,511
(1,928,083)
(30,703)
5,646,275
-
$
7,300,000
Balances – At 31 March 2010 and 2011
a)
Rental income earned from the properties was $157,381 (2010 - $165,380), while costs totaled $69,302
(2010 - $87,360).
b)
The Group’s investment property was revalued by Proverbs Surveys Inc. Construction Cost Managers & Property
Valuers during the previous financial year who determined that its fair value was $7.3 million. The amount of
$5,646,275, being the excess of the revaluation over the asset’s carrying value was shown in the statement of
comprehensive income.
$
7,300,000
$
71
12. Development land for resale
14. Accounts payable and accrued expenses
2011
Balance – at beginning of year
Transferred from investment property (note 11)
Additions during the year
Balance – at end of year
$
$
2010
2,268,890
- 626,754
2,895,644
$
1,928,083
340,807
$ 2,268,890
13. Members’ deposits
Withdrawals during the year
Term
(237,115,030)
(170,600,453)
170,785,823
165,308,218
29,432,212
18,725,723
$ 200,218,035
$ 184,033,941
In accordance with the Credit Union’s lending policies, members, as part of the security requirement for loans, can
pledge deposits, which they hold with the Credit Union. In such instances, the deposits that can be withdrawn on
demand are usually restricted to the amount of deposits, which are not pledged.
At year-end, total deposits, which were pledged, and as such which could not be withdrawn on demand, amounted
to $67,172,046 (2010 - $67,886,506).
At 31 March 2011, the maturity profile of members’ deposits was as follows:
2011
2010
Within 1 year
1 – 5 years
Over 5 years
$ 55,452,507
66,476,543
78,288,985
$ 45,083,987
48,030,434
90,919,520
$ 200,218,035
$ 184,033,941
72
Amounts due to deceased members
Salaries and wages
Sundry creditors
Director of National Insurance
Audit fees
Commissioner of Inland Revenue
$
2011
2010
Savings
Balances – beginning of year $ 165,308,218 $ 153,877,175
Deposits during the year
242,592,635
182,031,496
407,900,853
335,908,671
2011
901,412 -
288,049
66,258
112,000
43,620
$ 1,411,339
2010
$
1,533,700
305,878
450,428
61,807
97,000
33,409
$ 2,482,222
15. Loan payable
a) On 29 August 2005, the Credit Union entered into a loan agreement with the National Insurance Board for $10
million. The loan is subject to interest at a minimum rate of 5.5% per annum and is repayable by fixed monthly
amounts of $55,556 on account of principal and interest over a period of 15 years, which commenced on 30
September 2005. The rate of interest is to be determined at 1% below the average residential mortgage rate
as fixed from time to time by certain stipulated financial institutions.
The loan is secured as a first or prior charge over all deposits received from members in respect of applications
and/or agreements for residential loans to members, all mortgages, charges, deposits of title deeds or similar
security given for such loans and first preferential bond certificates issued by the Credit Union, (if any).
Interest expense for the year was $365,185 (2010 - $401,852). At March 31, 2011 the maturity profile of the
loan was as follows:
2011
Within 1 year
1 – 5 years
Over 5 years
$
666,666 3,333,333
2,277,779 $
6,277,778 2010
$
666,666
3,333,333
2,944,446
$ 6,944,445
b) On 30 June 2009, the Credit Union entered into another loan agreement with the National Insurance Board
for an amount of $15 million. The security given is the same as that for the loan in a) above. No draw downs
of the loan facility had been made by the Credit Union at the end of the current financial year.
73
16. Liabilities qualifying as regulatory capital
18. Special funds
2011
2010
Contributions during year
Withdrawals during year
$ 79,923,535 $ 82,446,004
90,308,409
90,316,580
$ 77,125,303 $ 79,923,535
170,231,944
(93,106,641)
172,762,584
(92,839,049)
In accordance with the requirements of IAS 32 and IFRIC 2, share capital is classified in the financial statements as a
liability as their terms provide for withdrawal at the option of the members. Shares are classified as a liability and the
appropriate payments classified as an expense and presented as a charge in arriving at net surplus for the period.
The change in classification does not affect the rights and obligations of the members as set out in the Act or the
Credit Union’s by-laws.
Shares in the Credit Union entitle each member to one vote in the conduct of the affairs of the Credit Union at
general meetings. Shares may be transferred to another member or anyone eligible for membership with the
consent of the Credit Union. Shares may be withdrawn in whole or part by the member, however, the Credit Union
reserves the right at any time to require a member to give notice of seven (7) days, provided that the member does
not require to withdraw any shares used to qualify for a loan and that act will reduce their shares to an amount
below the current liability to the Credit Union or the amount used to qualify as borrower, co-maker or guarantor.
At 31 March 2011, the maturity profile of liabilities qualifying as regulatory capital was as follows:
2011
2010
Within 1 year
1 – 5 years
Over 5 years
$ 26,993,856
15,425,060
34,706,387
$ 27,174,001
17,583,177
35,166,357
$ 77,125,303
$ 79,923,535
17. Statutory reserve
Balances at
beginning of
Amounts
year
Transfer
utilised
Common good fund Co-operative education fund
COB Cares Dividend stabilisation fund
Real estate development fund
Membership assistance fund
$
$
Total - 2011
$ 7,879,058
$ 282,600 $ (253,218)
$ 7,908,440
Total - 2010
$ 7,848,685 $ 381,789
$ (351,416)
$ 7,879,058
1,914
149,481
48,576
3,122,254
4,500,000
56,833
20,000
82,600
80,000
-
-
100,000
$
(20,681) (17,353)
(117,010)
-
-
(98,174)
Balances at
end of
year
$
1,233
214,728
11,566
3,122,254
4,500,000
58,659
Common good fund
This fund is to be used for donation to community efforts, charitable causes and other purposes which coincide with
the Credit Union’s community and social responsibility. Donations made during the year ended 31 March 2011 of
$20,681 (2010 - $59,651) have been charged against the available funds.
Co-operative education fund
The Co-operative education fund was established by appropriations out of the undivided surplus in accordance with
a resolution of members in June 2002.
In accordance with a directive issued by the Registrar of Co-operative Societies, an amount of not less than the
greater of 1% of a credit union’s net surplus or $100 is to be appropriated annually to a Co-operative education
fund for the purpose of financing the training and education of the Credit Union’s members and the general public
in the philosophy and operations of co-operatives. At the Annual General Meeting in August 2010, an amount of
$82,600 (2010 - $90,000) was approved for appropriation to the Co-operative education fund.
During the year ended 31 March 2011 an amount of $17,353 (2010 - $68,686) was paid to the Barbados CoOperative Credit Union League Limited out of the fund.
Section 197(2) of the Co-operative Societies (Amendment) Act 2007-39 requires that an appropriation equivalent to
the greater of 0.5% of total assets or 25% of net surplus shall be credited to the reserve fund annually until capital
equals 10% of total assets. The Registrar of Co-operatives may increase the appropriation amount to 40% of net
surplus or 1% of total assets in certain circumstances. Entrance fees are credited directly to the statutory reserve.
74
75
18. Special funds (continued)
20. Distributions
COB Cares
COB Cares is a program designed for persons from birth to 25 years of age. Developed in 3 stages, it caters to
categories of persons less than 12 years of age, 12 to 17 years of age and young adults 18 to 25 years of age. It is
a savings program that provides the opportunity to win scholarships at Common Entrance, Caribbean Examinations
Council, Caribbean Advanced Proficiency Examinations, University of the West Indies, Barbados Community College
and Samuel Jackman Prescod Polytechnic. During the year ended 31 March 2011 an amount of $117,010 (2010 $113,573) was paid under this programme.
Membership assistance fund
Annually, the equivalent of the lower of $5 per member or 2.5% of the surplus from operations is allocated to this
fund. The fund is aimed at providing financial assistance to members who are deemed to be in a weak financial
position. During the year ended 31 March 2011 an amount of $98,174 (2010 - $109,506) was utilised under this
fund
Dividend stabilisation fund
This fund was established to ensure that members would receive a stable dividend yield over the long term.
Real estate development fund
This fund was established to facilitate the acquisition and development of real estate properties, for the benefit of
the members.
Details of distributions are as follows:
Approved at annual general meeting in
August 2010 (2009 – August 2009)
Dividend
Rate
Estimated amount
The savings and loans benefit fund was established in 1994 to provide loan protection and life savings benefits for
the members of the Credit Union and the assets of the fund are separately maintained.
Details are:
2010
$ 532,086
$ 340,587
Claims incurred
Claims paid
360,000 (245,047)
360,000
(168,501)
114,953 191,499
$ 647,039 $ 532,086
Net change
2.50%
$1,975,000 4.00%
$3,160,000
$1,977,090 $3,243,241
A dividend shall be paid only on the shares fully paid up and outstanding on the last day of the preceding year,
provided always that a member shall be deemed to have ten fully paid shares of $5 each and consequently the
dividend paid will differ from the estimated amount which is based on the situation as of the balance sheet date.
In accordance with a resolution of the members at the Annual General Meeting held in July 2005, there is no
maximum limit that can be appropriated for the payment of dividends in any year.
Financial instruments consist of cash and cash equivalents, investment in associated company, investments, loans to
members, accounts receivable, members’ deposits, accounts payable and loan payable. The group does not engage
in any significant transactions that are speculative in nature.
Interest rate risk
Fluctuations in interest rates on the group’s financial assets may expose it to interest rate risk. The group’s exposure
to interest rate risk is as follows:
2011
2010
21. Financial instruments
19. Savings and loans benefit fund
Actual amount paid in August 2010 (2009 – August 2009)
2011
2011
2010
Cash
2.50%
2.50%
Investments 2.50% - 5.00% 3.00% - 4.00%
Loans to members
8.00% - 18.00% 9.00% - 16.50%
Loan payable
5.50%
5.50%
Members’ deposits 2.75% - 4.25% 2.50% - 4.00%
As of 31 March 2007, an actuarial valuation of the fund was concluded by an independent actuary who recommended
that a minimum of $203,000 be carried forward to cover any potential liabilities of the fund. The balance in the
fund at year end does not vary significantly from that calculated by the actuary.
76
77
21. Financial instruments (continued)
Credit risk
Credit risk arises from the possibility that counterparties may default on their obligations to the group. The maximum
credit risk exposure of financial assets recognised in the consolidated balance sheet is represented by the carrying
amount of the financial assets.
Concentration of credit risk exists if a number of members are engaged in similar activities or are located in the same
industry sector or have similar economic characteristics such that their ability to meet contractual obligations would
be similarly affected by changes in economic, political or other conditions. Concentration of credit risk indicates
the relative sensitivity of the group’s performance to developments affecting a particular industry or geographical
location. Management does not believe that the concentration is unusual or provides undue risks.
Fair value
Fair value amounts represent the approximate values at which financial instruments could be exchanged in current
transactions between willing parties. However, many of the financial instruments lack an available trading market
and therefore, it is not possible to determine independently the estimated fair values. The fair values of financial
instruments are considered to approximate their book values.
Liquidity risk
The group is exposed to daily calls on its available cash resources from general savings, deposits, maturity loan drawdowns, guarantees and withdrawal of shares. The group does not maintain cash resources to meet all of those
needs, as experience shows that a minimum level of reinvestment of maturing funds can be predicted with a high
level of certainty.
The matching and mismatching of the maturities and interest rates of assets and liabilities is fundamental to the
management of the group. It is unusual for Credit Unions to be fully matched since business transactions are often
of uncertain term. An unmatched position potentially enhances profitability, but can also increase risk.
2011
Within
3 months
Cash and cash equivalents $10,214,359 Investment in associated
company
-
Investments
-
Loans to members
13,965,086
Accounts receivable
390,942
1,127,540
Total assets
25,697,927 Within
3 months
Members’ deposits
13,169,762
Remaining to maturity
Over
Carrying
3 - 12 months
1 to 5 years
5 years
value
$
-
$
-
$
-
$10,214,359
-
-
1,145,854
1,145,854
3,145,924
1,530,575
18,861,847
23,538,346
28,939,942 221,639,339
266,882,520
2,338,153
-
-
-
390,942
-
-
-
1,127,540
30,470,517 241,647,040 303,299,561
5,484,077 Remaining to maturity
3 - 12 months
1 to 5 years
Over
5 years
Carrying
value
42,282,744
66,476,543
78,288,986
200,218,035
Regulatory capital
7,712,530
19,281,326
15,425,060
34,706,387
77,125,303
The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as
they mature, are important factors in assessing the liquidity of the group and its exposure to changes in interest
rates.
Interest payable
564,107
-
-
-
564,107
Accounts payable
1,411,339
-
-
-
1,411,339
Management believes that the following is a “worse case scenario” based on information available on the maturity
profile of the loan portfolio. Accordingly, the cash flows within the “3 months” and “over 5 years” periods could
be more favourable than indicated.
Long term loan
166,666
500,000
3,333,333
2,277,779
6,277,778
Total liabilities
23,024,404
62,064,070
85,234,936
115,273,152
285,596,562
$ 2,673,523 78
$ (56,579,993) $ (54,764,419) $ 126,373,888 $ 17,702,999
79
22. Commitments
2010
Within
3 months
Cash and cash equivalents $19,027,366
Investment in associated
company
-
Investments
2,000,000
Loans to members
15,797,602
Accounts receivable
291,273
1,440,523
Total assets 38,556,764 Within
3 months
Members’ deposits
11,270,997
Remaining to maturity
3 - 12 months
1 to 5 years
$
-
$
-
$
Over
5 year
Carrying
value
-
$19,027,366
2010
-
987,618
987,618
Mortgage loans approved and pending disbursement
Available balances on line of credit accounts
$11,610,500 12,982,280
$11,793,107
12,474,872
7,734,780
-
6,819,095
16,553,875
Total
$ 24,592,780
$ 24,267,979
30,407,987 201,125,695
249,785,377
2,454,093
-
-
-
291,273
-
-
-
1,440,523
30,470,987 208,932,408 288,086,032
10,188,873
23. Pension contribution
Effective 1 January 2004, the Credit Union established a defined contribution plan for its employees. Contributions
of the plan are managed by an insurance company under a Trust Deed. Total pension expense for the year ended
31 March 2011 was $83,244 (2010 - $80,100). The Credit Union makes monthly contributions to the plan equal to
the amounts accrued for pension expense.
24. Staff costs, compensation and transactions with key management personnel
emaining to maturity
R
3 - 12 months
1 to 5 years
Over
5 years
Carrying
value
Staff and compensation costs for key management personnel are as follows:
2011
2010
$ 1,412,528
69,278
36,126
11,580
$ 1,292,003
64,820
29,323
9,339
$ 1,529,512
$ 1,395,485
33,812,990
48,030,434
90,919,520
184,033,941
6,793,500
20,380,500
17,583,177
35,166,358
79,923,535
Interest payable
479,060
-
-
-
479,060
Accounts payable
2,482,222
-
-
-
2,482,222
Long term loan
166,666
500,000
3,333,333
2,944,446
6,944,445
Total liabilities
21,192,445
54,693,490
68,946,944 129,030,324
273,863,203
Salaries and wages
National insurance
Pensions
Health and life insurance
The outstanding balances with key management personnel at year end are as follows:
2011
2010
Loans to members
$ 5,533,972
$ 6,093,132
Members’ deposits
$
$ 1,058,598
$ 17,364,319 2011
-
Regulatory capital
$ (44,504,617) $ (38,538,957) $ 79,902,084
$
14,222,829
80
In the normal course of business, there are various outstanding commitments and some contingent
liabilities, which are not reflected on the face of the financial statements. No material losses are anticipated
as a result of these transactions. At year end the following were among the more significant items:
863,973 CITY OF BRIDGETOWN CO-OPERATIVE CREDIT UNION LTD • ANNUAL REPORT 2010-2011
81
26. Tax losses
25. C.O.B. Financial Services Inc.
Abridged information on subsidiary’s financial position at 31 March 2011
2011
Statement of Financial Position
Current assets
$
263,316
Current liabilities
(92,562)
Other liabilities
(1,550,000)
2010
$
Working capital
Non-Current Assets: Plant and equipment
Deferred charges
Development land for resale
1,938
65,206
2,895,644
5,655
49,913
2,268,890
$ 1,583,542
$ 1,271,489
(1,379,246)
614,862
(117,831)
(1,550,000)
Financed by: Shareholder’s equity
Stated capital
Accumulated deficit
Net loss
Accumulated deficit, at beginning of year Accumulated deficit, at end of year
Year
Amount
Expiry Date
Year of income 2018
Year of income 2019
Year of income 2020
2009
2010
2011
$
121,589
109,852
187,947
$
419,388
(1,052,969)
Because of uncertainty surrounding the utilisation of the tax losses, the net deferred tax asset of $101,913 (2010 $57,128) has not been recorded.
27. Prior period adjustment
Statement of Loss
Revenue
Expenses
The subsidiary has tax losses of $419,388 (2010 – $231,441) available to be carried forward and set off against
future taxable income. The losses have not been agreed with the Commissioner of Inland Revenue, but are not in
dispute. The losses and their expiry dates are as follows:-
The Group previously accounted for its investment in its associated company based on unaudited financial statements
for the ten month period ended 31 March. The Group has changed its method of accounting for its investment to that
based on the associated company’s audited financial statements which it believes are more reliable. Consequently,
a prior year adjustment has been made to record the following: -
$ 2,000,000
(416,458)
$ 1,500,000
(228,511)
$ 1,583,542
$ 1,271,489
$
$
34,110
(222,057)
20,682
(130,663)
(187,947)
(109,981)
(228,511)
(118,530)
(416,458) $ (228,511)
Additional net income – Year ended 31 March 2010
Group’s share of revaluation reserve
Group’s share of other reserves
$
2010
$
111,990
66,074
180,115
$
65,749
180,115
$
358,179
$
245,864
28. 2010 Comparatives
82
2011
Certain comparative figures have been restated to confirm to the current year’s presentation.
83
MEET OUR OPERATIONAL TEAM
EXECUTIVE MANAGEMENT
Mr. Glendon S Belle, FCCA, F.C.A, MBA, Dip CU Mgmt.
Mr. Ronnie Norville, CGA
Ms. Susanna Thompson, LLB Hons. LEC Mr. Henderson Williams, B.Sc.(Hons) M. Sc
Mr. Algernon Yearwood, CMD (UWI) Dip. Mgmt
COLLECTIONS
- Chief Executive Officer
- Internal Auditor
- Legal Counsel
- Human Resources Manager
- Loans Manager
MIDDLE MANAGEMENT
Mr. Winston Alleyne, CMD (UWI) Dip. Mgmt
Ms. Judie Gill Mrs. Barbara Langdon-Thompson
Mrs. Alison Lynch, B.Sc.
Ms Wendy Springer - Member Relations Executive
- Accounting Manager
- Member Care Manager
- Branch Manager Manor Lodge
- Branch Manager Broad Street
SENIOR SUPERVISORY
Mr. Norman Belgrave, B.Sc., ACCA
Mrs. Suzanne Brice-Haynes
Mr. Winston Davis
Mr. Philip Eno, B.Sc. Mrs. Reneé Estwick
Mr. Ryan Greaves, A+,MCSE,MCSA,CCNA
Mr. Joseph Holder
Mr. Creig Jones
Mr. Rawle McClean
Mr. Elon Miller
Mrs. Joyann Quintyne-Grimes, B.Sc. Accounting
- Management Accountant
- Senior Collections Officer
- Senior Member Services Officer
- Human Resources Officer
- Branch Officer
- Network Administrator
- Senior Credit Officer
- Senior Member Care Officer
- Property Officer
- Systems Analyst/Programmer
- Senior Audit Officer
- Executive Secretary (Manor Lodge Branch)
- Executive Secretary (HR/Admin)
- Executive Secretary (Loans)
- Executive Secretary (Legal)
- Member Services Officer
- Executive Secretary (C.E.O Office)
- Executive Secretary (Board)
- Member Care Officer
- Member Services Officer
- Human Resources Officer
ACCOUNTS, FINANCE & INVESTMENTS
Ms. Ruth Connell, B.Sc.
Mrs. Lisa Wood Ms. Kelly-Ann Small
Ms. Patrina Phillips, B.Sc.
84
- Collections Officer
- Collections Clerk
- Collections Clerk
- Collections Clerk
- Collections Clerk (part time)
C.E.O OFFICE
Ms. Kelly Kirton
- Administrative Assistant
HUMAN RESOURCES & ADMINISTRATION
Ms.Yvonne Grazette
Ms. Rosemary King
Ms. Pauline Mayers Mr. Collis Lynch
Mr. Steven Edwards
Mr. Elvis Walters
Ms. Shanelle Howell, B. Sc
- Administrative Clerk
- Messenger
- Property Assistant
- Property Assistant
- Administrative Clerk [Temp]
INFORMATION TECHNOLOGY
Mr. Christopher Fields, B.Sc. (Hons)
Mr. Sheldon Herman, B. Sc. (Hons)
Ms. Halishia Springer
- Network Technician
INTERNAL AUDIT
SUPERVISORY
Ms Angela D Beckles, BCMS (Gen Mgmt), ACS, APS
Ms Sharon Corbin, APS
Mrs. Doriel Dowell ACS (Dist.), APS (Dist.)
Ms. Fran A. Haynes
Ms. Anmaria Hutson
Mrs. Evelina King-Harper, ACS, B.Sc.
Ms. Deborah Payne, APS
Mrs. Virginia Remise
Ms. Susan Roach
Mrs. Gaynelle Trotman, ACAM
Mrs. Althea Graham
Mr. Corey Harding
Ms. Shaunelle Sealy
Mrs. Keri Belle- Baptiste
Ms. Kimberley Broomes
Mr. Andre Cobham, B. Sc.
Mr. William Franklyn
- Accounting Officer
- Accounting Officer
- Reconciliation Officer
- Accounting Assistant (part time)
Mr. Jermaine Payne
Ms. Shondeb Sealy
- Quality Assurance Clerk
- Quality Assurance Clerk
LEGAL AND SECURITIES
Ms J. Natasha Trotman
Ms. Krystal Watson
- Legal & Securities Officer
- Legal & Securities Clerk
LOANS UNDERWRITING & ADMINISTRATION BROAD STREET BRANCH
Mr. Richard Blenman
Ms Yvette Evelyn
Mr. O’Brien Scantlebury
Ms. Camille Harvey Mrs. Camille Jack
Mr. Jamal Payne
Mrs. Alison Rudder
Ms. Rhea Hinds
Mr. Sheldon Roach, B. Sc
- Credit Officer
- Credit Officer
- Credit Officer
- Credit Clerk
- Credit Clerk
- Credit Clerk
- Disbursement Officer
- Credit Clerk (part-time)
- Credit Clerk (part-time)
85
NOTES
LOANS UNDERWRITING & ADMINISTRATION MANOR LODGE BRANCH
Mrs. Yvonne Cottle-Hinds
- Credit Officer
MARKETING, MEMBER CARE AND CONTACT CENTER
Ms. Leanna Small
Mr. Justin Bennett
Ms. Janelle Cato
Ms. Natasha Clarke
Mrs. Donna Eristhee
Mrs. Cindy Greaves-Gibson
Mrs. Ingrid Haynes
Ms. Stacy Jones
Ms. Gillian Mahon
Mr. Jamal Maynard
Mr. Michael Roberts
Mrs. Deirdre Thompson Carrington
Ms. Kathryn Thornton
- Marketing Assistant
- Member Care Representative
- Member Care Representative (part time)
MEMBER SERVICES BROAD STREET
Mr. Shane Archer
Mr. Mario Best
Ms. Christie Holder
Ms. Keisha Howard
Mr. Kevin Howard
Mrs. Cherisse Joseph
Ms. Marina Mason
Mr. Jermaine Mounter
Mr. Jabarry Nurse
Mr. Bernard Simmons
Mr. Adrian Symphorien
Ms. Keisha Watson
Mrs. Carol Williams
Mr. Shamar Reece - Member Services Representative
- Member Services Representative
- Member Services Representative (Part-time)
MEMBER SERVICES MANOR LODGE
Mrs. Akaia Archer
Ms. Lyrissa Austin
Mr. Mark Bourne
Mr. Shon Chandler
Mr. Corey Harewood
Mr. Antonio Headley
Mr. Leon Mayers
Mr. Xavier Roach
Ms. Kamasha Williams
86
- Members Services Representative
- Member Services Representative (Part-time)
- Vault Custodian
87
NOTES
88
NOTES
89

Annual Report 2011

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