annual report 2 19 · 2020. 9. 25. · annual report 2 19 36th annual general meeting together we...

A N N U A L R E P O R T

2 19

36th Annual General Meeting

TOGETHER WE CAN MOVE MOUNTAINS

39th Annual General Meeting

1Together we can MOVE MOUNTAINS |

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Together we can move mountains

National Anthem

Sons and daughters of St. LuciaLove the land that gave us birthLand of beaches, hills and valleys,Fairest isle of all the earthWhere so ever you may roamLove, oh love our island home.

Gone the time when nations battledFor this “Helen of the West”!Gone the days when strife and discorddimmed her children’s toil and restdawns at last a brighter day,Stretches out a glad, new day.

May the Good Lord bless our island,Guard her sons from woe and harmMay our people live unitedStrong in soul and strong in armJustice, Truth and Charityour ideal forever be.

Lyrics: Rev Charles Jesse FMIMusic: Sir Leton Thomas KCMG, SLC, OBE, CBE

Prayer of St. Francis of AssisiLord make me an instrument of Thy peaceWhere there is hatred,let me sow love;Where there is injury, pardon;Where there is doubt, faith;Where there is despair, hope;Where there is darkness, light; andWhere there is sadness, joy.

O divine Master grant that I may notSo 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.

2I

Standing Orders

1. (a) A member shall stand and state his name when addressing the chair.

(b) Speeches shall be clear and relevant to the subject before the meeting.

2. A member shall address the meeting when recognized or called upon by the Chairperson to do so, after which, he shall immediately take his seat.

3. No member shall address the meeting

except through the Chairperson

4. A member shall not speak twice on the same subject, except:

(a) the mover of a motion who has a right to reply.

(b) the member rises to object to or explain any matter (with the permission of the Chair).

5. No speeches shall be made after the “Question” has been put to the meeting.

6. The Mover of a ‘Procedural Motion’ – (that is a motion for adjournment laid on the table, or motion to postpone) shall have no right to reply.

7. A member rising on a “Point of Order” shall state the point clearly and concisely. (A Point of Order must have relevance to the Standing Orders.)

8. A member shall not “call” another member ‘to order’.

(a) A member may draw the attention of the Chairperson to a ‘breach of order’.

(b) On no account can a member call the Chairperson ‘to order’.

9. Only one amendment shall be before the meeting at one and the same time.

10. When a motion is withdrawn, an amendment to it fails.

11. The Chairperson shall have the right to a ‘casting vote’.

12. If there is an equality of voting on an amendment, and if the Chairperson does not exercise his casting vote, the amendment is lost.

13. Provision shall be made for protection by the Chairperson for vilification (personal abuse) among members.

14. No member shall impute improper

motives against another.

3Together we can MOVE MOUNTAINS | II

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CONTENTSiiStanding Orders

08B.O.D Report

35Credit CommitteeReport

01 28Treasurer’sReport

40Education CommitteeReport

02President’s Message

32 44Supervisory CommitteeReport

Auditor’s Report

ATTORNEY AT LAWCyril Landers & AssociatesMongiraud Street Castries BANKERS Bank of St. Lucia Bridge Street, Castries

1st National BankBridge Street,Castries.

AUDITOR BDO Choc AFFILIATION St. Lucia Cooperative League Ltd.Coral Street Castries

OUR BRANCHES

CASTRIES VIEUX FORT

Cnr. Jeremie Street and Chaussee Road. Chitolie Mall, Beanefield8:00 am to 3:00 pm 8:30 am to 3:00 pmPhone: (758)4524807/8 Phone: (758) 454-9774 Fax (758) - 451 7725 Fax (758) - 4549778

P.O.Box 1333, Castries, St. Lucia WI. Email: [email protected]

Website: www.cscreditunion.org

Notice of Meeting

NOTICE OF MEETING

NOTICE is hereby given that the 39th Annual General Meeting of the The St. Lucia Civil Service Cooperative Credit Union Limited trading as JANNOU Credit Union will be held at the Conference Room of the Finance Administrative Centre, Pointe Seraphine Castries on Tuesday September 29th, 2020 commencing at 5.00 p.m.

AGENDA

OPENING SESSION

1. Call To Order 2. National Anthem3. Prayers/Invocation4. Welcome Address – President Junia Emmanuel-Belizaire5. Greetings from Fraternal Organisations

CLOSED SESSION

1. Ascertainment of Quorum2. Apologies for Absence3. Reading and approval of the Minutes of the 38th Annual General Meeting and any

intervening Special General Meeting and discussion of matters arising there from.

4. Adoption/Confirmation of Reports:- (i) Board of Directors (ii) Treasurer (iii) Auditor (iv) Credit Committee (v) Supervisory Committee (vi) Any Sub - Committee (a) Nominating

5. Unfinished Business

6. Elections to: (i) Board of Directors (ii) Credit Committee (iii) Supervisory Committee

7. Appointment of Auditors for the ensuing year.

8. New Business Resolutions i) Declaration of Dividends and Patronage Refund 9. Adjournment

REFRESHMENTS WILL BE PROVIDEDBY ORDER OF THE BOARD

BEVERLEY-ANN POYOTTESECRETARY


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Allow me to begin by expressing my sincerest gratitude for your continued membership and dedication to the business of the St. Lucia Civil Service Cooperative Credit Union Ltd. (SLCSCCUL), now trading as “Jannou Credit Union”. Our organization continues to show the “Credit Union Difference” in the lives of our members and the communities in which we live and work, through our mission to support their dreams, by providing safe and affordable financial services that put their best interest first. A testimony by which many members can attest too.

In 2019, we continued to pursue many changes that will allow us to better serve you. At our last annual general meeting we introduced the first

phase of our re-branding campaign. Following through with this campaign, we witnessed the completion of our first phase of the re-branding process, giving us a new image and renewed momentum to drive the business of our organization. We saw the unveiling of our new logo, Credit Union colours, signage and communication media which now reflects our new brand.

In addition, our new brand expresses three pillars for the building on our future: -

w People Power which encourages us to work together in a trusted relationship to make members dreams come true;

w Visionary Leadership providing the

2

President’s Message

guidance for our organization’s growth and sustainability through shared responsibility of all our members; and

w Technology and Innovation causing us to embrace the new normal to serve all our members even better.

Our work continues on the second phase requiring some infrastructural changes, which may cause some discomfort. We ask for members patience and support when this phase begins, as we are only seeking to make our business environment more welcoming and member friendly.

Remaining on our path of growth, our Teams will continue to work with our strategic partners, both local and regional, to enhance our effectiveness and efficiency, which will provide for greater opportunities for membership. We remain steadfast on our path to build on the opportunities available through technology. We are now in the advance stages of major initiatives soon to be rolled out by the end of 2020, which will improve our competitiveness and membership satisfaction.

Each reporting year we speak of our Credit Union’s financial soundness and adherence to our statutory and regulatory obligations, reminding members of our responsibilities

collectively and on an individual level. Accordingly, a review of the financial year ended December 31, 2019 shows that the SLCSCCUL has recorded a net surplus of $5.7 million compared to the previous year of $9.9 million in 2018. Our records show that over the past years, we have recorded a downward trend, which is further exacerbated by a reducing loan portfolio, our growing delinquency and the necessary provisioning required to mitigate against this risk.

Our Credit Union continues to pursue all measures necessary to be fully compliant through sound risk management, compliance practices and good corporate governance. Accordingly, the Board is required to provide guidance and support to Management in implementing the initiatives necessary to accomplish the Vision of our organization.

The year 2020 is now faced with growing challenges globally, as on March 11, 2020, the World Health Organization (WHO) declared the breakout of the novel coronavirus (COVID-19) a pandemic. Saint Lucia like many other countries have felt the impact on its economic and social environments. Future developments relating to this pandemic will most definitely impact our financial markets. One of the most important responsibilities our members have entrusted to the Board of Directors is one of “Fiduciary Responsibility”. It is our duty to establish strong policies and provide guidance and direction to the Credit Union Leadership to ensure we are financially strong and well managed financial institution. In an effort to execute this responsibility, Board, Management and other Committee members have actively participated in discussions on the national level to ensure that members are not adversely affected by emerging Government and other regulatory changes.

I am grateful for the guidance and leadership of our dedicated volunteer Board of Directors. I am also thankful for the leadership of our dedicated Management team and staff of our great organization and how hard they work getting the “little things” right, for you our members.

Let me assure members, that the Board of Directors is committed to be focused on our mission to serve you in the best way possible. We encourage members to be part of this process. Your participation and continued commitment to our Credit Union allows SLCSCCUL to provide you with the great products and services to meet your needs, and helping your dreams come true. We are pleased to be the financial institution of choice to you.

We can move mountains together, but it requires hard work, dedication and commitment of all. Only then will we make the impossible, POSSIBLE. _________________________________JUNIA EMMANUEL-BELIZAIREPresident


Our Credit Union continues to pursue all measures necessary to be fully compliant through sound risk management, compliance practices and good corporate governance.

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Angela Frazer

Treasurer

Profession: Professional Business Accountant

Qualification: PBA, BA - Accounting & IT

Substantive Position: Senior Reviewer, Large & Medium Unit-Audit, Inland Revenue Depart-ment

Board Member Since: 2019

Served on: Chairperson, Finance & Investment Committee

Junia T. Emmanuel- Belizaire

President

Profession: Management ConsultantQualification: PG Diploma-Marketing

Management, BSc.Manage-ment, PMP, Development Educator -CaribDE11, US DE 2016, I-CUDE 2017

Substantive Position: Director, Commerce & IndustryBoard Member Since: 2019Served on: HR Committee, Scholarship & Bursary Committee

Beverley-Ann Poyotte

Secretary

Profession: Social Worker/ Counsellor

Qualification: BA - Psychology; MSc. Counselling Developmental Educator- CaribDE DE 22

Substantive Position: Director (Ag) Di-vision of Human Services


Served on: Education Committee

4

Meet Our BOARD OF DIRECTORS

Thalassa CoxProfession:Legal Consultant

Qualification: LLB (Hons) ,Development Educator -CaribDE 30Substantive Position: Legal Consultant , Inter-American Commission on Human Rights

Board Member Since: 2017Served on: Education & Editorial Committees,

Irene E. St CroixProfession: Human Resource Consultant

Qualification: CLOD, CDir, MSc HR Management & Training, BSc Management & Government , Development Educator – CaribDE 20

Substantive Position: Permanent Secretary, Office of the Prime Minister


Served on: Human Resource Committee; Nominating Committee

Dayne Simone AlexanderProfession: Land SurveyorQualification: BSc (Hons) Surveying &

Mapping Sciences. Certificate in Conflict Management, Development Educator – CaribDE 30,

Substantive Position: Lands & Survey Officer (LUCELEC)

Board Member Since: 2017Served on: Scholarship & Bursary

Committee, Nominating, Building & Membership Committees

Kervyn Tobias Profession: M&E/ ICT Specialist

Qualification: MSc. Information Systems, BSc. (Hons.) Computer and Management Studies, Development Educator – CaribDE 13

Substantive Position: Head,Monitoring & Evaluation, OECS Commission


Served on: Finance & Investment Committee, Supervisory Committee

Augustin Gaspard Profession: Retired Chief Fire Officer

Qualification: BSc (Hons) Management Science

Substantive Position: Retired

Board Member Since: 1996 to 2005, and 2019

Served on: Building Committee

O’Brien RichardsProfession: Architect/ Lecturer

Qualification: BA (Hons) Architecture, (Hons) Dip Arch Technology, Development Educator CaribDE 13

Substantive Position: Lecturer on Architecture & Building, SALCC


Served on: Building Committee, Credit Committees


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Explanation of the Soca account goes here, Explanation of the Soca ac-count goes here, Explanation of the Soca account goes here, Explanation

of the Soca account goes here, Explanation of the Soca account goes here,

It’s Never to Early

JANNOUCREDIT UNION

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OVERVIEW

Our regional economies continue to be challenged with high liquidity facing the financial service sector of which JANNOU Credit Union is part of. Financially our year was favourable as reported in our 2019 audited financials and discussed in the Treasurer’s Report. In 2019 our re-branding efforts were geared towards laying the foundation for a modernized credit union focusing mainly on delivering more efficient and accessible services to our members through digital transaction processing strategies. In recognition of the increased importance of compliance, JANNOU Credit Union hired a Compliance Officer to enhance and strengthen compliance in the areas of Anti-Money Laundering and Anti-Terrorism Financing. We anticipate your continued understanding and support as we seek to protect your hard- earned funds which you have entrusted to us. Against the current backdrop and global financial concerns, I wish to express my gratitude to the Board of Directors, Committees, Management and Staff for your hard work to JANNOU Credit Union and our membership. In these difficult times we will continue to provide steadfast leadership and guidance to our members. I would like to encourage members to continue growing our Credit Union business, so you our members can share in the profits in the form of dividends and patronage refunds. Together we could move Mountains.

8 8

Emmerlyn MonroseGeneral Manager

$5.75MNET INCOME

as stated in tresurer’s Report

FAVOURABLE YEAR FOR 2019

REBRANDINGFOCUSED EFFORTS ON

To deliver more efficient and accessible services

INCREASED COMPLIANCE

To protect our members

Celestin LaurentDeputy General Manager


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Table 1- Meeting Attendance Record 2019

BOARD POSS ACT’L ABS POSS ACT’L ABS POSS ACT’L ABS POSS ACT’L ABS

ZEPHERIN FRANCIS 6 6 - 5 5 0 5 5 - 2 2 -

JUNIA EMMANUEL-BELIZAIRE

12 11 1 11 9 2 10 10 - 4 4 -

IVOR DANIEL 6 3 3 5 3 2 4 2 2 2 1 1

THALASSA COX 12 11 1 11 9 2 10 8 2 4 4 -

DAYNE ALEXANDER 12 10 2 11 9 2 10 9 1 4 4 -

KERVYN TOBIAS 12 12 - 11 10 1 10 10 - 4 4 -

IRENE ST. CROIX 12 8 4 11 9 8 10 4 6 4 2 2

O’BRIEN RICHARDS 12 11 1 11 10 1 10 10 - 4 3 1

BEVERLEY-ANN POYOTTE 12 12 - 11 10 1 10 8 2 4 2 2

AUGUSTIN GASPARD 6 5 1 6 5 1 5 4 1 2 2 -

ANGELA FRAZER 6 6 - 6 5 1 5 5 - 2 2 -

POLICY LOANS SPECIALS QUATERLY

SUPERVISORY COMMITTEE POSS ACT’L ABS POSS ACT’L ABS POSS ACT’L ABS

LYNDELL ST. VILLE 25 24 1 3 3 - 4 4 -

LOUENDA GEORGE 12 7 5 1 1 - 2 1 1

KAISHER VON WAHL 18 11 7 3 1 2 2 2 -

MARTHA KEARL DUVAL 12 10 2 1 1 - 2 2 -

SHERNELLE PHILLIP 26 18 8 3 1 2 4 1 3

ANNE VERN JOHN 13 9 4 2 2 - 2 1 1

ANNETTE DESIR-BUTCHER 6 4 2 - - - 2 1 1

VERNA KHADOO-MATHURIN 13 10 3 2 2 - 2 - 2

CREDIT COMMITTEE POSS ACT’L ABS POSS ACT’L ABS POSS ACT’L ABS

LISA GOODMAN 84 72 12 3 2 1 4 3 1

RICARDO CORSINIE 84 67 17 3 2 1 4 4 -

SHERMAN SYLVESTER 84 73 11 3 3 - 4 4 -

SHORNA DENIS 41 36 5 2 2 - 2 2 -

CLETUS CYRIL 41 40 1 1 1 - 2 2 -

JOSHANN CHARLES 41 - 41 1 - 1 2 - 2

GLENIS BAPTISTE 41 40 1 2 2 - 2 1 1

ORDINARY MEETINGS SPECIAL/JOINT QUARTERLY

ORDINARY MEETINGS SPECIAL/JOINT QUARTERLY

Table 1.2- Meeting Attendance Record 2019

Table 1.1- Meeting Attendance Record 2019

Meeting Attendance Record & General Statistics

10

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Man

agem

et

Antonius Dusauzay Finance Manager

Rita A. Francis Loans Manager

Melania Bailey FrancoisSystems Administrator

Olive St. VilleMember Services Manager

Vanya Pilgrim Samuel Human Resource Manager

Wilton Bleasdille Internal Auditor

Aw

ard

Win

ner

s 20

19


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AWARD EMPLOYEE

Spirit of CSCCU Mercedes Fanis

Above and Beyond Natoya Arno

Congeniality Andrea Remy, Heather James

Team Player of the Year Sheralye Alcindor

Corporate Image Award Bibiana Etienne

Member Focus Award Martin Lafeuillle ,Dayci Innocent

Teller of the Year Miguel Moses

Loans Officer of the Year Donovan Denis

Pillar of Performance Shenel Lionel

Pillar of Quality Latoya Alphonse, NeighmanLascaris

Pillar of Service Tony Abraham

Star Award Eldon Paul

Supervisor of the Year Jacinta Jn. Charles

Extraordinary Diligence Award Olivia Corneille

Cornelia McDonald Award (Productivity)

Menessia Nelson-Dubois

General Manager’s Award (Excellence)

Jessica McVane

Employee of the Year 1st runner Up Devaughw Charles

Employee of the Year 2019 Marlan Biscette

Alin Verneuil Icub Job Mercedes Fanis

Amarae Arthur Jacinta Jn. Charles Miguel Moses

Andrea Remy Jerson Charlemagne Natoya Arno

Bibiana Etienne Jessica Mc Vane Neighman Lascaris

Cheryl Joseph JnMill Augustin Olivia Cornielle

Cleavert Jn. Baptiste Justina Samuel Priscilla Sidonie

Dayci Innocent Kirsten Savery Ria Marius

Devaughw Charles Latoya Alphonse Sarica St. Rose

Donna Mathurin Lylius Joseph Shenel Lionel

Donavon Denis Malauge Vitalis Sheralye Alcindor

Edwin Charlery Marciana Gabriel Sylca Philip

Eldon Paul Marlan Biscette Tanize Stanislaus

Emerlyn Auguste Martin Lafeuillee Tony Abraham

Gina John Marylene Cherry-William Warren Leo

Heather James Menassia Nelson-Dubois

STAFF MOVEMENT AND CHANGES

Four (4) new persons joined our staff complement and have been assigned as follows:

Shayne Felicien - Compliance Officer

Cassia Joseph - Teller(Vieux Fort)

Laura Placide - Teller

Kurtania Dore- Teller

The staff members were recognized for excellence. Mr.Marlan Biscette was the overall winner for the “Employee of the Year Award” with Mr.Devaughw Charles as the runner-up under this category.

Mr.Marlan BiscetteEmployee of the Year

Mr.Devaughw CharlesRunner-Up

Congratulations to all our awardees for

a job well done.

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Other awardees and categories included:

Line Staff for the 2019 Period:

VIEUX FORT OFFICE


During 2019 the Vieux Fort Branch was able to navigate a challenging year, as we strived to grow our membership base and preserve existing member relationships. The financial services landscape is characterized by stiff competition from other credit unions and banks alike with the common objective of increasing membership from a limited pool. Notwithstanding the challenges we persisted

with our strategic approach which focused on the following:

u Growth in membership

u Growth in our lending portfolio

u Improving the lives of our membership and by extension our community.

The branch hosted a few activities specifically geared at increasing our visibility with the community. These included but were not limited to organizational visits and community outreach. Worthy of mention was our participation in the graduation ceremonies of various schools where we made donations in the form of cash and trophies. Some of these institutions included, Vieux-Fort Comprehensive Campus B, Anse Ger Secondary, Beanfield Secondary, Belle Vue Combined and Micoud Secondary to name a few. We must highlight the critical assistance received daily by the Member Services department, making special mention of team members Ms. St. Ville, Ms. Alphonse, and Ms. St. Rose.

The annual Fun Walk of 2019 saw the participation of over three hundred and twenty individuals an increase of over 80 persons from the previous year. The success of the activity came through the collaborative efforts of our team members at the main branch, many of whom participated in the walk for the first

time along with a few board and committee members. The contingent from Castries consisted of over forty individuals. Mr. Laurent our deputy G.M and his secretary Ms. Verneuil played a key role in recruiting participants from the north and organizing transportation for them to and from the activity.

In October we successfully hosted our Financial Cocktail which was attended by 33 individuals. Presentations were delivered on budgeting, benefits of credit union membership, insurance

(property, life & vehicle) and prudent lending habits. We were extremely thankful to have our President Junia Emmanuel Belizaire, Director Augustin Gaspard, Mrs. Rita Francis, and Mr. Celestin Laurent among our presenters.

As is customary we facilitate our members in the South who are interested in participating in activities held in the north by providing transportation to and from. Our junior members did not miss out on the 2019’s Summer Safari and Youth Transition workshops. Team Vieux-Fort remains committed to the growth and development of the branch and JANNOU Credit Union as a whole. We continue to strive to provide excellent service in a warm welcoming environment to our family of members. Towards this end we have increased our physical office space by acquiring the adjoining office. Very soon we will embark on a renovation project with the goal of making our officers more attractive and comfortable to conduct your business. While we are a small branch with a staff compliment of only 4, our biggest strength is the unmatched quality of our customer service delivery. At our branch we embody the true spirit of Jannou; our members are our extended family. In 2020 and beyond we will remain committed to the holistic development of each member and the fulfilment of our social responsibility.

Staff of the Vieux- Fort Office

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2019 Caribbean Confederation of Credit Unions (CCCU) – 62ndAnnual International Convention & 48th Annual General Meeting

In 2019 Caribbean Confederation of Credit Unions and World Council of Credit Unions hosted the first ever joint Convention at The Atlantis, Bahamas, from July 28-31, 2019. The year’s delegation comprised Directors, Committees Members, Management and Staff.The Convention was attended by participants from all over the world.

THE BAHAMASWORLD CREDIT UNION CONFERENCE

28-31 JULY 2019

16

15th OECS Credit Union Summit MeetingThe theme for the year’s Summit was “Empowering OECS Credit Unions for the Future.” A delegation of twenty (20) participants attended the Summit, which was held at various locations on the island of St Lucia which included : Coco Resorts, Golden Palm,Bay Gardens Hotel and the Hilton Harbour Club, from June 5th -9th, 2019. The delegation comprising Directors, Committee Members, Management and Staff were in attendance.

The 2019 Summit programme provided educational and social opportunities for participants. Some of the topics included:

• Empowering OECS Credit Unions for the Future- Readiness of Credit Unions and Adaptation of Change

• Events affecting the Operations and Management of Credit Unions within the OECS• Block chain Technology: Understanding the Impact and Technology• IT Issues/Trends Affecting Credit Unions• Young Entrepreneurs and Business Opportunities• Understanding the Financial Landscape (IFRS 9/AML/CFT)• Credit Union Leadership in a Changing Landscape• The process, the Value and the implementation of Legislation and the Associated Regulations• Leadership and Innovation, the Credit Union Way• Women in the Leadership of Credit Union Movement

Student’s Name School Assigned Parents

1 Kayla Toussaint SJC Anastasia Toussaint

2 Alyssa Alfred SJC erson Alfred

3 Brianna Larcher SJC Bradley Larcher

4 Shemiyah Francois SJC Felix Francois

5 Eden St Croix Jr SMC Irene E St Croix

6 Ajani S Philip SJC Lisa Louis Philip

7 Sanea Eugene SJC Nina Khodra-Eugene

8 Sayvion Rosemond SMC Sharon John

9 Caleb Augustin SMC Travis Augustin

Child School Assigned Parent

1 Tristen Alphonse

Vieux Fort Comprehensive

Kirsten Savery

Child’s Name Parents

1 Kay-Dee Delpesche Karen Delpesche

2 Tassell Eugene Teather T. Thomas

3 Kharyce Moonie Wendy Gabriel-Moonie

SCHOLARSHIPS

FOR 2019JANNOU Credit Union will continue to provide scholarships and bursaries to children and wards of

our members. In 2019,nine (9) scholarships were granted to students to attend secondary schools.

The 2019 Secondary Schools Scholarship Holders are:

35Bursaries

One (1) Staff ScholarshipNew Scholarships (3)


2019 Tertiary Level Scholarship holders

A total of thirty-five (35) bursaries were awarded to children of members for both the secondary and tertiary level.

2019 Secondary School Scholarship holders.

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In 2019, 602 applications for membership were

approved by the Membership Committee an increase of 4.3% over

2018 levels.

These new applicants of 2019 profiled as youth ( 67% aged below 35 years old), were more likely to have joined through the recommendation of a family member (76%) rather than through their Public Service employment , they applied through the Castries Branch (94%) and were most likely female ( 61%.)

Of special note is the fact that 31% more junior account holders, Spirit of the Calabash Account (SOCA) applied for membership when they attained the age of 16 compared to 2018. Not to be outdone, 1% of the membership applications came from persons over 66 years old a tangible demonstration that it is never too late to join a credit union or seek membership benefits.

Member Support Services

18

88%

12%

61%

39%

94%

6%

76%

24%

28%

39%14%

12%

6%1%

Qualification for Membership Location of Applicants

Non Public Servant / Family

Public Servant

CASTRIES

VIEUX FORT

Gender of Applicants

FEMALE

MALE

Source of Applications

ADULTS

UPGRADED SOCA

Age Group of Applicants

16-25 YEARS

26-35 YEARS

36-45 YEARS

46-55 YEARS

56-65 YEARS

66 & OVER


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NEW MEMBER ACCOUNTS

Despite higher than usual levels of approvals, members often delay in opening their accounts once notified of the approval for a host of reasons. Consequently, only 94% of approved applications were opened and the share accounts funded.

Notwithstanding gap between approvals and accounts opened, our youth seemed the most eager to complete their membership and accounted for 58% of new members.

The senior members over 66 may have delayed in applying for membership but they too, once notified came in at a relatively higher rate than the other age groups.

Age Range No %

16-25 198 35

26-35 133 23

36-35 115 20

46-55 66 12

56-65 39 7

65 and Over 15 3

Total 566

Age Distribution of New Member for January to December 2019

SPECIAL MENTION MUST BE MADE OF 3 GROUPS OF MEMBERS NAMELY: -

93 SOCA HOLDERS

93 SOCA holders who made the decision to become full members having attained the age of 16.

4 GRADUATES

OF THE SCHOOL THRIFT

4 graduates of the School Thrift Programme who elected to make JANNOU Credit Union a

part of their financial management plan

5 beneficiaries of deceased members who used the shares and final death benefits derived from their loved ones to as the final group who saw the merit in journeying with JANNOU Credit Union to move life’s mountains.

We wish to remind members that membership approvals terminate three (3) months after the member has been notified then the applicant must re-apply if still interested.

5 BENEFICIARIES OF DECEASED

MEMBERS

20

MEMBERSHIP TERMINATION

JANNOU is very proud to admit that membership of our organization is valued enough that only about 50 members per year will choose to terminate theirs.

This number, however, can increase significantly when final death benefits (based on share and loan insurance payments and balances) for deceased members are paid out to the beneficiaries and the accounts closed. This year the numbers remained at the average levels with 54 accounts closed.

GROUP MEDICAL INSURANCE PLAN UPDATES

The Beacon Medical Insurance Group Plan experienced a very low growth rate of just over 4% in 2019. Any potential gains of the plan were severely undermined by the delays in approving new applicants and payment of claims. Notwithstanding these issues, member interest in accessing medical insurance services via our Credit Union is high.

Plan MEMBER ONLY MEMBER +1 MEMBER+ FAMILY

TOTAL Change

Premium $106.4 $175.4 $274.4

2015 125 39 31 195 21.90%

2016 144 49 37 230 17.90%

2017 141 55 39 235 2.20%

2018 163 60 36 259 10.20%

2019 165 64 41 270 4.25%

Retirement Plan *

(6 individuals)

COMPARISON OF BEACON SUBSCRIPTION FOR 2015 -2019

HOMEOWNERS, CONTENTS, VEHICLES AND ALL RISK GROUP PLAN

Closed Accounts 2015-2019

Trends in Group Insurance Membership 2015-2019


In 2019, the Credit Union’s insurance Brokers were again able to negotiate a rate reduction for our home owner’s plan.

This very attractive rate caused a growth in new enrollments especially for new homeowners. At the same time however, the growth was negated by delays or non- renewals by existing plan members.

Efforts were made to encourage otherwise to no avail. Some members who have paid off their mortgages with their financial institution often choose not to renew their home owner’s insurance in a bid to save money.

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This year, 3 additional persons joined the Winners Circle by signing up for the IRD approved Registered Homeowners Savings Plan. A total of 34 individuals actively contributed into the savings plan to help finance the acquisition of their first home or mortgage. The average age of the members on the plan is 37 years old with everyone saving an average of $12, 000 thus far.

Registered Homeowners Savings Plan (RHOSP)

DEATH BENEFITSThe famous Japanese novelist Haruki Murakami wrote that “ Death is not the opposite of life but a part of it’ and in April 2019 , the inclusion of three (3) higher payout plans and the Critical Illness Rider to the CUNA Mutual Family Indemnity Plan (FIP) to help meet the ever raising cost of saying Farewell had us excited. 215 members took advantage of the higher payouts by upgrading their plans while some finally made the decision to sign up drawn by the higher benefits now available under the plan. Do you have a question about your benefit, want to sign up or upgrade your plan, contact the Member Services Department for assistance.

PLAN MEMBERSHIP AT DECEMBER 31 2019

Plan Monthly Premium Payout per Plan member

No. of Members

PLAN A $ 26.40 $ 5000 102

PLAN B $39.60 $7500 174

PLAN C $52.80 $10,000 972

PLAN D $79.20 $15,000 1130

PLAN E $105.60 $20,000 80

PLAN F $132.00 $25,000 26

PLAN G $158.40 $30,000 109

TOTAL 2593

AVERAGE $12,000 SAVED

Under the FIP, CUNA Mutual paid out XCD $1.216 million dollars for 98 death claims received from our members and their families. This represented an increase of over 32% over the payouts for 2019 from a 7.7% increase in the number of claims. The significant increase in the payout came from most claims being in the Plan C and D category.

22

DECEASED MEMBERS FOR 2019

2019 was a very sad year for the membership with more than the usual number of members departing this life. The Board takes this opportunity to offer say farewell and to offer our most sincere sympathies to those touched by the loss of a loved one.

1 Adalbert Trezelle 18 Ivan Forde 35 Michael Casimir

2 Agnes Noel 19 Ivan Meroe 36 Michael Charles

3 Allan Cuthbert Mathurin 20 Jennifer Theobalds 37 Mona George

4 Alvina George 21 Joan Charles 38 Nyker Papius

5 Andrena Serieux 22 Juliana St Brice 39 Patricia Volney

6 Anselma McLorrain 23 Leonard Blades 40 Perpetua Aimable-Stanislas

7 Christie Popo 24 Leonora Melchoir 41 Peter Jn Baptiste

8 Christine Malcolm 25 Lincoln Justin 42 Peter Plummer

9 Albert Eudovique 26 Luke Henry 43 Phillip Brown

10 Electra Mclorain 27 Margaret Olive Charles 44 Rufina Harvey

11 Elias St Clair 28 Maria Hippolyte 45 Ruth Clarke-Joseph

12 Erica John 29 Marie Vitte 46 Sandra White-John

13 Esther Phillip 30 Mary Clifford 47 Shane Vitalis

14 Gabriel Augustin 31 Mary Michel 48 Simone Septembre

15 Harold George 32 Mary Samuel 49 Sylvester Mortley

16 Henry Lubin 33 Matthew Theodore 50 Thecla Bledman

17 Herbert George 34 Melitus Sidonie 51 Wayne Martial

DECEASED MEMBERS 2019

SOCA PROGRAMMING

This year the Member Services Department targeted specific groups of junior/SOCA (Spirit of the Calabash) account holders with the activities that were held for them.


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In May 2019, for the 6th time, our Credit Union hosted almost 40 children scheduled to take the Common Entrance exam in June 2019. This activity delivered by a School Counselor and Principal has at its primary objective the improvement of the student’s exam taking skills and management of the high stress and anxiety associated with this future defining evaluation. Once again, the three-day workshop made the maximum use of the grounds and conference facilities of the Bel Jou Hotel to relieve the students of their exam related fears and anxieties

The post workshop evaluation from the students referenced the vital knowledge, confidence and skills gained from the sessions.

COMMON ENTRANCE STRESS RELEASE WORKSHOP

(FOR AGES 10- 13)

YOUTH TRANSITION WORKSHOP

22 SOCA (Jr Account) holders or youth members registered to attend the 7th Youth Transition Workshop which was held for 4 days at the Bel Jou Hotel. The main objective of this workshop was to give the attendees a leg up on the job-hunting process and to prepare them to be responsible employees instead of a dependent student.

Despite planning an interesting programme aimed at developing a combination of hard and soft skills, delivered by highly skilled presenters is a semi-formal format only 22 account holders attended out of the very large group of potential ones. Those who attended spoke highly of the activity especially the mock job interview facilitated by HR industry professionals.

The final day of the workshop included a formal closing with awarding of certificates and graduation. The graduates gave kudos to the Credit Union for the intense but stimulating and invaluable programme.

(FOR AGES 17 – 22)

Extracts of The Youth Transition Workshop Proogramme

Credit Union Vibes (Getting to Know Your Credit Union)

“Interpersonal and Effective Communication Skills”

“Knowing Me (Personality Awareness & Discovery of Personal Skills and Interests”

“Preparing for The Job Interview”

“Individual Interviews & Subsequent Debriefing

“Group Presentations on Youth and Entrepreneurship

“Critical Thinking”

“Choices and Decisions”

“Work Ethics And Work-Life Balance”

“Money Management”

“Five Keys to Being A Good Employee”

“Understanding Workplace Protocol”

Corporate Social Responsibility (Good Turn)


(FOR AGES 7 -16)For the first time in Summer Safari history the Credit Union witnessed twice as many boys as girls among the 103 attendees in this year’s programme. Usually, the oldest age group 14 – 16 is our smallest one, but this year it was equal in size to the 3 other groups. So, having almost 70 boys at the Safari meant that the whole week needed to be more interactive and physical and the Credit Union responded to this challenge.

The week featured a physical activity every day and trips to the different attractions around the island. The safari-ans accompanied by 40 volunteers went to Soufriere, climbed Tet Paul, had a sky ride, attended a sports clinic (where they played football, basketball, badminton and volleyball), watched a movie at the cinema, learnt about the credit union and money management. The Friday offered a Fun Fair and the talent show at the closing and prize giving ceremony where individual and team contributions were recognized and rewarded. It was very hard work for all involved, but a usual Safari was fun.

SUMMER SAFARI

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The Member Service Department continues to provide support to the Education Committee with their scheduled activities and monthly meeting this year. Most of these activities were directed at identified groups as can be seen from the table.

ACTIVITY TITLE DATE HELD

Editorial Committee Meetings March

Orientation for AGM Nominees June

Parent Transition Workshop October

26

MEMBER WORKSHOPS/ TRAINING

In 2019, new member on boarding by the staff of the Member Services Department (MSD) using Member Orientation Workshops continued as the primary vehicle to help them maximize membership benefits. Every quarter, all new members were invited to attend these informative sessions where the MSD staff supported by Loans Officers shared vital information and answered member questions. Members interested in accessing more information about the CU’s suite of products and services may do well to attend these workshops. Contact the Member Service Department for more information on the schedule.

WORKSHOP NAME Date Held

New Member Orientation January

New Member Orientation March

New Member Orientation June

New Member Orientation September

The Family Indemnity Plan May

Common Entrance Stress Release May

Youth Transition Workshop June

Safari Volunteer Preparation & Train-ing

July

Safari Volunteer – Post Event Assess-ment

September

INTERNATIONAL CREDIT UNION DAY CELEBRATIONS 2019

A new strategy was employed to commemorate International Credit Union Day 2019 under the theme “Local Service Global Reach”.

Celebrations began with our customary Church Service and Creole breakfast and from then on the activities held were used to say thank you to our volunteers, Thrift Teachers and members for the important contributions that they all have made and continue to make. We thought it symbolic to use October to show our appreciation.

Individual Appreciation events were held to say thanks to the 6 Thrift School Teacher Supervisors, Safari Volunteers, Outgoing Elected Members of the Committees, our Senior members, and the general membership. Thanks again, we appreciate you all and as the theme said your local service allows our Credit Union to reach not just our members but the whole St Lucian Community.


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OVERVIEW The Saint Lucia Civil Service Co-operative Credit Union Limited trading as JANNOU Credit Union recorded “Net Income” of $5.75 million ($9.97 million in 2018) as disclosed on the Statement of Comprehensive Income for the year ended December 31, 2019. The decline in “Net Income” was attributed to the increased provisioning required from the extension of the bad debt recovery cycle; it takes the Credit Union more time to recover delinquent loans. Our Credit Union has always been aggressive in its provisioning under IAS 39 and it is anticipated that with the implementation of the International Financial Reporting Standard (IFRS) 9 even more aggressive provisioning will be required.

IFRS 9 had a significant impact on many financial institutions due to major changes which influenced the accounting estimates and operational procedures. The Financial Services Regulatory Authority (FSRA) in recognition of the challenges that are typically encountered by entities seeking to be compliant with the standards extended the deadline to 2021. We will continue to work diligently despite these challenges to comply with and implement this mandatory requirement which demands the provision of more timely recognition on “Expected Credit Losses”. Our Credit Union will reach full compliance with IFRS 9 within the deadline date. Rest assured that the performance for the financial year 2019, despite its challenges, was aligned with established financial benchmarks which reflected prudent decision making by the Board of Directors and the Management team.

During the reporting period our Credit Union introduced online banking in recognition of the need to provide more convenient financial services to its members. This allowed easier access and control over members’ accounts through - funds transfer, continuous balance availability and a 24-hour online secure messaging portal. It is anticipated that by the end of 2020 we will further enhance our financial services portfolio with the roll out of ATM services and an international debit card

TREASURER’S

REPORT A. STATEMENT OF FINANCIAL POSITION ASSETS “Cash” and “Loans and Advances to Members”

At December 31, 2019, the Statement of Financial Position reported “Total Assets” of $286.17 million, an increase of $19.41 million or 7.3% from the prior year. Our Credit Union has been experiencing considerable cash inflows over the past years resulting in increased liquidity. This is not an isolated trend within the financial sector and has created a highly competitive lending environment where members have more borrowing power. The notable decline in “Loans and Advances to Members” during the period is a cause for concern since many members have taken advantage of lower interest rates available elsewhere. “Loans and Advances to Members declined by $1.37 million or 0.8% when compared to 2018. Notwithstanding the decline, we have maintained our loan quality through more aggressive provisioning as well as containing a delinquency ratio within the prudential standards of less than 5%. “Financial Investments”

Guided by our Investment Policy Statement and mindful of default risk, the Finance & Investment Committee has been working to realign its strategic objectives with the current investment environment to capitalize on its high liquidity position. There was an overall increase of $2.26 million in “Total Financial Investments” for the reporting period. The Committee is mindful of not investing too much within one economic space and as such has approached and will continue to approach its financial investment with caution.

LIABILITIES The continued increase in “Deposits from Members” and “Withdrawable Shares” over previous periods is a source of our high liquidity. This trend, notwithstanding the challenges it creates for investing of excess funds, reflects the level of confidence that members have in this institution. Our Credit Union will continue to pursue prudential investments to ensure that members earn a satisfactory return on their funds through the distribution of interest, dividends and patronage refund. MEMBERS’ EQUITY The Credit Union continued to strengthen its


capital base with an increase of $1.99 million transferred to its “Statutory Reserve” and a growth of $1.29 million in “Share Capital” (i.e. Non-withdrawable shares) as reported in the Statement of Changes in Members’ Equity. This speaks well for the organization as it provides a solid foundation from which it can buffer future economic or financial shocks. “Retained Earnings” year over year declined as a result of the changes in the level of provisioning as required by IAS 39. B. STATEMENT OF COMPREHENSIVE INCOME OPERATING INCOME AND GENERAL & ADMINISTRATIVE EXPENSES Our Credit Union recorded total income of $20.16 million derived from “Interest Income on Loans and Advances to Members” of $17.76 million; “Investment Income” of $2.09 million and “Other Operating Income” of $308,998.

Expenses Change Comment

Repairs and Maintenance

$300,017.00 Increase in IT related spending on license fees etc.

Professional Fees

$233,333.00 Related to rebranding of our Credit Union

Staff-Related Expenses

$249,062.00 Salary Review

Board & Committee

$188,148.00 Increase in the cost of CCCU convention and volunteer activ-ities

“Operating and Administrative Expenses” increased by $1.05 million from the prior year. The increases were largely attributed to the expenses outlined in Table 1. Combined with “Interest Expense” of $4.21 million, “Impairment Losses” and “Loss on Disposal of Assets”, total expenses were $14.41 million. As a result, “Total Comprehensive Income for the Year” was $5.75 million. CONCLUSION To this end, I wish to extend a special thanks to the Board of Directors, Management and Staff of the Saint Lucia Civil Service Co-operative Credit Union Limited for their support during the year. As Chairperson of the Finance and Investment Committee and the Debit Card Project, I say a special thank you to the teams for their collaborative work.

I also wish to express my sincere appreciation to the members who first gave me the opportunity at the last Annual General Meeting to serve and who continue to place not only their money but also their confidence in “Our dear and trusted friend – JANNOU Credit Union. We make the promise to “Move Mountains” for our members through our People Power, Institutional Strength and Innovation. However, as we move to the challenging times ahead, we solicit the continued support of members as the impact of COVID-19 would most likely negatively affect our Credit Union’s performance.

______________________Angela FrazerTreasurer

Table 1

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ACTUAL RATING ACTUAL RATING STANDARD

PROTECTION

1 Provision for Loan Losses/Loan Delinquent>12 Months

100% 1 100% 1 100%

1 2 Provision for Loan Losses/Loan Delinquent<12 Months

174% 1 106% 1 35%

3 Solvency ( Net Value of Assets/Total Shares & Deposits

118% 1 119% 1 >111%

EFFECTIVE FINANCIAL STRUCTURE

1 Net Loans/Total Assets 56.40% 2 61% 2 70-80%

2 2 Savings Deposits/Total Assets 79% 1 84% 2 70-80%

3 Member Shares Capital/Total Assets 6% 2 6% 2 Less than or equal to 20%

4 Institutional Capital/Total Assets 15% 1 16% 1 Greater than 10%

ASSET QUALITY

3 Total Delinquency/Gross Loan Portfolio

4% 1 4% 1 Less than or equal to 5%

Non-Earning Assets/Total Assets 2% 1 2% 1 Less than or equal to 5%

RATE OF RETURN AND COST

1 Operating Expenses/Average Assets

2.80% 1 3% 1 Maintain 5%

4 2 Net Income/Average Assets 2% 2 4% 1 E4=10%

3 Fin. Cost : Member Shares 5% 1 5% 1 Market Rate

Market Rate > Inflation

LIQUIDITY

5 1 Liquid Reserves/Total Savings Deposit

25% 1 26% 1 Minimum 15%

2 Non-Earning Liquid Assets/Total Assets

0.16% 1 0.19% 1 Less than or equal to 1%

SIGNS OF GROWTH

1 Asset 7.30% 1 8% 1 Greater than inflation rate

6 2 Member Shares 8.50% 1 9% 2 To achieve goal in E3

3 Loans -0.84% 2 1% 2 To achieve goal in E1

4 Membership 2.93% 2 3% 1 Minimum 5%

5 Institutional Capital -3% 2 12% 1 To achieve goal in E4

SAINT LUCIA CIVIL SERVICE CO-OPERATIVE CREDIT UNION LIMITEDP-E-A-R-L-S

CREDIT UNION PERFORMANCE RATINGS

2019 2018


INDICATORS 2019 2018

$ $ $ %

Assets 286,165,681 266,751,960 19,413,721 7.3%

Net Loans 161,361,676 162,733,504 (1,371,828) (0.84%)

Members’ Withdrawable shares 196,099,780 181,616,493 14,483,287 8%

Members’ Deposits 29,981,026 25,956,262 4,024,764 15.5%

Shares 16,480,111 15,186,509 1,293,602 8.5%

Members’ Equity 58,643,352 58,097,924 545,428 0.94%

Interest Income 17,763,852 17,824,344 (60,492) (0.03%)

Operating and Administrative Ex-penses

7,635,323 6,580,536 1,054,787 16%

Net Operating Surplus 5,746,234 9,965,928 (4,219,694) (42)%

INTERPRETATION OF GRADES

GRADE 1 CREDIT UNION IS DOING WELL.

GRADE 2 CREDIT UNION IS DOING WELL BUT EXPERIENCING MINOR INTERNAL PROBLEMS

GRADE 3 CREDIT UNION IS ON THE WATCH LIST

GRADE 4 GREDIT UNION IS IN SERIOUS TROUBLE

GRADE 5 CREDIT UNION IS ON THE WAY OUT WITH THE POSSIBILITY OF LIQUIDATING OR MERGING WITHIN SIX (6) MONTHS

Analysis of Financial Statements 2019

INCREASE/(DECREASE)

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Supervisory Committee members during the reporting period were as follows:

Dr. Lyndell St. Ville — ChairpersonMrs. Verna Khadoo-Mathurin — SecretaryMs. Shernelle PhillipMs. Anne Verne JohnMrs. Annette Desir-Butcher

The Supervisory Committee essentially serves the Credit Union in ensuring that a quality system of checks and balances is maintained. During the reporting period January to December 2019, we oversaw both the internal and external audit functions of our Credit Union to ensure compliance with the By-Laws and the Cooperative Society Act Chapter 12.06 of the Laws of Saint Lucia. We ensured that the Board of Directors and Management of the Credit Union met the required financial reporting objectives and standards, and established practices and procedures sufficient to safeguard the financial resources of the Credit Union and to protect the interest of its members. We were required to verify and report on whether the operations were conducted in accordance with governing rules and regulations and assets were properly administered. We ensured that Management and the Board of Directors complied with their established policies and plans. In this capacity, we are pleased to present the 2019 Supervisory Committee Report.

During the reporting period, we welcomed Ms. Anne Verne John and Mrs. Verna Khadoo-

Mathurin following their election at the AGM. We bade farewell to Mrs. Louenda James and Ms. Kearl Duval who reached the end of their tenure after serving two consecutive terms. We also bade farewell to Ms. Kaisher Von Wahl, who resigned from the Committee in September 2019. We welcomed her alternate, Mrs. Annette Desir-Butcher, who joined the Committee in October.

With renewed enthusiasm, we embraced the Committee’s new make-up and proceeded towards bringing the new members up to speed and continuing with our work programme. As required,

Ms. John and Mrs. Khadoo-Mathurin participated in the orientation training offered to all volunteers, which was conducted in September.

The Committee usually met twice a month to perform its duties monitoring the operations and financial sustainability of the Credit Union. These duties included working with and supervising the work of the Internal Auditor, as well as carrying out our own reviews.

We met periodically with the management of the Credit Union to review the quality of all financial reports and responses to internal audits conducted, thereby ensuring the accuracy and strength of internal controls and assuring operational continuity. In addition, as a Committee we undertook the additional responsibility of continual dialogue and follow up, so that the necessary corrective actions

Supervisory Committee Report


were taken by Management in a timely manner.Internal audit, with oversight by the Committee during the year, included reviewing and testing operations vis-à-vis the established policies and procedures, while also ensuring that a thorough risk-based methodology, internal controls and safe practices were being adhered to.

INTERNAL AUDIT AND CONTROLS

The Committee closely monitored the work plan of the Internal Auditor to ensure that activities and reports were progressing as planned. The following audits were undertaken, and the necessary findings and recommendations presented to Management for the required action:

● Business Impact Assessment● Review of Vieux-Fort Branch Operations● Accounting and Financial Controls● Loans● Investments● Home Banking

The Committee was satisfied with the completed and submitted audits, which were appropriately and sufficiently supported as per International Auditing Standards (IAS). The use of a risk register provided a mechanism for facilitating seamless tracking of prioritized risk areas and management control responses. FINANCIAL AFFAIRS ATTESTATION

In compliance with Section 81(5) of the By-Laws, the Committee reviewed all monthly

management accounts for the financial year 2019. The Committee continued to work with the Finance Manager in recommending occasional enhancements of the presentation and content of the monthly management accounts. These changes contributed to improved transparency and quality of reporting and enhanced opportunities for independent review and analysis to support effective decision making.Compared to 2018, the Credit Union’s delinquency year-to-date average increased to 4.05%, which is among the lowest ratio in the credit union movement in Saint Lucia, and in the region. Despite this ratio being well within the PEARLS standard, any level of delinquency is of concern to the Board, Committees, and staff of the Credit Union. We continue to encourage

any member experiencing difficulties with loans to speak with the Credit Union officers to find some resolution.

CORPORATE GOVERNANCE

The Committee monitored and reviewed the activities of the Board and Management, which included the review of Board and Sub Committee Minutes to ascertain whether relevant plans, policies and control procedures established were properly administered in accordance with the Credit Union’s guiding principles. We also made enquiries, where necessary, to ensure that Committee concerns were noted and addressed.

The daily operations of the Credit Union were also under constant review as matters

AUDITS UNDERTAKEN FOR 2019 PERIOD

Business Impact Assessment Review of Vieux-Fort Branch Operations

Accounting and Financial Controls

Loans Investments Home Banking

| 34

hard work and support over the last year. We are committed to ensuring that our Credit Union principles are upheld, members’ investments are secure and our Credit Union performs at a satisfactory level and grows to meet our financial needs. We are honored that members have placed their confidence in us and we look forward to continued service to you.

..............................................................Dr. Lyndell St. Ville

...............................................................Ms. Verna Khadoo-Mathurin

..............................................................Ms. Shernelle Phillip

...............................................................Ms. Anne Verne John

...............................................................Ms. Annette Desir-Butcher

brought to our attention by members were communicated and taken up with the Management and the Board. A review was also done of elected Board and Committee Personnel files and it was found that adequate internal controls existed to protect members and no policy violations were noted. In the opinion of the Committee, the Credit Union maintained a system of internal accounting and administrative controls in compliance with international standards.

The Supervisory Committee continues to be guided by the PEARLS performance indicators, our controls, oversight, systems and processes, in support of maintaining and continuing the strengthening of our Credit Unions’ financial safety and soundness. We remain vigilant in representing your interests, and resolute in ensuring continued security for your money as the Credit Union strives to provide excellent member services.

CONVENIENCE SERVICES

The re-branding of the Credit Union was launched on December 14, 2019. The initial phase of the re-branding promised new services such as debit cards and Home CU Online banking facilities to strengthen operations and allow for greater convenience for our members and employees. However, although we anticipated the implementation of the aforementioned services within the current reporting period, the Credit Union encountered a number of issues which delayed the implementation. The Home CU banking application was delayed due to insufficient staff, lack of office space and security concerns. The debit cards have been further delayed due to testing.

CONCLUSION

As members’ representatives, we sincerely appreciate the support extended to us by Management and Staff of the Credit Union. We are thankful for the courtesies extended to us by the Credit Union throughout the year and for the continued cooperation, commitment and dedication. The Supervisory Committee values and pays very close attention to the contributions and feedback of members, on whose behalf we serve. We shall continue to follow-up on all concerns and suggestions brought to our attention, especially those raised at Annual General Meetings.

As Chairperson, I thank the members of the Supervisory Committee for their dedication,

We are delighted to have served JANNOU Credit Union during 2019 and is my pleasure to report on the activities of the Credit Committee for the year ended 31st December, 2019. The provision of loans to members is the primary service of our credit union. All loan applications are individually assessed and, whilst every effort is made to approve each application, the process has to ensure that there is no undue risk to you the borrower or to the credit union as a whole. Our objective at all times is to consider each loan on its own merits and to give each application due consideration. It is very important that we have the full financial picture of our member when determining their ability to repay.

At the 38th Annual General Meeting held on June 27, 2019 the Committee bade farewell to Mr. Cletus Cyril who completed his 2nd 3 year cycle and was not eligible for re-election. The Committee welcomed Ms. Glenis Baptiste and Ms. Shorna Denis who were elected to serve as members of the Credit Committee. For the year under review, the Credit Committee was made up of the following members 1. Ms Lisa Goodman Chairman2. Mr. Sherman Sylvester Secretary3. Mr. Ricardo Corsinie Member

4. Ms. Glenis Baptiste Member5. Ms. Shorna Denis Member Your Credit Committee met twice a week to review and consider loan applications during 2019. Loans were approved as long as they met the requirements as stipulated in the loan and lending policy. The Committee found the loans to be consistent with the Credit Union’s Loan and Lending policy.

During meetings we engaged in:

1. Reviewing new, add-on loan applications and reviewing deferred loans;

2. Interviewing members when required and providing a level of Financial Counselling to members;

3. Listening to members when they requested an audience with the Committee;

4. Ratification of over-the-counter loans;

5. Reviewing and Ratification of Management approved loans;

6. Reviewing of Credit Union monthly delinquency summary reports;

7. Providing recommendations to the Joint Committee on loans.

Credit Committee Report – 2019


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Our Credit Union continues to be committed and responsive to the needs of its members. In December 2019 your call for better interest rates on Mortgages materialized with the introduction of reduced rates of interest on mortgage Loans. Members are now able to secure interest rates of 5% to 7% for the purchase of property, building, House extensions and major repairs.

ANALYSIS OF LOANSAs at December 31st 2019, a total of ten thousand, three hundred and seventy six (10,376) loans were approved representing a slight decrease in the number of loans approved when compared

to 2018. Domestic loans continued to dominate the total portfolio accounting for seventy seven percent (77%) of the total loans. This was followed by loans for social purposes and education. The total value of loans approved in 2019 was Fifty nine Million ($59.3 mil), compared with the total value of Fifty Eight Million ($58.8 mil) in 2018, representing a slight increase in the value of loans taken. Ninety seven percent (97%) of all loan applications were approved. Out of the approved loans, twenty-one (21) loans had to be referred to the Board for final approval totalling Eight hundred and twenty eight thousand, Two hundred and eighty two hundred ($828,282.06.)

Figure 1. Loans categories considered in 2019

36

Domestic 77.02%

House Renovation/ Repair 1.04%

Vehicle 2.21%

Business 0.13%

Special Refinancing 0.03%

First Time Home Owner 0.35%

Home Renovation 0.12%

Home Renovation(HR) 0.61%

Wishmaker 9.24%

Social 2.25%

Insurance 0.32%

Debt Consolidation 1.96%

Education 2.26%

Special Education 1.09%

Medical 1.12%

Real Estate - Land 0.27%

1

1

2

3

4

5

6

2

3

45

6

7

8

9

10

78

9

10

11

12

13

14

15

16

1112

1314 15 16

TYPE OF LOAN AMOUNT APPROVED

2018

NO. APPROVED 2018

AMOUNT APPROVED

2019

NO. APPROVED 2019

Social-Travel, Wedding, Death Etc.

$2,271,231.89 331 $1,932,038.68 233

Insurance $92,562.22 36 $108,750.67 33

Debt Consolidation $2,949,060.71 225 $3,051,287.85 203

Education $2,338,165.44 310 $2,390,655.76 235

Special Education $905,541.79 134 $817,730.28 113

Medical $741,169.95 160 $686,993.71 116

Real Estate - Land $4,669,109.73 38 $3,523,993.61 28

Domestic - furniture, appliances, personal expenses, other pur-

pose etc.

$26,893,281.43 8265 $27,436,163.57 7992

House Renovations, Improvements or House Repair

$2,397,137.63 201 $1,112,468.44 108

Agriculture $57,000.00 10 $0.00 -

Vehicle (New, Old) Parts etc $5,726,914.38 270 $4,574,342.03 229

Business $121,399.10 4 $435,387.16 13

Under 1 Roof (First time Homeowners) Land and the

House

$3,023,025.82 35 $3,565,873.03 36

Special Refinancing $249,110.27 6 $45,016.46 3

Home Renovation $732,752.51 34 $241,200.00 12

Home Renovation $2,633,807.45 63

Wish Maker $5,712,952.44 935 $6,831,425.55 959

TOTALS $58,880,415.31 10994 $59,387,134.25 10376

Table 1 Loans considered and approved by the Credit Committee

Your Credit Union will continue to evaluate our lending criteria and examine the potential to offer other services that meet our members’ financial needs, such as the financial counselling and budget planning services already in existence. We would encourage all members to talk to the credit union about their borrowing requirements and/ or their financial position if they find themselves in difficulty. We are a credit union for our members and strive at all times to help members with their finances.It is rare that we are unable to help a member sort out their finances when they are open and forthcoming with their situation. As such, the Committee conducted a number of interviews with members,to gather additional information necessary to assist the committee in making a decision on the loan application.

We take this opportunity once again to remind

our members that the staff of the Credit Union are able to provide you with debt counselling and budget advice to members who may be experiencing difficulties. The staff of the Loans Department are always happy to assist you and most times will go above and beyond the call of duty.

The Committee had to decline a few loans during 2019 reflecting one percent (1%) of total loans. See chart in Figure2. Members are encouraged to provide your loans officer with all the information and supporting documentation necessary to avoid delays of having your loan deferred or denied.

If your loan has been denied and you feel that there are additional factors, information or explanation relevant to you application,you are encouraged to appeal to the Board of Directors.


|

Figure 2 Loans considered for 2019

The Credit Union disbursed loans valued at $59.3 mil. This was an achievement of 97% of the target for the year 2019. Although the overall target was not achieved, this performance is still commendable given the economic climate of Saint Lucia.

DELINQUENT LOANS

We continue to be challenged with the issue of delinquency during 2019. Although there has been an increase in the number of delinquent loans as shown in Table 2, efforts to manage this portfolio have begun realizing some benefits.

The Credit Committee encourages members to borrow wisely, save regularly and to maintain regular and prompt payment on their loans at the Credit Union. If at any time you encounter problems with servicing your loan, please call the office to inform the credit union and to discuss the way forward. Remember this is your Credit Union and it will be as strong as you make it.

Table 2 Profile of Delinquent loans

TIME PERIOD TOTALDELIQUENT LOAN PORTFOLIO 2018

TOTAL DELIQUENT LOAN PORTFOLIO

2019

1 - 30 days 13 19

31 - 60 days 16 31

61 - 90 days 15 20

91 - 179 days 41 46

180 - 269 days 19 19

270-364 days 21

365 days & over 22 126

Over 12 Months 85

TOTAL 211 282

LOANS APPROVED

96.85%

LOANS REJECTED

1.15%

2.01%

LOANS REFERRED TO BOARD

38

REDUCED INTEREST

RATES

As low as 5%To purchse property/

building

WE ARE A CREDIT UNION

AIMED AT HELPING

MEMBERSCome sit with US

let’s work together to achieve your goals.

97% LOAN APPROVAL

RATE

CONCLUSION

Looking forward the credit committee will continue to review loans which fall outside the remit of management. The road ahead will be a challenging one, but it is one that we can face with our Credit Union providing the support and financial assistance where possible. We thank you our family for the opportunity to serve, as your loyalty and participation in the credit union is allowing us to grow in these difficult financial times. We look forward to another successful year assisting members in making their personal and financial goals a reality. Keep spreading the word for others to join this family to experience the benefits as you have.

We encourage all members to make JANNOU Credit Union their number one place to borrow and save with pride. Our doors are always open. So when you need a loan.........consider Jannou. We continue to assist members and member’s children attend university, couples to get married, members to undertake that much needed home renovations project and change their vehicles or manage their finances through debt consolidation.

I would like to express my heartfelt appreciation to our dedicated and hard- working staff of the Loans Department, led by Loans Manager Mrs Rita Francis. Thank you to the Admin team for providing a conducive working environment, which ensured a high level of output from the Committee.

It has been a pleasure for me to have served as your Chairperson for the year 2019 and as a member of the Credit Committee for the past six (6) years. To the members of the Committee, your commitment to your duties is recognised. It has been a wonderful leaning experience serving alongside you.

On behalf of the Credit Committee,I thank you the members for allowing us to serve you. To the Board of Directors, Management and staff we thank you for your stewardship and support during our tenure. May God continue to guide and bless us all. Long Live JANNOU Credit Union...Together we can move Mountains!

....................................................................Ms Lisa Goodman

....................................................................Mr. Sherman Sylvester

...................................................................Mr. Ricardo Corsinie

..................................................................Ms. Shorna Denis


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The Education Committee of the JANNOU Credit Union receives its mandate from two (2) pieces of legislation namely the Co-operatives Societies Regulation and By Law No. 84. The Co-operatives Societies Regulation states that

1) The Board of Directors shall, appoint a committee which shall consist of 5 persons, who may also be members of any other committee

2) The Committee Shall be in charge of

education and propaganda and will advise and act in collaboration with leaders of discussion groups, assist in the provision of literature for the use of members, arrange for the purchase of books and magazines, particularly in relation to the Co-operative Movement, and such literature that will be useful for education.

3) The committee shall submit to the board

of directors a report of its activities, and a requisition to cover the cost of literature, and any other materials, according to the funds set for that purpose.

4) The committee shall ensure that the

education fund is used for the purpose which it is intended, and in conformity with requirements of section 33(7) of the Act, and the rules of the registered society.

By Law 84 states that

The Board shall from time to time appoint a Committee of not less than three (3) and not more than seven (7) persons who may also be members of any other Committee to be known as the Education Committee. The Committee shall be in charge of membership education, promotion and advancement, shall support staff training and development programmes and generally, CO-OPERATIVE education of the community in which members reside. The Committee shall collaborate closely with management in performing its duties and shall report quarterly to the Board. The tenure of members of the Education Committee shall be one year. Based on the above, the Education Committee was constituted with four members namely:

1. Beverley-Ann Poyotte Chairperson2. Thalassa Cox Director and immediate past

Chairperson, 3. Wilton Jeremie Secretary 4. Angelin Remy member

The term of office of the Education Committee runs from September to August therefore in September of 2019 Ms. Remy demitted office after having served for several years. The team was joined by Ms. Andrea Alcide and Mr. Earl Emmanuel.

EDUCATION COMMITTEE REPORT

40

The committee set out to create a work plan for the year 2019/2020 which included

1. Volunteer orientation2. Director’s forum- Volunteer retreat3. Member education series4. Parent Transition Workshop one in the

north and one in the south5. Anti-Money Laundering Workshop6. Volunteer and Management Retreat7. Preparing members for retirement8. Education series for financial literacy9. Training of potential members prior to AGM.

ACHIEVEMENTS

u Volunteer exit interviews July 2019u Volunteer training workshop October 2019u Parent Transition Workshop

CHALLENGES

u In past years the number of members who attend workshops and other educational activities has dwindled. This was no difficult with Parent Transition Workshop which targeted parents of students who were transitioning from primary to secondary school.

u Poor responses to call for interest in

educational activities

WAY FORWARD

Since much of the work plan of the committee was not achieved, the intention is to carry these activities forward into the year 2020/2021, including taking the lead in the organization of the Financial Reality Fair. The committee seeks your assistance in

u Providing suggestions of topics for presentation

u Responding to and attending educational activities planned

u Making suggestions of activities within the mandate of EDC

The EDC therefore looks forward to a more vibrant, learning filled year ahead as we forge

new methods of interaction to enhance learning.

___________________________Beverely-Ann Poyotte (Ms.)Chairperson


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|

St. Lucia Civil Service Co-operative Credit Union Ltd. (Trading as Jannou Credit Union) Financial Statements Year Ended December 31, 2019 (Expressed in Eastern Caribbean Dollars)

44

Contents

Page 1 - 3 Independent Auditor’s Report to the Members Page 4 Statement of Financial Position Page 5 Statement of Changes in Members’ Equity Page 6 Statement of Comprehensive Income Page 7 Statement of Cash Flows Page 8 - 40 Notes to the Financial Statements


Page 50

Page 51

Page 52

Page 53-86

Page 46- 48

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Tel: 758-452-2500 Fax: 758-452-7317 www.bdoecc.com

Mercury Court Choc Estate P.O. Box 364 Castries LC04 101 St. Lucia

BDO Eastern Caribbean, a network of firms registered in Anguilla, Antigua and Barbuda, St. Lucia and St. Vincent and the Grenadines, is a member of BDO International Limited, a UK company Limited by guarantee, and forms part of the international BDO network of independent member firms.

1

INDEPENDENT AUDITOR’S REPORT To the Members of St. Lucia Civil Service Co-operative Credit Union Ltd. (Trading as Jannou Credit Union) Report on the Audit of the Financial Statements Qualified Opinion

We have audited the accompanying financial statements of St. Lucia Civil Service Co-operative Credit Union Ltd. (Trading as Jannou Credit Union)(the Credit Union), which comprise the statement of financial position as at December 31, 2019, and the statements of changes in members’ equity, comprehensive income and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of the Credit Union as at December 31, 2019, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs). Basis for Qualified Opinion In July 2014, the IASB issued IFRS 9 Financial Instruments (IFRS 9), which replaced IAS 39 Financial Instruments: Recognition and Measurement (IAS 39) and is effective for annual periods beginning on or after January 1, 2018. As described in Note 3(a) for the year ended December 31, 2019 the Credit Union has not adopted IFRS 9 and the associated disclosure requirements of IFRS 7 and has classified its financial assets, financial liabilities and determined its impairment allowance for financial assets in accordance with IAS 39 which is no longer applicable, in this respect the financial statements are not in accordance with IFRS. The effects on the financial statements of the failure to adopt IFRS 9 have not been determined. Consequently, we were unable to determine whether any adjustments might have been found necessary in respect of the recorded financial assets and liabilities in the financial statements and the elements making up the statement of financial position, statement of comprehensive income, statement of changes in members’ equity and statement of cash flows. We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Credit Union in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in St. Lucia and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Emphasis of Matter Without qualifying our opinion, we draw attention to Note 27 to the financial statements, which describes event subsequent to the date of the financial statements indicating that the Company’s net income is likely to be negatively impacted due to the outbreak of COVID-19.

46

2

INDEPENDENT AUDITOR’S REPORT (CONT’D) Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Credit Union’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Credit Union or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Credit Union’s financial reporting process. Other Information Included in the Credit Union’s 2019 Annual Report Management is responsible for the other information. The other information comprises the information included in the annual report but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Auditor’s Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: ▪ Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or

error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

▪ Obtain an understanding of internal control relevant to the audit 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 Credit Union’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.


St. Lucia Civil Service Co-operative 4 Credit Union Ltd. (Trading as Jannou Credit Union) Statement of Financial Position As at December 31, 2019 (Expressed in Eastern Caribbean Dollars)

2019 2018

Notes $ $

ASSETS Cash 7 56,532,201 38,223,395 Financial investments: - Loans and receivables 8 61,689,102 58,430,228 - Available –for-sale (AFS) 8 709,373 1,709,478 Other receivables 9 621,630 533,706 Loans and advances to members 10 161,361,676 162,733,504 Property and equipment 11 5,251,699 5,121,649

TOTAL ASSETS 286,165,681 266,751,960

LIABILITIES AND MEMBERS' EQUITY Liabilities Other payables and accruals 12 1,441,523 1,081,281 Deposits from members 13 29,981,026 25,956,262 Withdrawable shares 14 196,099,780 181,616,493

227,522,329 208,654,036

Members' Equity Share capital 16 16,480,111 15,186,509 Statutory reserve 17 31,561,349 29,562,503 Education reserve 18 500,000 500,000 Development fund 19 538,156 538,156 Disaster fund 230,112 230,112 Funeral and burial benefits scheme 20 851,885 851,885 Fair value reserve 21 26,571 26,571 Retained earnings 8,455,168 11,202,188

58,643,352 58,097,924

TOTAL LIABILITIES AND MEMBERS' EQUITY 286,165,681 266,751,960 The accompanying notes form an integral part of these financial statements.

APPROVED ON BEHALF OF THE BOARD:-


|

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50

St. Lucia Civil Service Co-operative 6 Credit Union Ltd. (Trading as Jannou Credit Union) Statement of Comprehensive Income For the Year Ended December 31, 2019 (Expressed in Eastern Caribbean Dollars)

2019 2018

Notes $ $

Income Interest income on loans and advances to members 17,763,852 17,824,344 Interest expense (4,211,310) (3,876,965)

Net Interest Income 13,552,542 13,947,379

Other Income Investment income 22 2,085,079 1,956,510 Other operating income 23 308,998 267,393

2,394,077 2,223,903

Operating Income 15,946,619 16,171,282

General and Administrative Expenses Operating and administrative expenses 24 7,635,323 6,580,536 Impairment losses/(write back) on loans and advances to members 10 2,541,668 (375,182) Loss on disposal of assets 11 23,394 -

10,200,385 6,205,354

NET INCOME FOR THE YEAR 5,746,234 9,965,928 Other Comprehensive Loss To be reclassified to profit or loss in subsequent periods Fair value decrease in AFS investments 21 - (3,272)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 5,746,234 9,962,656 The accompanying notes form an integral part of these financial statements.


|

St. Lucia Civil Service Co-operative 7 Credit Union Ltd. (Trading as Jannou Credit Union) Statement of Cash Flows For the Year Ended December 31, 2019 (Expressed in Eastern Caribbean Dollars)

2019 2018 $ $ Cash Flows from Operating Activities Net income for the year 5,746,234 9,965,928 Adjustments for: Depreciation 240,848 271,180 Provision for loan losses 2,541,668 171,279 Loss on disposal of property and equipment 23,394 - Interest income on loans and advances to members (17,763,852) (17,824,344) Investment income (2,085,079) (1,956,510) Interest expense 4,211,310 3,876,965 Bank charges 39,380 44,455 Operating loss before working capital changes (7,046,097) (5,451,047) Increase in other receivables (87,923) (109,688) Increase in loans and advances to members (1,176,053) (2,407,184) Increase/(decrease) in other payables and accruals 360,242 (21,306) Increase in deposits from members 4,024,764 3,057,388 Increase in withdrawable shares 14,483,287 11,971,805 Entrance fees 5,660 6,220 Cash generated from operations 10,563,880 7,046,188 Interest received from members' 17,770,065 17,851,725 Interest expense paid (4,211,310) (3,876,965) Bank charges paid (39,380) (44,455) Net cash generated from operating activities 24,083,255 20,976,493 Cash Flows from Investing Activities Interest received 2,008,379 1,788,827 Purchase of investment securities (7,524,606) (15,787,790) Proceeds from sale of investments securities 5,342,536 3,923,816 Purchase of property and equipment (394,292) (779,007) Net cash used in investing activities (567,983) (10,854,154) Cash Flows from Financing Activities Increase in share capital 1,293,602 1,309,031 Dividends (3,219,537) (2,983,367) Patronage refund (3,280,531) (2,405,680) Net cash used in financing activities (5,206,466) (4,080,016) Increase in Cash 18,308,806 6,042,323 Cash - Beginning of Year 38,223,395 32,181,072 Cash - End of Year 56,532,201 38,223,395

Represented by: Cash at bank 464,407 508,509 Cash in hand 56,067,794 37,714,886 56,532,201 38,223,395 The accompanying notes form an integral part of these financial statements.

52

St. Lucia Civil Service Co-operative Credit Union Ltd. (Trading as Jannou Credit Union) Index to Notes to the Financial Statements

Note 1 Introduction

Note 2 Date of Authorisation of Issue

Note 3 Significant Accounting Policies

Note 4 Critical Accounting, Judgments and Estimates and Assumptions

Note 5 Financial Risk Management

Note 6 Capital Risk Management

Note 7 Cash

Note 8 Financial Investments

Note 9 Other Receivables

Note 10 Loans and Advances to Members

Note 11 Property and Equipment

Note 12 Other Payables and Accruals

Note 13 Deposits from Members

Note 14 Withdrawable Shares

Note 15 Dividends Payable

Note 16 Share Capital

Note 17 Statutory Reserve

Note 18 Education Reserve

Note 19 Development Fund

Note 20 Funeral and Burial Benefits Scheme

Note 21 Fair Value Reserve

Note 22 Investment Income

Note 23 Other Operating Income

Note 24 Operating and Administrative Expenses

Note 25 Staff-related Expenses

Note 26 Related Party Transactions

Note 27 Events after the Reporting Period


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St. Lucia Civil Service Co-operative 8 Credit Union Ltd. (Trading as Jannou Credit Union) Notes to the Financial Statements For the Year Ended December 31, 2019 (Expressed in Eastern Caribbean Dollars)

1. Introduction

St. Lucia Civil Service Co-operative Credit Union Ltd. (Trading as Jannou Credit Union) (“the Credit Union”) is a co-operative society registered in St. Lucia as a Credit Union under the Co-operative Societies Act Cap 12.06 of 2001 on September 28, 1972.

Its principal activity is that of providing financial services and other benefits to its members.

2. Date of Authorisation of Issue

These financial statements were authorised for issue by the Board of Directors on September 10, 2020.

3. Significant Accounting Policies

The principal accounting policies adopted are stated in order to assist in a general understanding of the financial statements. These policies have been consistently applied to the years presented, unless otherwise stated.

(a) Statement of Compliance

The financial statements comprise of the statements of financial position, changes in members’ equity, comprehensive income, cash flows and the notes.

These financial statements have been drawn up in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB) as at December 31, 2019 (the reporting date), except for the provisions of IFRS 9 and associated disclosure requirements under IFRS 7. The Credit Union has not adopted IFRS 9 and has classified its financial assets, financial liabilities and determined its impairment allowance for financial assets in accordance with IAS 39 which is no longer applicable for the year ended December 31, 2019. These financial statements have been prepared under the historical cost convention, except for available-for-sale (AFS) investments measured at fair value.

(b) Basis of Preparation

The preparation of financial statements in conformity with International Financial Reporting Standards requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Critical accounting estimates may be made in determining impairment of financial assets as set out in Note 4.

The cash flows from operating activities are determined by using the indirect method. The net surplus is therefore adjusted by non-cash items, and all income and expenses from cash transactions that are attributable to investing or financing activities are eliminated. Interest received on investments is classified as investing activities and bank charges are classified as operating activities. The cash flows from investing and financing activities are determined by using the direct method. Management determines the classification of the cash flows into operating, investing and financing activities.

The Credit Union classifies its expenses by the nature of expense method.

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3. Significant Accounting Policies (Cont’d)

(b) Basis of Preparation (Cont’d)

Amendments to International Financial Reporting Standards effective in the 2019 financial year

The Credit Union applied for the first-time, unless otherwise indicated, certain amendments to the standards, which are effective for annual periods beginning on or after January 1, 2019. The amendments had no significant impact on the Credit Union’s financial statements.

IFRS 9, ‘Financial Instruments’

These amendments which are effective for annual reporting periods beginning on or after January 1, 2018, replaces the existing guidance in IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial assets and liabilities, including a new expected credit loss model for calculating impairment of financial assets and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. Although the permissible measurement bases for financial assets – amortised cost, fair value through other comprehensive income (FVOCI) and fair value though profit or loss (FVTPL) - are similar to IAS 39, the criteria for classification into the appropriate measurement category are significantly different. IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ model, which means that a loss event will no longer need to occur before an impairment allowance is recognised.

The Credit Union has not adopted IFRS 9 and thus the financial statements are not in accordance with this standard, as disclosed in Note 3(a).

IFRS 16, ‘Leases’

IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under IFRS 16 is substantially unchanged from today’s accounting under IAS 17. Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases.


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Amendments to International Financial Reporting Standards effective in the 2019 financial year

IFRS 16, ‘Leases’ (Cont’d)

IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17.

IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs.

The standard will have no impact on the financial statement of the Credit Union.

Amendment to IFRS 9, ‘Financial Instruments’

IFRS 9, ‘Financial Instruments’ was amended to clarify that for the purpose of assessing whether a prepayment feature meets the solely payments of principal and interest (“SPPI”) condition, the party exercising the option may pay or receive reasonable compensation for the prepayment irrespective of the reason for prepayment. In other words, prepayment features with negative compensation do not automatically fail SPPI.

The application of this amendment did not have a material impact on amounts reported in respect to the Credit Union’s financial statements.

Amendment to IAS 12, ‘Income Taxes’

IAS 12, ‘Income Taxes’ was amended to clarify that all income tax consequences of dividends (i.e. distribution of profits) should be recognised in profit or loss, regardless of how the tax arises.

The application of this amendment did not have a material impact on amounts reported in respect to the Credit Union’s financial statements.

New and revised International Financial Reporting Standards that have been issued but are not yet effective and have not been early adopted

The standards that are issued, but not yet effective, up to the issuance of the Credit Union’s financial statements are disclosed below. The Credit Union’s intends to adopt these standards, if applicable, when they become effective.

IAS 1, ‘Presentation of Financial Statements’ and IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’ were amended to clarify when information is material. In particular, the amendments clarify:

(a) That the reference to obscuring information addresses situations in which the effect is similar to omitting or misstating that information, and that an entity assesses materiality in the context of the financial statements as a whole, and

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New and revised International Financial Reporting Standards that have been issued but are not yet effective and have not been early adopted (Cont’d)

(b) The meaning of “primary users of general-purpose financial statements” to whom those financial statements are directed, by defining them as “existing and potential investors, lenders and other creditors” that must rely on general purpose financial statements for much of the financial information they need.

This amendment is applicable for annual periods beginning on or after January 1, 2020. It is not anticipated that the application of this amendment will have a material impact on amounts reported in respect to the Credit Union’s financial statements.

There are no other IFRS or IFRIC interpretations that are not yet effective and expected to have a material impact on the financial statements of the Credit Union.

(c) Foreign Currencies

The financial statements are presented in Eastern Caribbean dollars which is the currency of the primary economic environment in which the Credit Union operates (its functional currency). All values are rounded off to the nearest dollar, unless otherwise indicated.

Assets and liabilities expressed in foreign currencies are translated into the functional currency at the rates of exchange ruling at the date of the financial statements. Transactions arising during the year involving foreign currencies are translated into the functional currency and recorded at the rates of exchange prevailing on the dates of the transactions. Differences arising from fluctuations in exchange rates as well as including differences between buying and selling rates, are included in the Statement of Comprehensive Income.

Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the revaluation reserve in equity.

(d) Impairment of Non-Financial Assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the Statement of Comprehensive Income for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use.

(e) Cash

Cash comprise balances with less than three months’ maturity from the date of acquisition and includes cash on hand, cash at bank and other short-term securities.

(f) Financial Assets

The Credit Union allocates financial assets to the following IAS 39 categories: loans and receivables and available-for-sale financial assets. Management determines the classification of its financial instruments at initial recognition.


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(f) Financial Assets (Cont’d)

(i) Available-for-Sale

Available-for-sale investments are financial assets that are intended 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 or that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

Available-for-sale financial assets are initially recognised at fair value, which is the cash consideration including any transaction costs, and measured subsequently at fair value with gains and losses being recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial asset is derecognised. If an available-for-sale financial asset is determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive income is recognised in the statement of comprehensive income. However, interest is calculated using the effective interest method, and foreign currency gains and losses on monetary assets classified as available for sale are recognised in the statement of income. Dividends on available-for-sale equity instruments are recognised in the statement of comprehensive income when the Credit Union’s right to receive payment is established.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than: (a) those that the entity intends to sell immediately or in the short term, which are classified as held for trading, and those that the entity upon initial recognition designates as at fair value through profit or loss; (b) those that the entity upon initial recognition designates as available- for- sale; or (c) those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration.

Loans and receivables are initially recognised at fair value – which is the cash consideration to originate or purchase the loan including any transaction costs – and measured subsequently at amortised cost using the effective interest rate method. Loans and receivables are reported in the statement of financial position as loans and advances to members or as investment securities. Interest on loans and advances to members and investment securities are included in the statement of comprehensive income. In the case of impairment, the impairment loss is reported as a deduction from the carrying value of the loan and recognised in the statement of comprehensive income.

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(iii) Impaired financial assets

Assessment of impairment

The Credit Union assesses at each financial reporting date whether a financial asset or group of financial assets is impaired. It assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognized are not included in a collective assessment of impairment.

The determination of impairment losses for financial losses for financial assets is inherently subjective because it requires material estimates, including the amount and timing of expected recoverable future cash flows. These estimates may change significantly from time to time, depending on available information.

Evidence of impairment

Objective evidence that financial assets are impaired can include default or delinquency by a borrower, restructuring of a loan or advance by the Credit Union on terms that the Credit Union would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the disappearance of an active market for a security, or other observable data relating to a group of assets such as adverse changes in the payment status of borrowers or issuers in the group, or economic conditions that correlate with defaults in the group.

Impairment on financial assets carried at amortized cost

If there is objective evidence that an impairment loss on loans and receivables carried at amortized cost has been incurred, the amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses) discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset shall be reduced either directly or through use of an allowance account. The amount of loss shall be recognized in Statement of Comprehensive Income. Such impairments loss shall not be reversed.


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(iv) Impaired financial assets (Cont’d)

Impairment on financial assets carried at cost (Cont’d)

If there is an objective evidence of an impairment loss on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, or of a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

Impairment on AFS investments

When a decline in the fair value of an AFS investment has been recognized in equity as other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that had been recognized directly in equity shall be reclassified from equity to Profit or Loss even though the financial asset has not been derecognized.

The amount of the cumulative loss that is reclassified from equity and recognized in profit or loss shall be the difference between the acquisition cost (net of any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in Profit or Loss.

Impairment losses recognized in profit or loss for equity investments classified as AFS investments are not subsequently reversed through Profit or Loss. Impairment losses recognized in profit or loss for debt instruments classified as AFS investment are subsequently reversed in the Statement of Comprehensive Income if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

Reversal of impairment loss

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is recognized in the Statement of Comprehensive Income, to the extent that the carrying amount of the asset does not exceed its cost or amortized cost at the reversal date.

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(g) Property and Equipment

Items of property, plant and equipment except for land are recorded initially at cost and subsequently measured at cost less accumulated depreciation and impairment losses. Land is measured at cost. Cost includes expenditures that are directly attributable to the acquisition of the assets. Purchased software that is integral to the functionality of related equipment is capitalised as cost of that equipment. Subsequent expenditure is capitalised when it will result in future economic benefits to the Credit Union.

Depreciation is calculated on the straight-line basis, so as to write down the cost of property, plant and equipment to their residual values, over their estimated useful lives. The estimated useful lives of property, plant and equipment are as follows: -

Assets Estimated Useful Lives Freehold buildings 50 years Leasehold improvements 5 years Furniture and equipment 5 - 10 years Gains or losses arising on the disposal or retirement of an item of property and equipment are determined as the difference between the sales proceeds and the carrying amount of the asset and are recognised in the Statement of Comprehensive Income.

(h) Financial Liabilities

The Credit Union classifies its financial liabilities as Other Financial Liabilities. This classification pertains to financial liabilities that are not held for trading or not designated as at fair value through profit or loss upon the inception of the liability. Included in this category are liabilities arising from operations or borrowings.

The financial liabilities are recognized initially at fair value and are subsequently carried at amortized cost, taking into account the impact of applying the effective interest rate method of amortization (or accretion) for any related premium, discount and any directly attributable transaction costs. Fair value amounts represent estimates of the consideration that would currently be agreed upon between knowledgeable, willing parties who are under no compulsion to act.

Accruals are liabilities to pay for goods or services that have been received or supplied but have not been paid, invoiced, or formally agreed with the supplier, including amounts due to employees.

The Credit Union recognizes a provision if a present obligation has arisen as a result of a past event, payment is probable, and the amount can be reliably measured. The amount recognized is the best estimate of the expenditure required to settle the present obligation at financial reporting date, that is, the amount the Credit Union would rationally pay to settle the obligation to a third party.

Provisions are measured at the present value of the amount expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligations. The increase in the provision due to passage of time is recognized as finance cost.

The Credit Union’s other payables and accruals, deposit from members and withdrawable shares are classified as other financial liabilities.


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(i) Offsetting Financial Instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Pursuant to Section 109 of the 2001 Act the Credit Union has a legally enforceable right to offset members’ deposits against any related loan balances that are over 90 days overdue.

(j) Members’ Equity

Share Capital is determined using the nominal value of shares that have been issued.

Reserves are set aside by the Credit Union whereby allocations are transferred from Retained Earnings as necessary.

Retained earnings include all current and prior period results of operations as disclosed in the Statement of Comprehensive Income.

(k) Interest Income and Expenses

Interest income and expenses are recognised in the Statement of Comprehensive Income for all interest-bearing instruments on an accrual basis using the effective yield method based on the actual purchase price.

(l) Fees and Other Revenue

Fees and other revenue are recognised on an accrual basis when the related service has been provided, except for interest on funds placed with the central financing facility of the St. Lucia Co-operative League that is recognised on a cash basis.

Income from operating leases is recognised on the straight-line basis over the term of the lease.

(m) Expenses

Expenses are recognised in the Statement of Comprehensive Income when a decrease in future economic benefit related to a decrease in an asset or an increase in a liability has arisen that can be reliably measured. Expenses are recognised: on the basis of a direct association between the costs incurred and the earning of specific items of income; on the basis of systematic and rational allocation procedures when economic benefits are expected to arise over several accounting periods and the association with income can only be broadly or indirectly determined; or immediately when an expenditure produces no future economic benefits or when, and to the extent that, future economic benefits do not qualify, or cease to qualify, for recognition in the Statement of Financial Position as an asset.

Expenses in the Statement of Comprehensive Income are presented using the nature of expense method. These are costs incurred that are associated with the premium revenue and costs attributable to administrative and other business activities of the Credit Union.

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(n) Leases

Accounting policy applicable from January 1, 2019

The Credit Union as a lessee

Short-term Leases and Leases of Low-value Assets – The Credit Union has elected to account for low-value assets and short-term leases (defined as leases with a lease term of 12 months or less) using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.

Accounting policy applicable before January 1, 2019

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Comprehensive Income on a straight-line basis over the period of the lease.

(o) Income Tax

The Credit Union is exempt from income tax under Section 25(1)(q) of the Income Tax Act, Cap 15.02 of the revised laws of St. Lucia.

(p) Dividend Distributions

Dividend distributions to the Credit Union’s members are recognised as a liability in the Credit Union’s financial statements in the period in which the dividends are approved by the members.

(q) Related Parties

Parties are considered related if one party has the ability to control, directly or indirectly, the other party or exercise significant influence over the other party in making financial and operating decisions. Individuals, associates or companies that directly or indirectly control or are controlled by or under common control are considered related parties. The key management personnel of the Credit Union are also considered to be related parties.

In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely legal form. Transactions between related parties are accounted for at arm’s-length prices or terms similar to those offered to non-related entities in an economically comparable market.


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4. Critical Accounting Judgments, Estimates and Assumptions

The Credit Union makes certain judgments, estimates and assumptions regarding the future. Judgments, estimates and assumptions are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying amounts of assets and liabilities that are not readily apparent from other sources. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed in the succeeding pages.

4.1. Judgments

In the process of applying the accounting policies, management has made the following judgements, apart from those involving estimations, which has the most significant effect on the amounts recognized in the financial statements:

Determination of functional currency

The provisions for IFRS require management to use its judgment to determine the entity’s functional currency such that it most faithfully represents the economic effects of the underlying transactions, events and conditions that are relevant to the entity. In making this judgment, the Credit Union considers the following:

(a) the currency that mainly influences sales prices for services (this will often be the currency in which sales prices for its services are denominated and settled);

(b) the currency that mainly influences labor and other costs of providing services (this will often be the currency in which such costs are denominated and settled);

(c) the currency in which funds from financing activities are generated; and (d) the currency in which receipts from operating activities are usually retained.

Based on the economic substance of the underlying circumstances relevant to the Credit Union, the functional currency is determined to be Eastern Caribbean Dollars. The determination of functional currency was based on the primary economic environment in which the Credit union generates and expends cash.

Classification of financial instruments

The Credit Union classifies a financial instrument, or its component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual agreement and the guidelines set by IAS 32 and IAS 39 on the definitions of a financial asset, a financial liability or an equity instrument.

The substance of a financial instrument, rather than its legal form, and management’s intention and ability to hold the financial instruments to maturity generally governs its classification in the Statement of Financial Position.

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4. Critical Accounting Judgments, Estimates and Assumptions (Cont’d)

4.2. Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Fair value of financial instruments

The Credit Union carries certain financial assets and liabilities at fair value, which requires extensive use of accounting estimates and judgment. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Credit Union utilized different valuation methodologies and assumptions. Any changes in fair value of these financial assets and liabilities would affect profit or loss and equity.

The fair values of financial assets and liabilities as at December 31, 2019 and 2018 are disclosed in Note 5(d).

Allowance for impairment on loans

The Credit Union reviews its loan portfolio to assess impairment at least annually. In determining whether an impairment loss should be recorded in the Statement of Comprehensive Income, the Credit Union makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio.

Useful lives of property and equipment

The Credit Union estimates the useful lives of property and equipment based on the period over which the assets are expected to be available for use. The estimated useful lives of each asset are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the assets. In addition, estimation of the useful lives of the assets is based on collective assessment of industry practice, internal technical evaluation and experience with similar assets.

It is possible, however, that future results of operations could be materially affected by changes in estimates brought about by changes in factors mentioned above.

The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of property, plant and equipment would increase recorded cost of sales and operating expenses and decrease noncurrent assets.

There were no changes in the estimated useful lives of property and equipment in 2019 and 2018.


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5. Financial Risk Management

The Board of Directors has overall responsibility for the establishment and oversight of the Credit Union’s risk management framework. The Credit Union’s risk management policies are established to identify and analyse the risk faced by the Credit Union, to set appropriate risk limits and controls and to monitor risks and adherence to limits and controls. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Credit Union’s activities. The Credit Union, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Supervisory Committee oversees how management monitors compliance with the Credit Union’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Credit Union. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Supervisory Committee and to the Board of Directors.

The Credit Union’s activity of accepting funds from members and of investing deposit receipts in loans and other investments exposes the Credit Union to various financial risks. Financial risks include credit, liquidity and market risks. Market risks arise from changes in interest rates, equity prices, currency exchange rates or other market factors. The effects of these risks are disclosed in the sections below.

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5. Financial Risk Management (Cont’d)

(a) Credit Risk

Credit risk is the exposure that the counterparty to a financial instrument is unable to meet an obligation, thereby causing a financial loss to the Credit Union.

Credit risk from financial assets is minimised through advancing loans only after careful assessment of the borrower, obtaining collateral before advancing loans, and placing deposits with financial institutions with a strong capital base. The risk accepted in relation to one borrower is restricted to 10% of the shareholder’s equity. Exposure to credit risk is also managed in part by obtaining collateral and guarantees for loans receivable. The collateral may consist of real estate, member deposits and shares, equipment, or vehicles.

The maximum exposure to credit risk before collateral held or other credit enhancements are as follows:

2019 2018 $ $ Credit risk exposure relating to on-statement of financial position items: - Cash at bank 56,067,794 37,714,886 Financial investments 62,398,475 60,139,706 Other receivables 621,630 533,706 Loans and advances to members 161,361,676 162,733,504 280,449,575 261,121,802 Credit risk exposure relating to off-statement of financial position items: - Loans commitments 3,168,392 2,833,619 283,617,967 263,955,421 Credit risk in respect of loans and advances is limited as this balance is shown net of impairment losses on loans and advances. The maximum exposure to credit risk for loans and advances to members at the reporting date by category was: - 2019 2018 $ $ Social 5,988,476 6,448,296 Insurance 550,011 613,207 Debt Consolidation 5,925,992 6,182,156 Education 9,749,727 10,627,190 Medical 1,902,329 1,845,166 Mortgages and Real Estate 58,588,305 61,583,363 Renovations 7,533,724 7,051,865 Christmas Wish maker 12,709,892 11,172,468 Vehicles 9,728,971 10,348,567 Refinancing 416,922 557,353 Consumer loans/other 56,504,345 51,769,384 169,598,694 168,199,015


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(a) Credit Risk (Cont’d)

(i) Loans and advances to members

Loans and advances to members are summarized as follows: 2019 2018 $ $ Neither past due nor impaired 160,624,122 161,266,825 Past due but not impaired 1,686,867 638,705 Impaired but not deemed total loss 281,129 528,546 Impaired 7,006,576 5,764,939 Gross 169,598,694 168,199,015 Allowance for impairment losses (9,225,164) (6,459,870) Net 160,373,530 161,739,145 The total impairment provision for loans and advances to members is $9,225,164 (2018 - $6,459,870) and is comprised as follows:- 2019 2018 $ $ Individually impaired loans 5,007,665 3,157,278 General portfolio provision 4,217,499 3,302,592 9,225,164 6,459,870

(ii) Loans and advances to members past due but not impaired

Loans up to 90 days past due are not considered impaired unless information is available to indicate otherwise. Therefore, the gross amount of loans and advances to members that were past due but not impaired were as follows:

2019 2018 $ $ Past due up to 30 days 351,378 50,071 Past due 31 – 60 days 512,621 237,375 Past due 61 – 90 days 822,868 351,259 1,686,867 638,705

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t U

nion

will

see

k to

dis

pose

of

by s

ale.

In s

ome

inst

ance

s, t

he C

redi

t U

nion

may

pr

ovid

e re

-fin

anci

ng.

The

re a

re n

o re

poss

esse

d as

sets

for

the

yea

r en

ded

Dece

mbe

r 31

, 20

19 a

nd 2

018.


|




(v) Credit quality per class of financial assets

The table below shows the credit quality by class of financial assets (gross of allowance for credit losses) of the Credit Union based on their historical experience with the corresponding third parties as at December 31, 2019.

The credit quality of the Credit Union’s financial assets is evaluated using internal audit rating. Financial assets are considered as neither past due nor impaired if the counterparties are not expected to default in settling their obligations, thus credit risk exposure is minimal. There counterparties include banks, members and other financial institutions who pay on or before due date.

Neither past due nor impaired Impaired Total $ $ $ As at December 31, 2019 Cash at bank 56,067,794 - 56,067,794 Financial investments 62,398,475 - 62,398,475 Other receivables 621,630 - 621,630 Loans and advances to members 162,310,989 7,287,705 169,598,694 281,398,888 7,287,705 288,686,593

Neither past due not impaired Impaired Total $ $ $ As at December 31, 2018 Cash at bank 37,714,886 - 37,714,886 Financial investments 60,139,706 - 60,139,706 Other receivables 533,706 - 533,706 Loans and advances to members 161,905,530 6,293,485 168,199,015 260,293,828 6,293,485 266,587,313

70




(v) Credit quality per class of financial assets (Cont’d) Loans and Loans and Loans and Receivables Receivables Receivables - Treasury - Bonds - Deposits bills Total $ $ $ $ As at December 31, 2019 CariBBB to CariBBB+ 24,626,466 - 17,299,383 41,925,849 Unrated 19,763,253 - 19,763,253 Total 24,626,466 19,763,253 17,299,383 61,689,102

As at December 31, 2018

CariBBB to CariBBB+ 18,834,517 - 18,933,640 37,768,157 Unrated - 20,662,071 - 20,662,071 Total 18,834,517 20,662,071 18,933,640 58,430,228


|

St.

Luci

a Ci

vil S

ervi

ce C

o-op

erat

ive

26

Cred

it U

nion

Ltd

. (T

radi

ng a

s Ja

nnou

Cre

dit

Uni

on)

Not

es t

o th

e Fi

nanc

ial S

tate

men

ts

For

the

Year

End

ed D

ecem

ber

31,

2019

(E

xpre

ssed

in E

aste

rn C

arib

bean

Dol

lars

)

5.

Fina

ncia

l Ris

k M

anag

emen

t (C

ont’

d)

(b)

Liqu

idit

y Ri

sk

Liqu

idit

y ri

sk is

the

exp

osur

e th

at t

he C

redi

t U

nion

may

enc

ount

er d

iffi

cult

y in

mee

ting

obl

igat

ions

ass

ocia

ted

wit

h it

s fi

nanc

ial

liabi

litie

s. L

iqui

dity

ris

k al

so a

rise

s w

hen

exce

ss f

unds

acc

umul

ate

resu

ltin

g in

the

loss

of

oppo

rtun

ity

to in

crea

se in

vest

men

t re

turn

s.

The

cont

ract

ual m

atur

itie

s of

ass

ets

and

liabi

litie

s, a

nd t

he a

bilit

y of

the

Cre

dit

Uni

on t

o m

eet

paym

ent

oblig

atio

ns a

ssoc

iate

d w

ith

fina

ncia

l lia

bilit

ies

whe

n th

ey f

all d

ue a

nd t

o re

plac

e fu

nds

whe

n th

ey a

re w

ithd

raw

n, a

re im

port

ant

fact

ors

in a

sses

sing

the

liqu

idit

y of

th

e Cr

edit

Uni

on.

Proj

ecti

ons

and

exam

inat

ion

of t

he C

redi

t U

nion

’s a

sset

and

liab

ility

mat

urit

y st

ruct

ure

to f

acili

tate

the

mat

chin

g of

ass

et a

nd li

abili

ty

mat

urit

y da

tes

as f

ar a

s po

ssib

le a

nd p

rovi

ding

for

any

sho

rtfa

ll or

exc

ess

cash

sit

uati

ons

is a

fun

dam

enta

l par

t of

the

Cre

dit

Uni

on’s

liq

uidi

ty r

isk

man

agem

ent.

Man

agem

ent

unde

rtak

es c

onti

nuou

s re

view

of

cash

infl

ows

and

outf

low

s an

d se

eks

to m

aint

ain

a lo

ans-

to-s

avin

gs r

atio

not

exc

eedi

ng

85%.

For

the

pur

pose

of

this

rat

io s

avin

gs in

clud

e de

posi

ts f

rom

mem

bers

and

sha

reho

lder

bal

ance

s.

The

tabl

e be

low

pre

sent

s th

e ca

sh f

low

s pa

yabl

e by

the

Cre

dit

Uni

on f

or f

inan

cial

liab

iliti

es b

y re

mai

ning

con

trac

tual

mat

urit

y da

tes

at

the

date

of

the

fina

ncia

l sta

tem

ents

. T

he a

mou

nts

disc

lose

d in

the

tab

le a

re t

he c

ontr

actu

al u

ndis

coun

ted

cash

flo

ws,

whe

reas

the

Cr

edit

Uni

on m

anag

es t

he in

here

nt li

quid

ity

risk

bas

ed o

n ex

pect

ed u

ndis

coun

ted

cash

flow

s.

Ca

rryi

ng

Cont

ract

ual

6 m

onth

s

6 -

12

1 -

2

2 -

5 M

ore

than

amou

nts

Cash

flo

ws

or le

ss

mon

ths

year

s ye

ars

5 ye

ars

$

$ $

$ $

$ $

As

at D

ecem

ber

31,

2019

Oth

er p

ayab

les

and

accr

uals

1,

441,

523

1,44

1,52

3 1,

441,

523

- -

- -

Depo

sits

fro

m m

embe

rs

29,9

81,0

26

29,9

81,0

26

29,9

81,0

26

- -

- -

Wit

hdra

wab

le s

hare

s 19

6,09

9,78

0 19

6,09

9,78

0 19

6,09

9,78

0 -

- -

-

227,

522,

329

227,

522,

329

227,

522,

329

- -

- -

As

at D

ecem

ber

31,

2018

Oth

er p

ayab

les

and

accr

uals

1,

081,

281

1,08

1,28

1 1,

081,

281

- -

- -

Depo

sits

fro

m m

embe

rs

25,9

56,2

62

25,9

56,2

62

25,9

56,2

62

- -

- -

Wit

hdra

wab

le s

hare

s 18

1,61

6,49

3 18

1,61

6,49

3 18

1,61

6,49

3 -

- -

-

208,

654,

036

208,

654,

036

208,

654,

036

- -

- -

72

St.

Luci

a Ci

vil S

ervi

ce C

o-op

erat

ive

27

Cred

it U

nion

Ltd

. (T

radi

ng a

s Ja

nnou

Cre

dit

Uni

on)

Not

es t

o th

e Fi

nanc

ial S

tate

men

ts

For

the

Year

End

ed D

ecem

ber

31,

2019

(E

xpre

ssed

in E

aste

rn C

arib

bean

Dol

lars

)

5.

Fina

ncia

l Ris

k M

anag

emen

t (C

ont’

d)

(c)

Inte

rest

Rat

e Ri

sk

The

Cred

it U

nion

is e

xpos

ed t

o in

tere

st r

ate

risk

, w

hich

ari

ses

whe

n a

chan

ge in

mar

ket

inte

rest

rat

e af

fect

s th

e cu

rren

t or

fut

ure

yiel

ds o

f fi

nanc

ial a

sset

s an

d fi

nanc

ial l

iabi

litie

s. T

he o

ccur

renc

e of

an

incr

ease

in in

tere

st r

ates

on

fina

ncia

l lia

bilit

ies

may

res

ult

in

fina

ncia

l los

s to

the

Cre

dit

Uni

on.

Inte

rest

on

loan

s an

d ad

vanc

es t

o m

embe

rs a

nd d

epos

its

from

mem

bers

is f

ixed

to

mat

urit

y.

The

tabl

e be

low

sum

mar

ises

the

exp

osur

es t

o in

tere

st r

ate

risk

s of

the

Cre

dit

Uni

on’s

fin

anci

al a

sset

s an

d fi

nanc

ial l

iabi

litie

s. A

mou

nts

are

stat

ed a

t ca

rryi

ng a

mou

nts,

cat

egor

ised

by

the

earl

ier

of c

ontr

actu

al r

e-pr

icin

g or

mat

urit

y da

tes.

Im

med

iate

ly

Gre

ater

rate

1

- 3

3 -

12

than

N

on-r

ate

sens

itiv

e m

onth

s m

onth

s 12

mon

ths

sens

itiv

e To

tal

$

$ $

$ $

$ A

s at

Dec

embe

r 31

, 20

19

Fina

ncia

l Ass

ets

Cash

at

bank

56

,067

,794

-

- -

- 56

,067

,794

Fi

nanc

ial i

nves

tmen

ts

- 2,

604,

289

37,2

06,8

62

21,2

13,3

25

1,37

3,99

9 62

,398

,475

O

ther

rec

eiva

bles

-

- -

- 62

1,63

0 62

1,63

0 Lo

ans

and

adva

nces

to

mem

bers

-

1,55

1,17

0 7,

924,

270

150,

898,

090

988,

146

161,

361,

676

Fina

ncia

l Lia

bilit

ies

Oth

er p

ayab

les

and

accr

uals

-

- -

- (1

,441

,523

) (1

,441

,523

) De

posi

ts f

rom

mem

bers

(2

9,98

1,02

6)

- -

- -

(29,

981,

026)

W

ithd

raw

able

sha

res

(196

,099

,780

) -

- -

- (1

96,0

99,7

80)

Tota

l int

eres

t se

nsit

ivit

y ga

p (1

70,0

13,0

12)

4,15

5,45

9 45

,131

,132

17

2,11

1,41

5 1,

542,

252

52,9

27,2

46


|

St.

Luci

a Ci

vil S

ervi

ce C

o-op

erat

ive

28

Cred

it U

nion

Ltd

. (T

radi

ng a

s Ja

nnou

Cre

dit

Uni

on)

Not

es t

o th

e Fi

nanc

ial S

tate

men

ts

For

the

Year

End

ed D

ecem

ber

31,

2019

(E

xpre

ssed

in E

aste

rn C

arib

bean

Dol

lars

)

5.

Fina

ncia

l Ris

k M

anag

emen

t (C

ont’

d)

(c)

Inte

rest

Rat

e Ri

sk (

Cont

’d)

Im

med

iate

ly

Gre

ater

rate

1

- 3

3

- 12

th

an

Non

-rat

e

se

nsit

ive

mon

ths

mon

ths

12 m

onth

s se

nsit

ive

Tota

l

$ $

$ $

$ $

As

at D

ecem

ber

31,

2018

Fi

nanc

ial A

sset

s

Ca

sh a

t ba

nk

37,7

14,8

86

- -

- -

37,7

14,8

86

Fina

ncia

l inv

estm

ents

1,

180,

661

9,59

2,79

9 27

,294

,489

19

,774

,353

2,

297,

404

60,1

39,7

06

Oth

er r

ecei

vabl

es

- -

- -

533,

706

533,

706

Loan

s an

d ad

vanc

es t

o m

embe

rs

- 1,

409,

595

7,93

0,56

9 15

2,39

8,98

1 99

4,35

9 16

2,73

3,50

4 Fi

nanc

ial L

iabi

litie

s

O

ther

pay

able

s an

d ac

crua

ls

- -

- -

(1,0

81,2

81)

(1,0

81,2

81)

Depo

sits

fro

m m

embe

rs

(25,

956,

262)

-

- -

- (2

5,95

6,26

2)

Wit

hdra

wab

le s

hare

s (1

81,6

16,4

93)

- -

- -

(181

,616

,493

) To

tal i

nter

est

sens

itiv

ity

gap

(168

,677

,208

) 11

,002

,394

35

,225

,058

17

2,17

3,33

4 2,

744,

188

52,4

67,7

66

74



(c) Interest Rate Risk (Cont’d)

At the reporting date, the carrying values of the Credit Union’s interest-bearing, fixed-rate financial instruments were: -

2019 2018 $ $ Financial Assets Loans and receivables 61,024,476 57,842,302 Loans and advances to members 160,373,530 161,739,145 221,398,006 219,581,447 Financial Liabilities Deposits from members 29,981,026 25,956,262 Withdrawable shares 196,099,780 181,616,493 226,080,806 207,572,755 The table below summarises the interest rates on financial assets and liabilities held at the reporting date. 2019 2018 % % Financial Assets Cash 0.5 - 1.75 0.5 - 1.75 Financial investments 1.75 – 6.95 1.75 – 6.95 Loans and advances to members 0 – 14.00 0 – 14.00 Financial Liabilities Deposits from members 2.00 – 0 2.00 – 0 Withdrawable shares 2.00 2.00

The following table demonstrates the sensitivity to a reasonably possible change in the interest rate, with all other variables held constant, of the Credit Union’s profit and net assets.

Change in

interest rate

Effect on profit before

tax

Effect on net assets

2019 Cash in bank ±0.50% ±234,474 ±234,474 Investment securities ±0.50% ±297,474 ±297,474 Loans and advances to members ±0.50% ±806,307 ±806,307 Members deposits ±0.50% ±139,843 ±139,843

2018 Cash in bank ±0.50% ±173,059 ±173,059 Investment securities ±0.50% ±259,552 ±259,552 Loans and advances to members ±0.50% ±803,106 ±803,106 Members deposits ±0.50% ±122,138 ±122,138


|



(d) Fair Value Hierarchy

Fair value amounts represent estimates of the consideration that would currently be agreed upon between knowledgeable willing parties who are under no compulsion to act and is best evidenced by a quoted market value if one exists. The following methods and assumptions were used to estimate the fair value of financial instruments.

The fair values of cash resources, accounts receivable and accounts payable, members’ deposits, and other short-term instruments are assumed to approximate their carrying amounts due to their short-term nature. The fair value of off-statement of financial position commitments are also assumed to approximate the fair value due to their short-term nature.

Investment Securities

Assets classified as available for sale are at fair value based on market prices or broker price quotations. For unlisted securities, fair value is estimated on their cost as the amounts are immaterial. For investment securities classified as loans and receivables fair value is estimated using discounted cash flows. Loans and Advances to Members

Loans and advances are net of their provision for impairment. The estimated fair values of loans and advances represent the discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted at current market rates to determine fair value.

Fair Values of Financial Assets and liabilities

The following table shows an analysis of financial instruments measured at fair value by level of the fair value hierarchy: -

Level 1 Level 2 Level 3 Total $ $ $ $ As at December 31, 2019 Financial Assets measured at fair value Securities available-for-sale – Listed - 133,625 - 133,625 Securities available-for-sale – Unlisted - - 575,748 575,748 - 133,625 575,748 709,373 Financial Assets for which fair values are disclosed Investment securities – loans and receivables - - 61,689,102 61,689,102 Loan and advances to members - - 161,361,676 161,361,676 - - 223,050,778 223,050,778 As at December 31, 2018 Financial Assets measured at fair value Securities available-for-sale - Listed - 133,625 - 133,625 Securities available-for-sale – Unlisted - - 1,575,853 1,575,853 - 133,625 1,575,853 1,709,478 Financial Assets for which fair values are disclosed Investment securities – loans and receivables - - 58,430,228 58,430,228 Loans and advances to members - - 162,733,504 162,733,504 - - 221,163,732 221,163,732

76


5. Financial Risk management (Cont’d)

(d) Fair Value Hierarchy (Cont’d)

The fair value of financial instruments with quoted prices in an active market are included in Level 1.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available. If all significant inputs required to fair value an instrument are observable, the instrument is Level 2.

If one or more significant inputs is not based on observable market data, the instrument is included in Level 3.

The table below summarises the carrying amounts and fair values of those financial assets and financial liabilities not presented on the Credit Union’s statement of financial position at their fair value.

Carrying amount Fair value 2019 2018 2019 2018 $ $ $ $ Financial assets Loans and advances to members 160,373,530 161,739,145 150,869,492 147,903,465 Investment securities Loans and receivables 61,689,102 58,430,228 61,560,037 58,292,501 The carrying amounts of all financial liabilities are assumed to approximate their fair values.

There were no transfer between levels in the fair value hierarchy during the year.


|


6. Capital Risk Management

The Credit Union’s objectives when managing capital are:-

• To comply with the statutory capital requirements of the Co-operative Societies Act of St. Lucia.

• To safeguard the Credit Union’s ability to continue as a going concern so that it can continue to provide returns for members and benefits for other stakeholders; and

• To maintain a strong capital base to maintain members, creditors, and other parties’ confidence and to sustain future development of the Credit Union.

The Board of Directors monitors the return on capital, which is defined as surplus for the year divided by total shares, as well as the level of dividends to members.

Section 119 of the Co-operative Societies Act Cap 12.06 requires the Credit Union to maintain statutory and other reserves at not less than 10% of its liabilities. The Credit Union is in compliance as at December 31, 2019.

Capital adequacy is monitored quarterly using the PEARLS ratios prescribed by the World Council of Credit Unions for determining capital adequacy and which has been adopted by the Financial Services Regulatory Authority (FSRA). PEARLS require that each Credit Union maintain minimum of 10% total assets as its capital base. As at year end the minimum capital required was $28,616,568 (2018 – $26,675,196). The regulatory capital is divided into two levels: -

• Institutional Capital: Share Capital, Statutory Capital, Retained Earnings.

• Transitionary Capital: Education Fund, Development Fund, Disaster Fund, Funeral and Burial Benefits Scheme and Fair Value Reserve.

2019 2018 $ $ Institutional capital Share capital 16,480,111 15,186,509 Retained earnings 8,455,168 11,202,188 Statutory reserve 31,561,349 29,562,503 Total institutional capital 56,496,628 55,951,200

Transitionary capital Education reserve 500,000 500,000 Development fund 538,156 538,156 Disaster fund 230,112 230,112 Funeral and burial benefits scheme 851,885 851,885 Fair value reserve 26,571 26,571 Total transitionary fund 2,146,724 2,146,724 Total regulatory capital 58,643,352 58,097,924

The risk-weighted assets are measured by an estimation of market, credit, interest, and other risk associated with each asset and with due consideration to the collateral proffered. In addition, management, and Board of Directors monitor movements in asset levels on a monthly basis.

The Co-operative was in compliance with this requirement at year-end.

78


7. Cash 2019 2018 $ $ Cash on hand 464,407 508,509 Cash at bank 56,067,794 37,714,886 56,532,201 38,223,395 For the purposes of the Statement of Cash Flows, cash include fixed deposits which are held to meet the liquidity requirements of Section 119 (3) of the Co-operative Societies Act Cap 15.02 of the revised laws of St. Lucia.

8. Financial Investments

2019 2018

Cost Carrying

Value Cost Carrying

Value $ $ $ $ Available-for-Sale (AFS) Investments Listed - Eastern Caribbean Financial Holding Limited 20,452 ordinary shares at $4.48 (2018 - $4.48) 204,520 91,625 204,520 91,625 - St. Lucia Electricity Services Ltd. 2,100 ordinary shares at $20.00 (2018 - $20.00) 40,000 42,000 40,000 42,000 Unlisted - St. Lucia Co-operative League - - 1,000,112 1,000,105 - Eastern Caribbean Home Mortgage Bank 1,642 ordinary shares at $152.36 (2018 - $152.36) 250,180 250,180 250,180 250,180 - 1st National Bank St. Lucia Limited 17,000 ordinary shares at $15.04 (2018 - $15.04) 305,000 325,568 305,000 325,568 Total AFS Investments 709,373 1,709,478 Loans and Receivables St. Lucia Government Bonds 12,008,108 12,465,291 St. Lucia Government Treasury Bills 1,575,000 1,575,000 St. Lucia Government Treasury Note 5,000,000 7,110,721 First Citizens Investment Services Ltd. Repurchase agreements 10,380,264 10,230,055 Eastern Caribbean Home Mortgage Bank Bond 12,462,000 5,999,700 41,425,372 37,380,767 Fixed Deposits 1st National Bank St. Lucia Limited 15,631,914 15,381,916 Bank of Saint Lucia Limited 3,967,190 3,898,958 St. Lucia Co-operative League - 1,180,661 19,599,104 20,461,535 Interest Receivable 664,626 587,926 Total Loans and Receivables 61,689,102 58,430,228 Total Financial Investments 62,398,475 60,139,706


|


9. Other Receivables

2019 2018 $ $ Other receivables 813,884 725,960 Allowance for impairment (192,254) (192,254) 621,630 533,706 Allowance for impairment Balance – beginning of year 192,254 192,254 Allowance for bad debts - - Balance – end of year 192,254 192,254

10. Loans and Advances to Members

2019 2018 $ $ Loans 115,957,910 111,874,750 Mortgages 53,640,784 56,324,265

169,598,694 168,199,015 Allowance for impairment (9,225,164) (6,459,870)

160,373,530 161,739,145 Interest receivable 988,146 994,359 161,361,676 162,733,504 Allowance for Impairment Balance - beginning of year 6,459,870 8,932,409 Loans written off - (1,827,437) Impairment losses/(write back) 2,765,294 (245,903) Recoveries - (399,199) Balance - end of year 9,225,164 6,459,870

Impairment Losses/(write back) Current year losses/(write back) 2,765,294 (245,903) Direct write-offs - 417,182 Recovery of amounts previously written-off (223,626) (546,461) 2,541,668 (375,182)

80


11. Property and Equipment

Furniture

Freehold Leasehold and

Land Buildings Improvements Equipment Total

$ $ $ $ $ At December 31, 2017

Cost 3,218,986 1,234,274 45,686 1,680,161 6,179,107 Accumulated depreciation - (368,440) (44,938) (1,151,907) (1,565,285) Net book value 3,218,986 865,834 748 528,254 4,613,822 Year ended December 31, 2018

Opening net book value 3,218,986 865,834 748 528,254 4,613,822 Additions - 491,659 - 287,348 779,007 Depreciation charge (Note 24) - (38,331) (748) (232,101) (271,180) Closing net book value 3,218,986 1,319,162 - 583,501 5,121,649 At December 31, 2018

Cost 3,218,986 1,725,933 45,686 1,967,509 6,958,114 Accumulated depreciation - (406,771) (45,686) (1,384,008) (1,836,465) Net book value 3,218,986 1,319,162 - 583,501 5,121,649 Year ended December 2019

Opening net book value 3,218,986 1,319,162 - 583,501 5,121,649 Additions - 106,038 - 288,254 394,292 Disposals - - - (23,394) (23,394) Depreciation charge (Note 24) - (40,152) - (200,696) (240,848) Closing net book value 3,218,986 1,385,048 - 647,665 5,251,699 At December 31, 2019

Cost 3,218,986 1,831,971 45,686 2,055,693 7,152,336 Accumulated depreciation - (446,923) (45,686) (1,408,028) (1,900,637) Net book value 3,218,986 1,385,048 - 647,665 5,251,699

Loss on Disposal Accumulated Net Book

Cost Depreciation Value Proceeds Loss $ $ $ $ $

December 31, 2019

Furniture and Equipment 200,070 176,676 23,394 - 23,394


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12. Other Payables and Accruals

2019 2018 $ $ Accruals 229,719 286,074 Other payables 1,211,804 795,207 1,441,523 1,081,281

13. Deposits from Members

2019 2018 $ $ Registered Homeowners Savings Plan (R.H.O.S.P.) 287,346 316,697 Special savings 24,738,130 21,183,077 S.O.C.A. savings 4,955,550 4,456,488 29,981,026 25,956,262 Members fixed deposits are payable on demand and has effective interest rates ranging from 2% to 4% (2018: 2% - 4%).

14. Withdrawable Shares

The withdrawable shares have a nominal value of $5. The shares are allotted on the basis of the amount credited to the members’ withdrawable shares account. There are no restrictions for the redemption of the shares.

15. Dividends Payable 2019 2018 $ $ Dividends declared 3,219,537 2,983,367 Patronage refund 3,280,531 2,405,680 Converted to shares and distributed (6,500,068) (5,389,047) Balance - end of the year - - The dividend proposed and approved at the 2019 annual general meeting was paid by the issuance of additional ordinary shares, withdrawable shares, and deposits to members’ savings accounts. The patronage refund of 10% (2018 – 10%) approved at the meeting was deposited to members’ savings accounts.

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16. Share Capital

No. of 2019 No. of 2018 Shares $ Shares $ Ordinary Shares Balance - beginning of year 3,037,302 15,186,509 2,775,496 13,877,478 Issued 258,720 1,293,602 271,397 1,356,984 Withdrawn - - (9,591) (47,953) Balance - end of year 3,296,022 16,480,111 3,037,302 15,186,509 The Credit Union is authorised to issue an unlimited number of ordinary and withdrawable shares, each with a par value of $5.00.

17. Statutory Reserve 2019 2018 $ $ Balance - beginning of year 29,562,503 27,064,801 Allocation from retained earnings 1,993,186 2,491,482 Increase in allocation - - Entrance fees 5,660 6,220 Balance - end of year 31,561,349 29,562,503 In accordance with Section 119 of the Co-operative Societies Act, the Credit Union is required to set aside a statutory reserve of at least 20% of net surplus (if any) each year. In addition, all entrance fees are placed in the statutory reserve.

18. Education Reserve 2019 2018 $ $ Balance - beginning of year 500,000 500,000 Allocation from retained earnings 370,083 154,325 Transfer to retained earnings for training expenses (370,083) (154,325) Balance - end of year 500,000 500,000 In accordance with a resolution passed by the members, the Credit Union is required to set aside an education reserve of 10% of net surplus (if any) after the statutory reserve allocation less training expenses once the reserve falls below $500,000 or such percentage as the Board of Directors may subsequently approve.

19. Development Fund

The Co-operative Societies Act and the Credit Union’s By-laws allow the Credit Union, on the recommendation of the Board of Directors, to make an annual contribution to the National League not exceeding 10% of its realized surplus from operations to be used for the development of registered societies.


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20. Funeral and Burial Benefits Scheme

2019 2018 $ $ Balance - beginning of year 851,885 865,885 Transfer to retained earnings for benefits paid - (14,000) Balance - end of year 851,885 851,885 The Credit Union approved the allocation of $60,000 per annum to the Funeral and Burial Benefits Scheme together with any additional sums as may be required and approved by the Board of Directors.

For the current year however, the board decided not to allocate any funds to this reserve.

21. Fair Value Reserve 2019 2018 $ $ Balance - beginning of year 26,571 29,843 Fair value decrease in AFS investments - (3,272) Balance - end of year 26,571 26,571 The fair value reserve arises on the restatement at fair value of the Credit Union’s investments in Eastern Caribbean Financial Holdings Limited and St. Lucia Electricity Services Limited which are classified as available-for-sale investments.

22. Investment Income 2019 2018 $ $ Interest on savings account - Bank of Saint Lucia Limited 77,468 58,991 Interest on savings account - 1st National Bank St. Lucia Limited 62,024 80,460 Interest on fixed deposits – other 379,140 405,094 Interest on government bonds and treasury bills 1,522,844 1,397,655 Other 43,603 14,310 2,085,079 1,956,510

23. Other Operating Income

2019 2018 $ $ Insurance administration fees 97,198 68,322 Family Indemnity Plan (FIP) income 136,414 122,345 Other 75,386 76,726 308,998 267,393 Included in other is an amount of $2,926,560 received from British American Insurance Company (Judicial Manager appointed), being reimbursement of impaired investment plus interest written off in prior years.

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24. Operating and Administrative Expenses 2019 2018 $ $ Advertising and promotion 339,937 367,740 AGM expenses 102,676 87,391 Audit fees 59,551 57,452 Bank charges 39,380 44,455 Board and committee expenses 441,802 253,654 Credit union week 88,693 74,786 Cuna insurance 1,095,928 1,009,834 Depreciation (Note 11) 240,848 271,180 Donations 99,220 94,468 General insurance 52,392 41,999 League dues 48,288 75,000 Members expenses 998 3,253 Miscellaneous - 14,000 Office supplies and stationery 139,481 153,159 Professional fees 317,328 83,995 Property taxes 32,204 32,500 Rent 28,688 21,038 Repairs and maintenance 596,578 296,561 Security 185,056 187,596 Scholarships 124,798 125,930 SOCA expenses 145,332 138,171 Staff-related expenses (Note 25) 3,073,732 2,824,070 Utilities 382,413 322,304 7,635,323 6,580,536


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25. Staff-related Expenses

Included in operating and administrative expenses are the following:- 2019 2018 $ $ Senior Management Salaries 792,572 796,302 National Insurance contributions 25,250 24,000 Allowances 46,300 45,000 Bonus 28,140 32,775 Gratuity 41,100 33,600 933,362 931,677 Other Staff Costs Salaries and wages 1,594,655 1,375,005 National Insurance contributions 79,379 72,728 Allowances 10,800 9,600 Bonus 48,200 52,942 Overtime 21,645 23,342 Uniforms 81,248 7,825 Staff training and development 140,665 131,265 Staff benefits 103,053 207,356 Gratuity 60,725 12,330 2,140,370 1,892,393 3,073,732 2,824,070 The total number of administrative staff as at December 31, 2019 was 51 (2018 - 51).

26. Related Party Transactions

The Credit Union recorded balances with its directors and senior management at the date of the financial statements as follows:- 2019 2018 $ $ Shares and deposits 1,138,680 984,416 Loans and advances 1,647,875 1,461,344

27. Events after the Reporting Period

On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus (COVID-19) a pandemic. The extent of the impact of COVID-19 on the Credit Union will depend on future developments including the duration and spread of the virus and its impact on the international financial markets and the local economy. Should the international financial markets and the local economy be negatively impacted for an extended period, the financial results of the Credit Union may be materially adversely affected. In particular, the provision for expected credit losses which may increase with delinquency will negatively affect Net Income. Management will monitor the situation and will take the necessary actions to limit the adverse impacts of the pandemic.

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730-9565


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