River Sallee Co-operative
Credit Union Limited
2016 Annual Report
RSCCU Annual Report • 2016
VISION STATEMENT “To be the premier Credit Union serving St. Patrick’s and its environs”.
MISSION STATEMENT “To satisfy the ever changing financial services and financial literacy needs of its members”.
OUR VALUES The Credit Union will be guided by the following core values in achieving its mission: »» HONESTY AND INTEGRITY – A strict and comprehensive adherence to robust ethical ideals and an unwavering honesty in actions. »» IMPARTIALITY AND OBJECTIVITY – Everyone will be treated with the utmost respect no matter their standing in the Credit Union. »» FINANCIAL SUSTAINABILITY AND VIABILITY – Providing optimal returns to all shareholders and depositors. »» MEMBER FOCUSED – All Credit Union activities are geared towards providing maximum benefits to its members. »» PROFESSIONALISM OF EXECUTIVE AND OPERATIONAL MANAGEMENT – Demonstrate consistent consideration and appreciation for colleagues, members and all other stakeholders. »» TEAM WORK – The belief permeates within the institution that excellence can be best achieved through collective and collaborative efforts. »» INNOVATION – Demonstrating passion for new ideas and fresh thinking by being on the cutting edge of new technology.
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RSCCU Annual Report • 2016
TABLE OF CONTENT Vision, Mission & Values
01
Corporate Information
03
Notice of 43rd Annual General Meeting
04
Standing Orders
05
43rd Annual General Meeting Agenda
06
President’s Message
08
Minutes of the 42nd Annual General Meeting
10
Board of Directors’ Report
15
Credit Committee’s Report
22
Supervisory Committee’s Report
24
Nominating Committee’s Report
26
Auditor’s Report
27
Budget
55
Resolutions
57
Credit Union Prayer
58
Credit Union Song
58
Caring for our Community
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RSCCU Annual Report • 2016
Corporate Information MAIN OFFICE: River Sallee, St. Patrick Grenada, West Indies Telephone: (473) 442-1727/442-9870 Fax: (473) 442-2677 Email: rscu@spiceisle.com Web: www.riversalleecreditunion.Com
SAUTEURS BRANCH Main Street, Sauteurs St. Patrick Telephone: (473) 442-2732 Fax: (473) 442-2732
AUDITORS Pannell Kerr Forster
BANKS Bank Of Nova Scotia Grenada Co-Operative Bank Republic Bank Limited
SOLICITORS Amicus Attorneys Church Street, St. George Wilkinson, Wilkinson & Wilkinson Lucas Street, St. George
EXECUTIVE OFFICERS: President: Robert Whyte Vice President: Robert Clement Secretary: Kim Jeffrey-Peters Asst Secretary: Richard John Treasurer: Arnotte Felix Asst Treasuer: Francis Noel Director: Valdon Paul
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RSCCU Annual Report • 2016
Notice of 43rd Annual General Meeting To: From: Subject: Date:
All Members of RSCCU Secetary 43rd Annual General Meeting March 20th, 2017
Fellow Members, In compliance with 42 (1) of the Co-operative Society Act 2011 notice is hereby given that the 43rd Annual General meeting of the RSCCU will be held at the Credit Union headquarters River Sallee St. Patrick. The meeting will commence at 4.00pm Thursday April 13th, 2017 for the following purposes: »» To receive the report of the Board of Directors and other Committees for 2016. »» To receive the Audited financial statement for 2016 »» To elect members to the Board of Directors and other Committees »» To discuss and approve the 2017 budget »» To appoint auditors and fix their remuneration »» To take action on such matters as may come before the 43rd AGM By order of the Board of Directors,
Bro. Richard John Secretary
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Standing Orders 1. (a) A member shall stand when addressing the Chair (b) Speeches shall be clear and relevant to the subject before the meeting 2. A member shall only address the meeting when called upon by the Chair to do so, after which he/she shall immediately take his/her seat. 3. No member shall address the meeting except through the Chair. 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) He/she rises to object to or to explain (with permission of the Chair)
5. No speeches shall be made after the question has been put and carried or negated. 6. The mover of a procedural motion (adjournments, postponement, lay on table) shall have no right of 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) A member shall not call another member to order but may draw the attention of the Chair to a ‘Breach of Order’
(b) In no event can a member call the Chair ‘to order’
9. A question should not be put to vote if a member desires to speak on it or move an amendment to it – except that a “Procedural Motion”, “the Previous Question”, “Proceed to the next business” or the closure “That the question be put now”, may be moved at any time. 10. Only one amendment shall be before the meeting at one and the same time. 11. When a motion is withdrawn, any amendment to it fails. 12. The Chair shall have, in addition to his ordinary vote, a “casting vote” in the case of equality votes. 13. If there is an equality of votes on an amendment, and if the Chair does not exercise his casting vote, the amendment is lost. 14. The Chair shall make provisions for the protection of members from vilification (personal abuse). 15. No member shall impute improper motives against the Chair, Board of Directors, Officers, or any other member.
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RSCCU Annual Report • 2016
43rd Annual General Meeting Agenda OPENING SESSION Call to order Invocation Silent Tribute Greetings from Sister Organisations Remarks »» President »» GCLL »» GARFIN BUSINESS SESSION Ascertainment of a Quorum Minutes of the last Annual General Meeting Reports: Adoption and Discussion »» Board of Directors »» Credit Committee »» Supervisory and Compliance Committee »» Financial (i)
Auditor’s
(ii) Treasurer’s (iii) Budget NOMINATING COMMITTEE’S REPORT AND ELECTIONS RESOLUTIONS GENERAL BUSINESS CONCLUSION
RSCCU Annual Report • 2016
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Reports
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RSCCU Annual Report • 2016
President’s Message INTRODUCTION Fellow members, I am grateful for the opportunity to present my report for the fiscal period January 1st to December 31st 2016. During this period the Board of Directors, along with the other members of the management team and staff worked diligently to continue the growth trajectory and the positive results experienced in 2015. The year ended with another positive performance despite the level of the surplus being lower than that of the previous year. ECONOMIC HIGHLIGHTS 2016 was the final year of a three-year structural adjustment program undertaken by the Government of Grenada under the guidance and assistance of the International Monetary Fund. Information released by the Ministry of Finance based on a review conducted on the Country’s Economic performance indicated the following; »» Moderate rate of inflation of 1.7% »» Reasonable GDP growth of 4.2% »» Unacceptably high unemployment rate of 28% »» Continued growth in the Credit Union movement occasioned by the fact that Credit Unions are demonstrating greater sensitivity to the needs of their membership and are responding by increasing their risk threshold. While the points noted above presents some measure of hope for the rebounding of the Economy, the Unemployment figure is still uncomfortably high and is negatively impacting on the rate of progress of the Economy.
In addition, the Government continued with its drive to reduce the size of the Public Service and maintained the attrition policy which provided that “there will be only 3 persons hired for every 10 persons leaving the system”. While this has resulted in a reduction in the wage bill from $219M to $216M, and is a positive move for the Government, this trend can have a negative impact on the Credit Union Movement as the Public Service has been a longstanding catchment area for the Credit Union movement. Against this backdrop the River Sallee Co-operative Credit Union continues to forge ahead, undaunted resilient and determined. MEMBERSHIP Since its inception, the River Sallee Co-operative Credit Union has been providing much needed financial services to the people of the rural St. Patrick’s area, particularly the people of River Sallee and the immediate environs. The credit Union grew and developed utilizing the model of the friendly, familial type operations, consistent with rural communal existence. The limitations of the growth potential of that market necessitated the opening of the membership bond to allow for expansion of the membership base. While our current membership stock is still predominantly from the rural parishes, we have experienced an appreciable surge in the number of persons from other parishes who have sought and are now enjoying membership in our Credit Union. As such we can safely say that our membership base is now truly island wide. The demands of this new and diverse membership mix present excellent opportunities for growth but also highlights the need for the expansion of our existing
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suite of products. A comprehensive review of our loan portfolio and demographics of our membership is carded to be undertaken within the second quarter of 2017.
Firm PKF has conducted interviews of persons applying for the position as advertised and to date a selection has been made.
COMPLIANCE In today’s market place, it is imperative that every financial institution operate in alignment with the compliance regime, to protect the integrity of our financial landscape, as we guard against terrorist financing and money laundering.
The candidate has accepted the offer for employment and we are now in the final stages of the contracting process. We are satisfied that the successful candidate will add significant value to the operations of the Credit Union and we look forward to a mutually beneficial engagement.
In the immediate future, there will be noticeable changes to our operations as we seek to upgrade to fully compliant status. These changes are to ensure strict adherence to the “know your customer” requirements of the Anti-Money Laundering legislation, FATCA and other requirements that has now become the new normal for the financial services sector. As a consequence, transactions conducted by our members will be subjected to more scrutiny than normal, but we seek your co-operation and remind you that this is necessary for both our individual and collective security. IMPROVEMENT IN SERVICE DELIVERY We are of the view that our institution should deliver exemplary service to our members and customers at every engagement. This is the ideal we are striving to. To this end, we have commissioned the services of a Human Resource Professional to assist with an audit of our current stock of employees, and to provide with training as necessary. All staff will be exposed to training at various levels. APPOINTMENT OF A NEW MANAGER In October 2016, the Board terminated the services of the former Manager Osmond Drakes. Since then, Mr. Valdon Paul was appointed as the Interim Manager of the Credit Union. This appointment was intended to be of a short duration while we endeavored to attract the services of a competent replacement. I am happy to report that the Credit Union, with the assistance of Mr. Henry Joseph from the Accounting
CONCLUSION The River Sallee Co-operative Credit Union is still a major provider of financial services in the rural northern parishes. I am excited about the prospects for the next three to five year period and encourage all members to remain steadfast in their support for this noble institution. Together we can achieve greater things.
…………………………. Bro. Robert S.P. Whyte Presidert
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RSCCU Annual Report • 2016
Minutes of the 42nd Annual General Meeting Held Thursday June 30, 2016 at the Credit Union’s Conference Room, River Sallee St. Patrick “Beyond The Boundaries – A Journey To Financial Freedom” 1.0
He added that the sector has made good progress in the last year and therefore encouraged those appointed to serve to take the responsibility seriously as this was a very demanding industry. He ended by extending best wishes.
CALL TO ORDER, PRAYER & WELCOME At 5:21 pm the meeting was called to order by the Chairman/President Bro. Robert Whyte. Prayers were offered by Bro. Richard John and at the end members were asked to remain standing in observance of a moment of silence for members who passed on in the last year. The Chairman welcomed fellow colleagues from the various Credit Unions, Committee members and other stake holders present. He expressed his pleasure in seeing the high turnout of the membership, and emphasized that they were the reason for the meeting. He congratulated them for taking time to come and hear about the progress of their institution.
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PRESIDENT’S REMARKS The President in his opening remarks stated that he was happy to report a surplus of $292,000, and highlighted some of the contributing factors; »» 74 % growth in the loans portfolio and a subsequent increase in interest earnings »» Revenue from charges associated with bookings of loans etc amounting to $200,000.00 »» 15 % increase in deposits
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REMARKS FROM REPRESENTATIVES OF SISTER CREDIT UNIONS/REGULATOR »» Shirley Stephen – Communal Co-operative Credit Union »» Leroy Cadet – Grenville Co-operative Credit Union »» Trevor Rodney – Grenada Co-operative Credit Union League »» The Regulators, GARFIN was represented by Mr. Denis Felix. He noted that there has been growth at River Sallee in areas of assets and membership however the Credit Union is still under intensive care therefore the registrar has appointed two observers to sit at Board of Directors meetings.
»» Membership growth of 16% »» Reduction in rate of delinquency from 14% to 9%. He explained that there were two factors responsible i.e; increase loan portfolio and aggressive pursuit of delinquent clients which included initiating of court action. He added that while the results were still outside of the PEARLS standards, the reduction was indeed commendable. The President apologized for the late distribution of the booklets, but paid his compliments to both the content and presentation of the booklets. He told the members that other areas of the presentation will come up later and so he would reserve it until such time.
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A head count was conducted to ascertain if there was a quorum. 37 persons were present representing a shortfall of 13 required to constitute a quorum. However, permission was sought from Mr. Felix to proceed with the meeting and was granted. Thus the meeting was duly constituted.
b. Adoption of Minutes
Recognition of Service
Bro. Anthony Edwards commented on the reoccurrence of late distribution of the booklets as stated by Br. Francis Noel, The Chairman said that the booklets came in late hence the reason the late distribution, he added however that this should not be an excuse, he also stated early distribution will be an excellent AGM marketing tool.
A motion was invited for the adoption of the minutes. It was moved by Br. Anthony Edwards, seconded by Sis. Annette Julien and carried by all. c. Matters Arising
The Management of the Credit Union believes in showing appreciation to members who have served the Institution in various capacities and whose term of service have come to an end. Consequently, Bro. Bernard George was presented a plaque in appreciation for his service as Chairman of Credit Committee.
Reports
Notice of 42nd Annual General Meeting
A motion that all reports be tabled for adoption was invited by the Chairman and was so moved by Sis. Lucille Swan; seconded by Sis Kim Jeffrey, carried by all.
Notice of meeting for 42nd Annual General Meeting read by the Chairman.
Motion for adoption of Standing Orders A motion for the adoption of the standing orders was invited by the Chairman. It was moved by Sis Annette Julien seconded by Bro. Robert Clement and carried by all.
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BOARD OF DIRECTORS REPORT Under captioned “Membership”, Bro. Anthony Edwards asked as to the extent of the appeal outside the rural location. The Chairman stated that the Credit Union has attracted interest at the south of the Island and also St. David to a lesser extent.
Minutes of the 41st Annual General Meeting Motion for the adoption of the minutes taken as read moved by Bro. Robert Whyte seconded by Bro. Valdon Paul and carried by all. a. Corrections to minutes »» On page #10 of the booklet under Credit Committee report the word “as” replaced with the phase, “which was”, »» Under captioned ‘Budget’ fourth paragraph the phrase “has is” corrected to read “is”. »» Also on page 11 on the booklet captioned ‘Credit Committee’, the phrase “sis Swan now resigned”, replaced with “Sis Swan whose term of Office has now expired”.
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CREDIT COMMITTEE REPORT Bro. Anthony Edwards commented on the presentation of the report as expressed by the use of various charts, graphs and text which he found to be impressive. Bro. Andall in his observation commented that a column to express value of the loans disbursed in every category should have been added. The Chairman made clear that all loans within the period stated including staff, Members of the Board etc, has been captured.
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RSCCU Annual Report • 2016
from page #47 he asked why is the building value appreciated yet the Insurance cost dropped. The Chairman explained that a special arrangement with Beacon Insurance was entered into therefore the insurance cost is lowered.
SUPERVISORY & COMPLIANCE COMMITTEE REPORT Br. Anthony Edwards brought to attention page #21 on the booklet under the captioned ‘Board of Directors’, as stated his concern with the statement “there was a lack of joint committee meetings during the period along with little or no correspondences from the B.O.D”, the Chair made clear that there was extra-ordinary Committee meetings for the approval of loans etc.
Bro. Edwards asked that the ‘unidentified difference’ of $73,765.00 be explained, the Manager said that it was some erroneous entries of accounts that was not properly reconciled, he however assured members that the error will be corrected in the next Financial year.
Sis Swan stated her concerns under the captioned “Draw Backs”, looking at the first two points: (I) “lack of Joint Committee meetings (II) Lack of communication between the BOD and Committee”. Stating that the area of Joint committee meetings be improved, the point was further emphasized by Bro. Edwards; the Chairman agreed that the concerns will be addressed.
Bro Edwards was clearly dissatisfied with the Manager’s response, the representative from the Accounting firm (PKF) was asked to explain, he said while it is the Management responsibility to explain the numbers presented they could not reconcile why the accounting error was made, hence the reason it was categorized as such.
Bro. Nolan Mitchell stated under captioned, “Draw Backs” item “still no amendment to the 20 year old bye-laws”, he emphasized that bye-laws be amended so as to have 4 members serving and also ensure that members exit strategically; Bro. Anthony Edwards added that the matter is urgent and should be dealt with as such.
In continuing with his questions Bro Edwards stated that in an earlier report from the (SCC) there was no training done for staff, he therefore asked why the $8,946.00 for ‘Education and Seminars’ under General & Administrative Expenses page # 47. The Manager explained that these monies were spent on Committee training/seminars etc.
It was recommended by the registrar (Mr. Felix) to have at the next election the member serve for 3 years in the first instance and 2 years thereafter to avoid the exiting of 2 members at once. Bro Edwards complemented the Credit Union on the initiative, working closely with the community as captured in the ‘High Points’ of the report.
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INDEPENDENT AUDITORS’ REPORT The Auditors’ Statement on page #25 was read by a representative from PKF Accounting; The Chairman then opened the floor for any questions from the report. Questions was asked by Bro. Anthony Edwards on ‘receivables & prepayments’ on page #26,
The Chairman apologized for not having a treasurers’ report, he added that the Treasurer did call earlier that day and reported that he has a workplace emergency and therefore will not be able to attend the meeting.
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BUDGET The Manager went through the budget item by item after a suggestion from Bro. Edwards. Since there was a line item captioned Vehicle Expenses, this prompted Bro. Edwards to enquire whether the Credit Union had purchased a vehicle. The Chairman answered in the affirmative, and then explained the reason that influenced the purchase.
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The Security budget of $46,080.00 on page 49 was explained by the Manager as a move to improve the Security of the Offices by employing a competent and reliable Security firm. The Chairman added that the staff had expressed concern over the inadequacy of the services rendered by the existing arrangements.
Therefore Sis Kim Jeffrey and Bro Robert Whyte were elected to serve.
Increase in expenses as expressed in the budget was raised as a concern by Sis Kim JeffreyPeters. She cautioned that in these difficult and challenging economy expenses should be reduced as much as possible.
»» Kim Jeffrey-Peters
The newly constituted members of the Board of Directors were; »» Robert Whyte »» Robert Clement
»» Richard John »» Arnotte Felix »» Francis Noel »» Valdon Paul
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NOMINATING COMMITTEE REPORT & ELECTIONS
Credit Committee:
The report was presented by the Chairman of the Committee Bro. Nolan Mitchell. He advised the meeting of the positions that were vacant and the nominations to fill those positions:
»» Godwin Wildman
Elections
It was identified that Sis. Doreen Bhola was absent without an excuse and therefore could not be offered as a candidate for election. A motion then tabled by Bro. Bernard George that nomination be closed was seconded by Bro. Francis Noel and carried by all.
Sis. Michelle Alexis-Peters was invited by the Chairman to supervise the elections Nominations for Board of Directors: »» Robert Whyte »» Loxley John Sis Kim Jeffrey-Peters was also nominated by Bro. Bernard George and seconded by Sis. Lucille Swan and carried. A motion for the close of nominations was tabled by Bro. Robert Whyte and seconded by Bro. Anthony Edwards and carried by all. The vote was conducted to determine the two candidates from the three nominees who would be elected to serve the three year term 2016-2019. The results were; »» Sis Kim Jeffrey-Peters – 33 »» Bro Robert Whyte – 25 »» Bro. Loxley John – 24
Recommendations for the position were;
»» Sis Doreen Bhola »» Dominic Roberts
The Credit Committee therefore was constituted as; Godwin Wildman, Dominic Roberts and AnnMarie Williams. It was suggested that terms of office for serving members of the Supervisory and Compliance Committee be rectified so as to avoid two serving members exiting at the same time. Persons appointed were congratulated; members were also encouraged by Sis Peters-Alexis to take advantage of the training session organized by the League from July 11-13 2016 at the Leagues’ office.
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RSCCU Annual Report • 2016
RESOLUTIONS The following resolutions were presented for approval by the AGM. Whereas the by-law article XI, section thirty-eight (38), two (2), (h) mandate that the budget should be approved by the annual General meeting; And whereas the budget for 2016 is being presented to this Annual General Meeting; Be it resolved that the budget for 2016 as presented be approved. The budget was approved by a majority vote
Appointment of Auditors Whereas the accounting Firm Pannell-Kerr Forster (PKF) continues to provide satisfactory service to the River Sallee Co-operative Credit Union as its Auditors. Be it resolved that PKF be reappointed as the auditor of the River Sallee Co-operative Credit Union for 2016. A vote was taken on the resolution and was carried.
The meeting ended at approximately 7:45pm.
Approval of Borrowing Limits The initial resolution submitted for an approval of a borrowing limit of two Million dollars was challenged by Bro. Edwards. Deliberations ensued after which a vote was invited to have the borrowing limit amended to One Million dollars ($1,000,000.00). The motion for the acceptance of the limit at One million dollars was moved by Bro. Edwards, seconded by Bro. Francis Noel and carried by all. The amended Resolution read; Whereas the by-law article XI section thirty –seven (37), (2), (m) stipulates that the Annual General Meeting must set the maximum borrowing limit of the Credit Union. Be it resolved that the maximum borrow limit for 2016 be One Million dollars ($1,000,000.00) The motion for the acceptance of the borrowing limit at One million dollars was moved by Bro. Anthony Edwards seconded by Bro. Francis Noel and carried by all.
------------------------------------Bro. Richard John Secretary
RSCCU Annual Report • 2016
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Board Of Directors Report INTRODUCTION The Board of Directors of the River Sallee Co-operative Credit Union (RSCCU) is pleased to present to the 43rd Annual General Meeting an account of its administrative and financial performance for the year ended 2016. Despite the challenges within the global financial market the credit union has been able to record significant growth in key areas such as assets, loans, members’ deposits, income and surplus in comparison to the prior years.
COMPOSITION OF BOARD The Board of Directors was constituted on July 12, 2016 with officers being elected to serve in the following positions: Name
Position
Bro. Robert Whyte
President
Bro. Robert Clement
Vice-President
Bro. Arnotte Felix
Treasurer
Bro. Francis Noel
Asst. Treasurer
Sis. Kim Jeffrey-Peters
Secretary
Bro. Richard John
Asst. Secretary
Bro. Valdon Paul
Director
Grenada Authority for the Regulation of Financial Institutions (GARFIN) extended the Memorandum of Understanding (MOU) between RSCCU and itself for another two years from 2016 to 2017. The observers were requested to continue attending Board meeting to provide guidance to the Board.
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RSCCU Annual Report • 2016
GOVERNANCE BOARD OF DIRECTORS The Board held sixteen meetings during the year. Three Joint Committee and two extraordinary meetings were also held in 2016. The following table shows the position, term and year of retirement: Name
Position
Robert Whyte
President
Robert Clement
Vice-President
Arnotte Felix
Treasurer
Francis Noel
Term
Year Retiring
2nd
2019
1st
2017
2nd
2018
Asst. Treasurer
1st
2018
Kim Peters- Jeffrey
Secretary
1st
2019
Richard John
Asst. Secretary
1st
2017
Valdon Paul
Director
1st
2018
There were a total of sixteen meeting during the year under review. They were held in accordance with section 47 of the Bylaws. The table below shows the Director’s attendance at meeting: Name
Position
Meetings (16)
Robert Whyte
President
16
Robert Clement
Vice-President
13
Arnotte Felix
Treasurer
15
Francis Noel
Asst. Treasurer
8
Kim Jeffrey-Peters- ** Secretary
8
Richard John
Asst. Secretary
11
Valdon Paul
Director
16
Loxly John ***
Director
*** Bro. Loxly John served the unexpired term of Bro. Jervis Viechweg from 2014 – 2016.
CREDIT COMMITTEE The Credit Committee was constituted on July 12, 2016. The members were elected to serve in the following positions: Year Term Retiring
Name
Position
Godwin Wildman
Chairman
2nd
2019
Dominic Roberts
Member
1st
2019
1st
2018
Annmarie Bullen-Williams Secretary
There were fifteen meetings held during the year under review. These meetings were held in accordance with section 64 of the Bylaws. The table shows the attendance for the period: Name
Position
Meetings (15)
**Godwin Wildman
Chairman
15
**Dominic Roberts
Member
13
Annmarie Bullen-Williams Secretary ****Bernard George
1
Chairman
*** Bro. Bernard George served two three year terms and had to retire for at least one year in accordance with the Act. ** Bro. Godwin Wildman served his first three year term and was eligible to serve another three year term. Bro. Dominic Roberts was elected to serve his first three year term at the 2016 AGM.
SUPERVISORY & COMPLIANCE COMMITTEE The Supervisory & Compliance Committee was constituted on July 12, 2016. The members were elected to serve in the following positions: Term
Year Retiring
Name
Position
Nolan Mitchell
Chairman
2nd
2017
Emerald Gordon
Member
1st
2018
Annette Julien
Secretary
2nd
2017
** Sis. Kim Jeffrey-Peters was elected at the 2016 AGM to the Board of Directors.
There were fifteen meetings held during the year under review. These meetings were held in accordance with section 74 subsection 2 of the Bylaws. The table shows the attendance for the period: Name
Position
Nolan Mitchell
Chairman
Meetings (3) 3
Annette Julien
Secretary
3
Emerald Gordon
Member
2
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JOINT & EXTRA-ORDINARY MEETINGS RSCCU held three Joint and two extra-ordinary meetings during the year under review. The tables below outline the attendance at the above- captioned meetings: Board Directors
Name
Position
Joint Committee (3)
Robert Whyte
President
2
Robert Clement
Vice-President
2
1
Arnotte Felix
Treasurer
2
2
Francis Noel
Asst. Treasurer
1
1
Kim Peters- Jeffrey
Secretary
2
1
Richard John
Asst. Secretary
2
2
Valdon Paul
Director
3
2
Name
Position
Joint Committee (3)
Extra-Ordinary (2)
Godwin Wildman
Chairman
3
2
Dominic Roberts
Member
3
2
Ann-marie Bullen-Williams
Secretary
1
NIL
Joint Committee (3)
Extra-Ordinary (2)
Extra-Ordinary (2) NIL
Credit Committee
Supervisory & Compliance Committee
Name
Position
Nolan Mitchell
Chairman
3
2
Emerald Gordon
Member
3
2
Annette Julien
Secretary
2
2
YEAR IN REVIEW The economic challenges that have affected economies in the world have had a negative impact on the Grenadian economy. However the credit union still continues to operate in a competitive environment. Bearing this mind the Board of Directors instituted measures to cushion the impact of this difficult period. These measures included; »» Designing different loan programs geared at fitting the varying personalities of our members. Salaried loans, Christmas loans and line of credit are a few examples. »» Extended loan repayment periods on a case by case basis. Like we did in 2015, a surplus was once again realized in 2016. This is a positive trend that we endeavour to continue going forward.
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RSCCU Annual Report • 2016
FINANCIAL HIGHLIGHTS The following graphs illustrate the growth in the financial achievements of the River Sallee Co-operative Credit Union for the period 2012 to 2016. The table below depicts the key areas of growth over the last five years. Surplus/ Deficit $
Year
Total Assets $
Savings $
Shares $
Loans $
Membership $
2012
10,226,620
9,384,108
284,725
7,411,910
2,984
28,015
2013
11,058,375
9,817,219
300,150
6,530,583
2,657
104,885
2014
11,659,033
10,473,338
325,700
5,442,904
2,677
(216,420)
2015
14,564,485
11,896,988
487,000
9,834,344
3,280
292,021
2016 Increase/Decrease
The graph below depicts the increases in total assets from 2012 to 2016. It increased by
Total Assets (in Millions)
$15
$10
$5
$0 2012
2013
2014
2015
2016
The graph below depicts the increases in savings from 2012 to 2016. It increased by
Savings
(in Millions)
$14 $12 $10 $8 $6 $4 $2 $0 2012
2013
2014
2015
2016
RSCCU Annual Report • 2016
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Surplus/Deficit
Shares $500,000
$300,000 $250,000
$400,000
$200,000
$300,000
$100,000
$150,000
$50,000 $0
$200,000
-$50,000
2012
2013
2014
2015
2016
-$100,000
$100,000
-$150,000 -$200,000
$0 2012
2013
2014
2015
-$250,000
2016
SUPERVISION & INSPECTION A preliminary assessment of the performance and operations of the Credit Union was conducted in the month of January 2016 by GARFIN, the regulators. A final assessment was done in June 2016 when the 2015 Audit was completed. The main issues raised were the deficiency in the institutional capital, the amount held as investment properties and the high rate of delinquency.
Loans
(in Millions)
$14 $12 $10 $8 $6 $4 $2 $0 2012
2013
2014
2015
2016
Membership
28%
26%
2012 2013 2014 2015 2016
23%
23%
The Board held two retreats to address the revision of the work plan for 2016 and to devise ways to increase the institutional capital. With the consent of GARFIN, and approval of members at the 2016 AGM minimum shares were increased from 100 to 200 per member. Though this has resulted in a positive growth of our institutional capital it has been insufficient to realize the minimum 7% of total assets. We are still contemplating other creative ways to improve the insitutional capital and will keep the membership informed of our results.
DELINQUENCY The rate of delinquency experienced remains a challenge for the Credit Union and this is an area of serious concern. The delinquency rate was 18% at the end of 2016 as opposed to 9.2% at the end of 2015. To address this problem in 2017 the Board intends to recruit a Recoveries Officer on either a commission basis or full time to address this issue.
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RSCCU Annual Report • 2016
SPONSORSHIPS & DONATIONS The table below outlines the sponsorship given to the different entities: Name of Organization
Event Assisted
Hard Rock Football Club
Transportation for football competitions
St. Patrick’s Anglican School
Annual School Fair
Chantimelle R. C. School
Annual School Fair
River Sallee Government School
Annual School Sports & Fair
River Sallee Youth Organization
Luncheon
Mt. Rose SDA Primary School
Annual School Sports
Mc Donald College
Award Ceremony
Rose Hill Pre Primary School
Annual School Fair
ADMINSTRATION & MANAGEMENT STAFF During the year under review, RSCCU Secretariat was composed of these persons: Bro. Osmond Drakes
General Manager
Sis. Andrea Williams
Loans Officer/Compliance Officer
Sis. Trella Charles
Branch Supervisor
Sis. Chennel Samuel
Accounts Clerk
Sis. Veronica Alexander
Secretary/Loans Clerk
Bro. Rupert Blache
Recoveries Officer
Sis. Glendora Jeffrey
Bulk Teller/Office Attendant
Bro. Troy Hassell
Teller
Sis. Rhona Roberts
Teller
Sis. Maria John
Cleaner
Sis. Natasha Julien
Cleaner
However during the latter part of 2016, the servcies of Bros. Osmond Drakes and Rupert Blache were terminated.
RSCCU Annual Report • 2016
21
TRAINING & DEVELOPMENT The credit union continued efforts to provide training for Board, Committee members and Staff. The table illustrates the participation in the various training activities organized locally by the Grenada Co-operative League Limited: Date
Training/Workshop
July
Creating Exceptional Customer Ms. Alice Thomas-Roberts All staff Service Every Time
July
Board of Directors Orientation
Mr. Alsitair Philip
Mr. Valdon Paul & Mr. Francis Noel
July
Credit Committee Orientation
Mr. Alsitair Philip
Mr. Godwin Wildman & Mr. Dominic Roberts
July
Supervisory & Compliance Committee
Mr. Alsitair Philip
Mr. Nolan Mitchell & Ms. Annette Julien
August
Loan Granting & Analysis
Mr. Alistair Philip
Board of Directors, Credit & Supervisory & Compliance Committees and Loan Officers
September Business Etiquette & Protocol
Facilitator
Attendees
Ms. Alice Thomas-Roberts All staff
CONDOLENCES The management and staff extend their deepest sympathies to all members who lost loved ones during the year 2016.
PLANS FOR 2017 »» Continue to make prudent investment decisions »» Reduction of the delinquency rate to the standard of 5% and more stringent monitoring of the loan portfolio. In addition hiring of a Recoveries Officer either on a permanent or commission basis. »» Introduction of additional products and services such as “Back to School loans”, Carnival loans, special loan promotion on mortgages with highly competitive rates of interest.
»» Educational seminars at schools in the St. Patrick’s area. »» Provision of technical assistance to the business member borrower.
APPRECIATION The Management and staff extend its gratitude to the following persons and organizations for their contribution to the performance of the credit union in 2016: »» Grenada Co-operative League Limited (GCLL) »» GARFIN »» Bro. Aaron Moses & Sis. Michelle Peters-Alexis »» General Membership
»» Increasing the institutional capital to the required minimum standard of seven percent (7%) »» Increase awareness through community walkabouts and advertisements. »» Offering specials as an incentive for new members. »» Increasing savings portfolio by encouraging school savings union to save with RSCCUL, offering members special incentives to save more, targeting specific members to place monies on fixed deposits etc.
………………………………………. …………………………………….. Bro. Robert Whyte Sis. Kim Jeffrey-Peters President Secretary
22
RSCCU Annual Report • 2016
Credit Committee Report INTRODUCTION The Credit Committee is pleased once more to present its report to the 43rd Annual General Meeting for the period January 1st to December 31st 2016. The Committee is mandated to carry out its duties and responsibilities as stated in the Credit Union’s by-laws and sections 59-62 of the Cooperatives Societies Act No.8 of 2011. YEAR IN REVIEW The committee began the year with Bro. Bernard George as chairman, Bro. Godwin Wildman as secretary and Sis. Annmarie Bullen –Williams as a member. At the A.G.M later in the year, Bro. George’s term ended and Bro. Dominic Roberts Joined the remaining members. At its post A.G.M meeting Bro. Wildman was elected chairman, Bro. Roberts secretary and Sis. Williams member. Unfortunately, Sis Williams was not able to fulfill her role during the last three months of the year. During the first half of the year there were very little activity for the Committee. This period saw a strained relationship between the Committee and the Board. However, after the A.G.M, relations improved tremendously and the Committee worked diligently at its tasks. The Committee therefore submits its statistical report as is required in section 62(1) (d) of the Act. Table1. Applications Received Numbers Categories
1st half
2nd half
Total
Agriculture
05
06
11
Business
12
33
45
Debt Consolidation
06
25
31
Domestic
17
77
94
Education
03
07
10
Home Improvement
11
51
62
Housing
01
09
10
Land
03
02
05
Medical
01
05
06
Travel
01
19
20
Vehicle
11
24
35
Totals
71
258
329
Applications Received Agriculture 3% Medical 2%
Land 2% Housing 3%
Travel 6%
Vehicle 11%
Business 14% Debt Consolidation 9%
Home Improvement 19% Domestic 29%
Education 3%
RSCCU Annual Report • 2016
23
Table2. Applications Approved No.
Categories
Value$
11
Agriculture
41,193
41
Business
491,085
26
Debt Consolidation
340,445
89
Domestic
390,284
10
Education
73,014
53
Home Improvement
429,034
09
Housing
503,648
05
Land
1,015,307
06
Medical
10,500
19
Travel
130,962
34
Vehicle
1,058,164
303
Total
4,483,636
Applications Approved Agriculture Business Debt Collection Domestic Education Home Improvement Housing Land Medical Travel Vehicle 0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
The Committee expresses thanks to the staff of the credit union who helped made our job possible. We also look forward to 2017 continuing to serve the needs of the membership while working along with the Board and the Supervisory and Compliance Committee for a better and more stable River Sallee Co-operative Credit Union.
________________________________________ Bro. Godwin Wildman (Chairman)
_______________________________________ Bro. Dominic Roberts (Secretary)
24
RSCCU Annual Report • 2016
Supervisory and Compliance Committee Report The SCC is please to submit its annual report for the period January 1st – December 31st 2016, also to give an account of our stewardship for the period under review. The committee’s primary purpose was to ensure that the credit union operated in accordance with the cooperative Act and the credit union bye-laws thus satisfying the requirements of our regulators. The committee comprised of the following persons: »» Mr. Nolan Mitchell (chairperson) »» Mrs. Annette Julien (secretary) »» Mr. Emerold Gordon (member) During the period under review the SCC held twelve (12) meetings, attended two (2) joint committee meetings and three (3) extra ordinary committee meetings. Table below shows attendance at SCC meetings: Names
Portfolio
# of meetings Attendance
Annette Julien
Secretary
12
11
Nolan Mitchell
Chairman
12
11
Member
12
10
Emerald Gordon
The following areas were undertaken: »» Examination of budget and financial statements. »» Delinquency review.
DELINQUENCY The SCC took keen interest in the top twenty loans, knowing that delinquency in these loans can cause problems for the Credit Union. Most of these loans are in proper standing. However there are a few among them that continue to be of grave concerns. The top ten deliquent loans were examined along with other delinquent loans; also follow up action was undertaken with the Manager in regards to the status of some loans. Actions were undertaken to reduce the delinquency portfolio through court action, recoveries etc. Our observation and recommendations were brought to the BOD attention. The delinquency figure can be reduce by proper follow through on the judgements handed done by the court as well as the legal minds working more promptly on matters, along with making adequate provision for delinquent loans. MONITORING OF INTERNAL CONTROL Various documents were examined such as fixed asset register, reconciliation of ledgers, budget and financial statements etc. Based on our observation, questions were asked, queries were made as well as clarification was sought from the General Manager. Our recommendations were noted. BOARD OF DIRECTORS The BOD of Directors acted slowly in resolving the areas pointed out by the auditor’s.
»» Monitoring of internal controls. »» Examination of BOD and Credit Committee minutes. »» Studying the Auditors and Garfin’s report to ensure follow up/compliance. »» Reconciliation of ledgers.
Examination of Garfin review showed that there were improvement in some areas but the BOD of Directors did not adopt a positive attitude towards recommendation made by the regulators, follow through was slow. Garfin sighted that there was weak oversight by the BOD. These areas needs to be strengthened going forward.
RSCCU Annual Report • 2016
There have been improvements in the area of training. There were organized training for BOD, Committees and staff conducted by GCLL and Garfin. There were joint committee meeting held but there is a need for more as well as there is need for improve communication between the BOD and committees. The BOD continues to do a good job by meeting regularly but we want to encourage them to be more vigilant and proactive and build their capacity through training. Also ensuring that policies are being adhered to. WEAKNESS »» Proper supervision was not maintained as well as adherence to policies.
25
CONCLUSION The information shared above should serve as a means to help the credit union to improve and not to play a blame game but going forward mistakes and errors that were made should serve as a building block to move us forward. The SCC expresses thanks to the Credit Union’s membership for the opportunity afforded us to serve in this capacity. We also say thanks to the Board of Directors, Credit Committee and the dedicated staff for the assistance that had been afforded us in order to get our tasks done. We trust by God’s help that the credit union will continue to grow from strength to strength. We also hope that the new SCC will be more vigilant and work harder to ensure that compliance is maintained.
»» There is a great need to strengthened internal controls. »» Untimely reports and follow through. »» Disconnect between management and staff. »» Institution capital needs strengthening. »» The BOD seems to make efforts to have joint committee meetings only when problems arise in the institution. STRENGTHS »» Increase in membership and savings »» Community awareness and marketing of the RSCC. RECOMMENDATIONS »» Continued training and development of the entire management team particularly in financial matters. »» To work diligently in order to reduce delinquency to an accepted percentage. »» More vigorous marketing of the credit union. »» Proper provision is made for loan lost. »» Strengthening of internal control. »» Proper filing of documents.
_____________________ _____________________ Annette Julien (Mrs) Nolan Mitchell Secretary
26
RSCCU Annual Report • 2016
Nominating Committee Report Outgoing:
Composition of Nominating Committee: Mr. Nolan Mitchell Mr. Valdon Paul Ms. Glendora Jeffery The Committee met on February 21st 2017 and considered the following: »» The members on the BOD and committees who are still eligible for continuation of service.
Supervisory and Compliance Committee
Mrs. Annette Julien
Supervisory and Compliance Committee
Recommendations to fill vacant positions: Board of Directors
»» Members whose terms of office have expired.
Mr. Robert Clement
»» Recommendations for filling of vacant positions.
Mr. Richard John
We are therefore please to submit the following: Board of Directors
Term Remaining
Mr. Robert Whyte
Two (2) years
(2nd term)
Mr. Arnotte Felix
One (1) year
(2nd term)
Mr. Valdon Paul
One (1) year
(1st term)
Mr. Francis Noel
One (1) year
(1st term)
Mrs. Kim Peters
Two (2) years
(1st ) term)
Mr. Robert Clement
Three (3) years
(2nd term) End of 1st term
Mr. Richard John
Three (3) years
( 2nd term) End of 1st term
Credit Committee
Term Remaining
Mr. Godwin Wildman
Two (2) years
(2nd term)
Mr. Dominic Roberts
Two (2) years
( 1st term)
Mrs. Ann Marie Williams
One(1) year
( 1st term) unable to continue service.
Supervisory and Compliance Committee Term Remaining Mr. Emerald Gordon
Mr. Nolan Mitchell
One (1) year (1st term)
Are nominated to be elected for a second term on the Board of Directors. Credit Committee Ms. Maureen Kaaba Supervisory and Compliance Committee Dr. Heusent James Mr. Loxley John
______________ Bro. Nolan Mitchell Chairman
RSCCU Annual Report • 2016
27
2 0 1 6 Au
dit
ed
Fin
an
cia
lS
ta
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s
TABLE OF CONTENT Independent Auditors’ Report
28
Statement of Financial Position
30
Statement of Comprehensive Income
31
Statement of Change in Members’ Equity
32
Statement of Cash Flows
33
Notes to the Financial Statements
34
Schedule of General & Administrative Expenses
54
28
RSCCU Annual Report • 2016
Independent Auditors’ Report to the Shareholders of River Sallee Co-operative Credit Union Limited OPINION We have audited the financial statements of River Sallee Co-operative Credit Union Limited, which comprise the statement of financial position at December 31, 2016, and the statement of comprehensive income, statement of changes in members’ equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Credit Union as at December 31st, 2016 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs). BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Credit Union in accordance with the ethical requirements that are relevant to our audit of the financial statements in Grenada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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. AUDITORS’ RESPONSIBILITIES 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 auditors’ 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.
RSCCU Annual Report • 2016
29
Independent Auditors’ Report to the Shareholders of River Sallee Co-operative Credit Union Limited ...continued
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. »» Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Credit Union’s ability to continue as a going concern. If we conclude that a material uncertainty exists; we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Credit Union to cease to continue as a going concern. »» Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
GRENADA March 8th, 2017 Accountants & Business Advisers
30
RSCCU Annual Report • 2016
Statement of Financial Position At 31st December, 2016
Notes EARNING ASSETS Members’ loans Loans and receivables financial assets Available-for-sale financial assets
4 5 5
Total earning assets
2016
2015
11,974,008 2,142,468 93,265
9,876,391 2,476,616 93,265
14,209,741
12,446,272
NON-EARNING ASSETS Property, plant and equipment Investment property
6 7
1,073,648 389,931
1,031,927 389,931
Other Assets Inventories Receivables and prepayments Cash and cash equivalents
8 9 10
5,122 94,478 1,201,321
6,914 101,424 630,064
2,764,500
2,160,260
$16,974,241
$14,606,532
11 12 13
566,300 245,218 704,725 (242,170)
487,000 222,565 704,725 (323,410)
14 15 16
53,096 6,100 11,433
47,680 6,100 11,433
1,344,702
1,156,093
914,394
1,067,827
14,279,825 435,320
12,232,877 149,735
14,715,145
12,382,612
15,629,539
13,450,439
$16,974,241
$14,606,532
Total non-earning assets TOTAL ASSETS CAPITAL AND LIABILITIES Institutional Capital Permanent shares Statutory reserve Revaluation reserve Accumulated deficit Other Funds and Reserves Development fund Disaster relief fund Small business fund TOTAL EQUITY Non-Current Liabilities Long-term borrowings Current Liabilities Members’ deposits Non-interest bearing liabilities
TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES
17 18
The notes on pages 34 to 53 form an integral part of these financial statements
: Director
: Director
RSCCU Annual Report • 2016
31
Statement of Comprehensive Income
For the year ended 31st December, 2016 Notes
2016
2015
986,568
632,950
(337,727)
(106,786)
648,841
526,164
119,551
134,690
231,550
237,851
999,942
898,705
1,085,397
879,183
(85,455)
19,522
15,151
20,881
171,870
277,923
7,640
15,458
(886)
(41,763)
193,775
272,499
$108,320
$292,021
INCOME Interest income – members’ loans Less: Interest payments to members Net interest income Interest - financial assets Other operating income Net income Deduct: General and Administrative Expenses (Schedule A) Operating (deficit)/surplus for the year Add: Foreign exchange gain Bad debts recovered - net Rental income Loss on disposal of fixed assets
Net surplus for the year
19
The notes on pages 34 to 53 form an integral part of these financial statements
163,096
325,700
Balance at 1st January, 2015 -As restated
Net movements in shares 58,404 22,565 989 21,664 $245,218
487,000 79,300 $566,300
Transfer to other funds and reserves
Net surplus for the year
Entrance fees
Transfer to other funds and reserves
Net surplus for the year
Balance at 31st December, 2016
Net movement in shares
$53,096
-
5,416
-
-
47,680
-
14,601
-
-
33,079
-
33,079
Development Fund
$704,725
-
-
-
-
704,725
-
-
-
-
704,725
-
704,725
Revaluation Reserve
The notes on pages 34 to 53 form an integral part of these financial statements
Balance at 31st December, 2015 – Restated
1,065
161,300
Entrance fees
Prior year adjustments
- as previously stated
163,096
Statutory Reserve
-
Permanent Shares 325,700
Balance at 1st January, 2015
For the year ended 31st December, 2016
Statement of Changes in Members’ Equity
$(242,170)
108,320
(27,080)
-
-
(323,410)
292,021
(73,005)
-
-
(542,426)
(292,097)
(250,329)
Accumulated Deficit
$1,327,169
108,320
-
989
79,300
1,138,560
292,021
-
1,065
161,300
684,174
(292,097)
976,271
Total
32 RSCCU Annual Report • 2016
RSCCU Annual Report • 2016
33
Statement of Cash Flows
For the year ended 31st December, 2016 2016
2015
108,320
292,021
44,728
37,246
886
41,763
153,934
371,030
OPERATING ACTIVITIES Net surplus for the year Adjustments for non-cash transactions: Depreciation Loss on disposal of fixed assets Operating surplus before working capital changes
1,792
(2,952)
6,946
(10,404)
2,062,541
1,423,650
269,992
41,589
2,495,205
1,822,913
Decrease/(increase) in financial assets
376,195
(881,945)
Purchase of property, plant and equipment
(87,435)
(62,162)
100
506
Decrease/(increase) in inventories Decrease/(increase) in receivables and prepayments Increase in members’ deposits Increase in non-interest bearing liabilities Net cash provided by operating activities INVESTING ACTIVITIES
Proceeds from the sale of fixed assets
-
(389,931)
(2,139,664)
(4,391,440)
(1,850,804)
(5,724,972)
989
1,065
79,300
161,300
-
(2,000)
(153,433)
987,827
(73,144)
1,148,192
571,257
(2,753,867)
630,064
3,383,931
$1,201,321
$630,064
Increase in non-interest bearing liabilities Increase in members’ loans Net cash used in investing activities FINANCING ACTIVITIES Entrance fees received Net movement in shares Disaster relief (Increase)/decrease in borrowings Net cash (used in)/provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents - at beginning of the year - at end of the year REPRESENTED BY: Cash on hand
236,450
123,978
Cash at bank
964,871
506,086
$1,201,321
$630,064
Cash and cash equivalents
The notes on pages 34 to 53 form an integral part of these financial statements
34
RSCCU Annual Report • 2016
Notes to the Financial Statements At 31st December, 2016 1.
REGISTRATION AND PRINCIPAL ACTIVITY The Credit Union was registered on 19th July, 1962, under the Co-operative Societies Ordinance as amended by the Co-operative Societies Act No. 20 of 1996 amended by the Co-operatives Society Act No. 8 of 2011 for the purpose of affording members of the Credit Union the opportunity to accumulate savings and to obtain credit for provident or productive purposes at reasonable rates of interest. The Credit Union employed on average ten (10) persons during the year (2015 - 10).
2.
SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. a. Basis of Accounting These financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS). The financial statements are expressed in Eastern Caribbean Currency Dollars. The preparation of financial statements in conformity with IFRS’s requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Credit Union’s accounting policies. Although those estimates are based on managements’ best knowledge of current events and conditions, actual results could differ from those estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. b. New Accounting Standards, Amendments and Interpretations (i) There are no new standards, amendments or interpretations that are effective for the first time for the financial year beginning on or after 1st January, 2016 that would be expected to have a material impact on the Credit Union’s financial statement. (ii) New standards, amendments and interpretations issued but not effective for the financial year beginning 1st January, 2016 and not early adopted. These either do not apply to the activities of the Credit Union or have no material impact on its financial statements.
RSCCU Annual Report • 2016
35
Notes to the Financial Statements
At 31st December, 2016 ...continued
2.
SIGNIFICANT ACCOUNTING POLICIES ...(continued)
Standard Description
Effective for annual periods beginning on or after
IAS 7
Statement of Cash Flows: Disclosure Initiative (amendments)
1st January, 2017
IAS 12
Income taxes recognition of Deferred Tax Assets for Unrealized
1st January, 2017
Losses (amendments) IAS 40
Investment property: Transfer of Investment Property (amendments)
1st January, 2018
IFRS 2
Share-based payment: Classification and Measurement of Share-
1st January, 2018
based payment transactions (amendments) IFRS 9
Financial Instruments: Classification and measurement
1st January, 2018
IFRS 15
Revenue from Contracts with Customers
1st January, 2018
IFRS 16
Leases
1st January, 2019
c. Property, Plant and Equipment Land, building and certain fixtures are stated at valuation less subsequent depreciation. All other assets are stated at cost less accumulated depreciation. Subsequent costs are included in the assets carrying amounts or are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Credit Union and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Increases in the carrying amount arising on revaluation are credited to revaluation surplus in equity. Decreases that offset previous increases of the same asset are charged against the surplus directly in equity; all other decreases are charged to the statement of income.
36
RSCCU Annual Report • 2016
Notes to the Financial Statements At 31st December, 2016 ...continued 2.
SIGNIFICANT ACCOUNTING POLICIES ...(continued) Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or re-valued amounts to their residual values over their estimated useful lives. The rates used are as follows: Per annum Leasehold improvement
33.3%
Building
2.5%
Furniture, Fixtures and equipment
10.0%
Computer equipment
16.6%
Motor vehicle
20.0%
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of comprehensive income. When re-valued assets are sold, the amounts included in revaluation surplus are transferred to retained earnings. d. Investment property Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, used in the production or supply of goods or services or for administrative purposes. Investment property of the Credit Union comprises of land situated at Bathway and La Taste, St. Patrick’s which are not occupied by the Credit Union. Investment property is treated as a long-term investment and is carried at cost. e. Financial instruments Financial instruments are contracts that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognized on the Credit Union’s statement of financial position when the Credit Union becomes a party to the contractual provisions of the instrument. Financial liabilities are derecognised when they are extinguished that is when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount
RSCCU Annual Report • 2016
37
Notes to the Financial Statements
At 31st December, 2016 ...continued
2.
SIGNIFICANT ACCOUNTING POLICIES ...(continued) e. Financial instruments ...(continued)
of a financial liability extinguished and the consideration paid is recognised in the statement of comprehensive income. Recognition and measurement All regular way purchases and sales of financial assets are recognised or derecognised on the trade date. That is the date on which the Credit Union commits itself to purchase or sell an asset. A regular way purchase and sale of an asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the market place concerned. When financial assets are recognised initially, they are measured at fair value of the consideration given plus transaction costs directly attributable to the acquisition of the asset. Financial assets are derecognised when the contractual rights to receive the cash flows expire or where the risks and rewards of ownership of the assets have been transferred. The Credit Union classifies its financial assets into the following categories: loans to members, loans and receivables and available-for-sale. Management determines the appropriate classification of its financial assets at the time of purchase and re-evaluates this designation at every reporting date. Loans to members Loans are financial assets provided directly to members. These carry fixed or determinable payments and are not quoted in an active market and are stated at principal amounts outstanding net of any unearned interest and allowances for impairment losses. Loans and receivables Investments classified as loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. The Credit Union’s loans and receivables comprise of fixed deposits which are stated at cost or cost less provision for impairment if necessary. Available-for-sale Investments are classified as available-for-sale as they are intended to be held for an indefinite period. These investments may be sold in response to needs for liquidity prices. These investments are carried at fair value, based on quoted market prices where available. However, where reliable measure is not available, cost is appropriate. The majority of these investments continue to be carried at cost as in almost all cases they are not traded on an active market and methods of reasonable estimation of fair value are unavailable.
38
RSCCU Annual Report • 2016
Notes to the Financial Statements At 31st December, 2016 ...continued 2.
SIGNIFICANT ACCOUNTING POLICIES ...(continued) e. Financial instruments...(continued)
Impairment of financial assets The Credit Union assesses at each date of the statement of financial position whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred if and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event�) and that event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Objective evidence that a financial assets or group of financial assets is impaired includes observable data that comes to the attention of the Credit Union about the following loss events: (i) Significant financial difficulty of the issuer or obligor. (ii) A breach of contract, such as default or delinquency in interest or principal payments. (iii) It is becoming probable that the borrower will enter in bankruptcy or other financial re-organization. (iv) The disappearance of an active market for that financial asset because of financial difficulties. (v) Observable data indicating that there is a measurable decrease in the estimated cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with individual financial assets in the group, including adverse changes in the payment status of borrowers in the Credit Union or national or economic conditions that correlate with defaults on assets in the Credit Union. The Credit Union first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant. If the Credit Union determines that no objective evidence of impairment exists for an individually assessed financial asset, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. Impairment losses are recorded in an allowance account and are measured and recognised as follows: (i) Loans to members All non-performing and individually significant loans are individually reviewed and specific provisions made for the impaired portion based on the requirements of the Co-operative Societies Act and the
RSCCU Annual Report • 2016
39
Notes to the Financial Statements
At 31st December, 2016 ...continued
2.
SIGNIFICANT ACCOUNTING POLICIES ...(continued) e. Financial instruments...(continued)
PEARLS Standards which recommends that delinquent loans less than three hundred and sixty-five (365) days in arrears are provided for to the extent of 35% while those in excess of that period are provided for in full. When all efforts have been exhausted to recover a non-performing loan, that loan is deemed uncollectible and written off against the related provision for loan losses. (ii) Financial assets measured at cost The difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate is recognised in the statement of comprehensive income. If, in subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as improvement in the debtor’s credit rating), the previously recognised loss is reversed to the extent that the carrying amount of the financial asset does not exceed what the amortised cost would have been, had the impairment not been recognised at the date that the impairment reversed. The amount of the reversal is recognised in the statement of comprehensive income. Financial Liabilities When financial liabilities are recognised initially, they are measured at fair value of the consideration given plus transaction costs directly attributable to the acquisition of the liability. Financial liabilities are re-measured at amortised cost using the effective interest method. Financial liabilities are derecognised when they are extinguished that is when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability extinguished and the consideration paid is recognised in the statement of comprehensive income. f. Cash and cash equivalents Cash and cash equivalents comprises of cash on hand and cash at bank. g. Stated capital Permanent shares are classified as equity.
40
RSCCU Annual Report • 2016
Notes to the Financial Statements At 31st December, 2016 ...continued 2.
SIGNIFICANT ACCOUNTING POLICIES ...(continued) h. Revenue recognition (i) Interest income Interest income is recognised on the cash basis. (ii) Investment income Investment income is recognised on the accrual basis. i.
Leases
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. Assets leased out under operating leases are included in property, plant and equipment or investment property in the statement of financial position. They are depreciated over their expected useful lives on a basis consistent with similar property, plant and equipment. Rental income is recognised on a straight-line basis over the lease term. Leases entered into by the Credit Union are all operating leases j.
Dividends
Dividends that are paid during the period are accounted for as an appropriation of retained earnings in the statement of changes in equity. k. Foreign currencies Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-translated at the rate of exchange ruling at the statement of financial position date. The resulting profits and losses are dealt with in the statement of comprehensive income. There are no foreign currency borrowings. l.
Finance cost
Finance cost is recognised in the statement of comprehensive income as an expense in the period in which they are incurred.
RSCCU Annual Report • 2016
41
Notes to the Financial Statements
At 31st December, 2016 ...continued
3.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING ACCOUNTING POLICIES The development of estimates and the exercise of judgment in applying accounting policies may have a material impact on the Credit Union’s reported assets, liabilities, revenues and expenses. The items which may have the most effect on these financial statements are set out below. Fair value of available-for-sale investments The fair values of financial instruments that are not quoted in active markets are determined using the last traded value for the investment. Where no such value exists the investment is carried at cost less impairment. Impairment of financial assets Management assesses at each statement of financial position date whether assets are impaired. An asset is impaired when the carrying value is greater than its recoverable amount and there is objective evidence of impairment. Recoverable amount is the present value of the future cash flows. Provisions are made for the excess of the carrying value over its recoverable amount. Property, plant and equipment Management exercises judgment in determining whether future economic benefits can be derived from expenditures to be capitalized and in estimating the useful lives and residual values of these assets.
4.
MEMBERS’ LOANS
Total loans Less: Provision for loan losses
2016
2015
12,476,054
10,530,019
502,046
(653,628)
$11,974,008
$9,876,391
These loans are secured by mortgages, bills of sale, members savings and personal guarantees. Interest is payable at rates ranging between 7% and 12% per annum.
42
RSCCU Annual Report • 2016
Notes to the Financial Statements At 31st December, 2016 ...continued 5.
FINANCIAL ASSETS 2016
2015
-
104,750
Loans and receivables Grenville Co-operative Credit Union Government of St. Lucia 7.5% bonds Bank of Nova Scotia Grenada Co-operative League Limited
484,607
512,302
-
208,084
655,545
650,539
500,000
500,000
941
941
500,000
500,000
501,375
500,000
2,642,468
2,976,616
500,000
500,000
$2,142,468
$2,476,616
800
800
23,065
23,065
69,400
69,400
$93,265
$93,265
British American Insurance Company Limited - Corporate saving plan Grenada Building and Loan Association – Regular shares Government of Dominica 7.0% bonds Government of St. Lucia 5.5% Treasury notes
Less: Provision for impairment loss
Available-for-sale Grenada Building & Loan Association - 8 preference shares Grenada Co-operative League Limited - 4,613 ordinary shares Eastern Caribbean Home Mortgage Bank - 507 ordinary shares
6.
$925,376
(90,153)
NET BOOK VALUE
1,015,529
Accumulated depreciation
$925,376
(19,073)
Cost/valuations
Balance at 31st December, 2016
NET BOOK VALUE
Depreciation charge for the year
-
23,907
Additions for the year
Disposals during the year
920,542
Opening book value
For the year ended 31st December, 2016
$920,542
(71,080)
Accumulated depreciation
NET BOOK VALUE
991,622
$920,542
Cost /valuations
Balance at 31st December, 2015
NET BOOK VALUE
(18,593)
-
Depreciation charge for the year
-
Disposals during the year
939,135
Revaluation during the year
Additions for the year
Opening book value
For year ended 31st December, 2015
-
-
-
-
-
-
-
$
-
(11,539)
11,539
$
$
(11,539)
11,539
$
-
-
-
-
-
$
$939,135
NET BOOK VALUE
11,539 (11,539)
991,622 (52,487)
Accumulated depreciation
Land and Leasehold Building Improvement
Cost/valuations
Balance at 1st January, 2015
PROPERTY, PLANT AND EQUIPMENT
$63,486
(113,329)
176,815
$63,486
(9,838)
-
12,570
60,754
$60,754
(105,791)
166,545
$60,754
(8,927)
(37,114)
17,120
89,675
$89,675
(324,114)
413,789
Furniture, Fixtures and Equipment
$44,357
(23,498)
67,855
$44,357
(11,008)
(986)
5,720
50,631
$50,631
(15,323)
65,954
$50,631
(9,726)
(5,155)
45,042
20,470
$20,470
(365,749)
385,219
Computer Equipment
-
-
-
-
-
-
-
-
-
-
$40,429
(4,809)
45,238
$40,429
(4,809)
-
45,238
$
$
$
-
-
Motor vehicle
$1,073,648
(243,328)
1,316,976
$1,073,648
(44,728)
(986)
87,435
1,031,927
$1,031,927
(203,733)
1,235,660
$1,031,927
(37,246)
(42,269)
62,162
1,049,280
$1,049,280
(751,228)
1,803,509
Total
RSCCU Annual Report • 2016 43
Notes to the Financial Statements At 31st December, 2016 ...continued
44
RSCCU Annual Report • 2016
Notes to the Financial Statements At 31st December, 2016 ...continued 7.
INVESTMENT PROPERTY 2016
2015
264,000
264,000
125,931
125,931
$389,931
$389,931
Pass books
3,954
4,794
Union jerseys
1,168
2,120
$5,122
$6,914
76,507 17,971
75,760 25,664
$94,478
$101,424
368,110
123,978
211,286
39,965
3,697
3,697
19,901
13,898
- Current account
187,868
314,035
- USD account
410,459
134,491
$1,201,321
$630,064
Land - Bathway, St. Patrick’s - La Taste, St. Patrick’s
8.
9.
INVENTORIES
RECEIVABLES AND PREPAYMENTS Receivables Prepayments
10.
CASH AND CASH EQUIVALENTS Cash on hand Republic Bank (Grenada) Limited - Current account - Government account Grenada Co-operative Bank Limited - Treasure chest
RSCCU Annual Report • 2016
45
Notes to the Financial Statements
At 31st December, 2016 ...continued
11.
EQUITY SHARES These are of a nominal value of $5.00 each when fully paid up. Each member is required to own forty shares.
12.
STATUTORY RESERVE
Balance at 1st January, 2016 Add: Entrance fees Transfer from surplus for the year Balance at 31st December, 2016
2016
2015
222,565
163,096
989
1,065
21,664
58,404
$245,218
$222,565
In accordance with Section 119 (2) of the Co-operative Societies Act No. 20 of 1996, at least 20% of the surplus for the year shall be transferred to a Reserve Fund. Entrance fees collected during the year are also credited to this reserve.
13.
REVALUATION SURPLUS The Credit Union’s land, building and certain fixtures were revalued by Cecil Frederick & Associates at $985,622 in 2013, resulting in a surplus on revaluation of $704,725.
14.
DEVELOPMENT FUND Balance at 1st January, 2016 Add: Transfer from surplus for the year Balance at 31st December, 2016
47,680
33,079
5,416
14,601
$53,096
$47,680
This fund is calculated at 5% of surplus for the year and is payable to the Grenada Co-operative League Limited in accordance with Section 120 of the Co-operative Societies Act No. 20 of 1996 amended by the Co-operatives Society Act No. 8 of 2011.
15.
DISASTER RELIEF FUND This fund was established to help needy members of the Credit Union. Annually, $1,200 is allocated to the fund out of the surplus for the year.
46
RSCCU Annual Report • 2016
Notes to the Financial Statements At 31st December, 2016 ...continued 16.
SMALL BUSINESS DEVELOPMENT FUND
Balance at 31st December, 2016
2016
2015
$11,433
$11,433
This fund was provided to the Credit Union for the purpose of lending to assist small business development.
17.
MEMBERS’ DEPOSITS Regular savings Term deposits Special savings Miscellaneous
18.
8,334,240
3,765,495
3,666,124
292,337
224,392
5,041
8,121
$14,279,825
$12,232,877
28,666 305,135 86,519 15,000
20,642 77,759 36,334 15,000
$435,320
$149,735
225,062
226,849
2,790
6,732
NON-INTEREST BEARING LIABILITIES Bill collections payable Accrued interest-members Other Provision for audit and accounting fees
19.
10,216,952
OTHER OPERATING INCOME Service charge Sale of passbooks, rule books and statement fees Commissions Jersey sales Miscellaneous
4,350
4,300
(2,543)
(1,800)
1,891
1,770
$231,550
$237,851
RSCCU Annual Report • 2016
47
Notes to the Financial Statements
At 31st December, 2016 ...continued
20.
INCOME TAX The Credit Union is exempt from the payment of Income Tax under Section 25(P) of the Income Tax Act 1994.
21.
PRIOR YEAR ADJUSTMENT 2016 Interest for 2014 and 2015
22.
$292,097
2015 $
-
FINANCIAL RISK MANAGEMENT The Credit Union’s activities expose it to the following risk from the use of financial instruments: »» Credit risk »» Liquidity risk »» Currency risk »» Interest rate risk »» Operational risk Risk management structure The Board of Directors defines the overall risk profile of the Credit Union by approving its policies and guidelines, maximum limits for exposure as well as for individual loans. The credit and finance department is responsible for managing the risks assumed through their operations and for ensuring that an adequate return for the risks taken is achieved. The Credit Union’s risk management policies are established to identify and analyse the risks faced by the Credit Union. An environment of proper controls is continually pursued through a system of training, management standard and procedures so as to ensure that all employees understand their roles and obligations. Risk management structure ...(continued) The Board has established two committees: Credit and Supervisory, which are responsible for developing and monitoring the Credit Union’s risk management policies in their specified areas. The risk management duties of the Credit Committee are focused on credit risk in the Credit Union’s lending operations and the Supervisory Committee deals with operational risk profile of the Credit Union. Both of these Committees report to the Board of Directors. Credit Risk Credit risk is the risk of financial loss to the Credit Union if a member or counter-party to a financial instrument fails to meet its contractual obligations, and arises principally from inability of members to repay loans, the inability of investments and cash and cash equivalents to be recuperated or interest on them to be realized.
48
RSCCU Annual Report • 2016
Notes to the Financial Statements At 31st December, 2016 ...continued 22.
FINANCIAL RISK MANAGEMENT ...(continued) Management of credit risk The Credit Union’s main objective as regards to credit risk is to protect against any unwanted counterparty credit exposures, maintain credit risk at a manageable level and identify and avoid material credit failure that would impart earnings. (i) Members’ loans Exposure to credit risk is managed through regular analysis of the ability of borrowers to settle outstanding balances and meet repayment obligations, and by changing lending limits when appropriate. (ii) Other financial assets With respect to credit risk arising from the other financial assets of the Credit Union, which comprise cash and cash equivalents and investments, the Credit Union’s exposure to credit risk arises from default of the counter-party. The Credit Union seeks to hold its funds with financial institutions which management regards as sound and the market for investments is monitored regularly to ensure that returns are realized. Exposure to credit risk The Credit Union’s maximum exposure to credit risk before collateral held or other credit enhancement is as follows: Maximum exposure
Members’ loans Loans and receivables financial assets Available-for-sale financial assets Inventories Receivables and prepayments Cash and cash equivalents
2016
2015
11,974,008
9,876,391
2,142,468
2,476,616
93,265
93,265
5,122
6,914
94,478
101,424
1,201,321
630,064
$15,510,662
$13,184,674
22.
-
700,895 1,836,484
Domestic
2,142,468 2,142,468 $2,142,468
1,181,011 3,398,374 1,782,655 2,193,493 25,998 37,494 610,786 97,279 114,252 12,476,054 (502,046) $11,974,008
Travel
Debt consolidation
Housing
Land
Business
Musical equipment
Medical
Appliance and equipment
Motor vehicle repair
Balance at 31st December, 2016
Less: Provision for loan losses
Home improvements
Other
-
45,303 270,124
Agriculture
Motor Vehicle
-
181,906
Education
Loans and Receivables Members’ Financial Assets Loans
Analysis of concentration of credit risk
FINANCIAL RISK MANAGEMENT ...(continued)
$93,265
-
93,265
-
-
-
-
-
-
-
-
93,265
-
-
-
-
-
-
$5,122
-
5,122
-
-
-
-
-
-
-
-
5,122
-
-
-
-
-
-
$94,478
-
94,478
-
-
-
-
-
-
-
-
94,478
-
-
-
-
-
-
Availablefor-Sale Receivables financial and Assets Inventories Prepayments
$1,201,321
-
1,201,321
-
-
-
-
-
-
-
-
1,201,321
-
-
-
-
-
-
Cash and Cash Equivalents
$15,510,662
-
16,012,708
114,252
97,279
610,786
37,494
25,998
2,193,493
1,782,655
3,398,374
3,536,654
1,181,011
270,124
45,303
1,836,484
700,895
181,906
Total
RSCCU Annual Report • 2016 49
Notes to the Financial Statements At 31st December, 2016 ...continued
22.
2,476,616 -
650,024 734,819 19,169 157,824 1,332,068 3,784,056 998,697 2,023,477 51,248
Domestic
Motor Vehicle
2,476,616
119,191 84,685 10,530,019
Motor vehicle repair
(653,628) $9,876,391
Less: Provision for loan losses
Balance at 31st December, 2016 $2,476,616
-
-
405,685
Home improvements
Appliance and equipment
Medical
Business
Land
Housing
Other
Debt consolidation
Travel
Agriculture
-
169,076
Education
Loans and Receivables Members’ Financial Loans Assets
Analysis of concentration of credit risk
FINANCIAL RISK MANAGEMENT ...(continued)
$93,265
-
93,265
-
-
-
-
-
-
-
93,265
-
-
-
-
-
-
$6,914
-
6,914
-
-
-
-
-
-
-
6,914
-
-
-
-
-
-
$101,424
-
101,424
-
-
-
-
-
-
-
101,424
-
-
-
-
-
-
$630,064
-
630,064
-
-
-
-
-
-
-
630,064
-
-
-
-
-
-
AvailableReceivables Cash and for-Sale and Cash financial Assets Inventories Prepayments Equivalents
$13,184,674
(653,628)
13,838,302
84,685
119,191
405,685
51,248
2,023,477
998,697
3,784,056
3,308,283
1,332,068
157,824
19,169
734,819
650,024
169,076
Total
50 RSCCU Annual Report • 2016
Notes to the Financial Statements
At 31st December, 2016 ...continued
RSCCU Annual Report • 2016
51
Notes to the Financial Statements
At 31st December, 2016 ...continued
22.
FINANCIAL RISK MANAGEMENT ...(continued) Analysis of members’ loans at 31st December, 2016 before the provision for loan losses: Current $
31-60 days $
61-90 days $
91-120 days $
Over 121 days $
Total $
2016
380,113
355,274
366,147
382,160
10,999,360
12,476,054
2015
961,628
974,826
295,492
98,819
8,199,254
10,530,019
Analysis of individually impaired financial assets as at 31st December, 2016: Net book value
Members’ loans Loans and receivables financial assets
Carrying Value $
Provision $
2016 $
2015 $
2,883,324
502,046
2,381,278
376,030
500,000
500,000
-
-
Write off Policy The Credit Union writes off a loan when it determines that the loan is uncollectible after considering information such as the occurrence of significant changes in the borrower’s financial position such that the borrower can no longer meet the obligation, and that proceeds from collateral will not be sufficient to recover the entire exposure. Collateral The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. The Credit Union has guidelines that set out the acceptability of difference types of collateral, as a risk mitigation tool, hence maintaining its credit risk exposure within acceptable levels. The types of collateral held by the Credit Union are registered mortgages over property, bill of sales on motor vehicles and other assets, liens on deposit and shares, guarantees and promissory notes. Estimates of fair value are based on the value of the collateral at the time of borrowing and are generally not updated except when a loan is individually assessed as impaired. Liquidity Risk Liquidity risk is the risk that the Credit Union will encounter difficulty in meeting the obligations associated with its financial liabilities.
52
RSCCU Annual Report • 2016
Notes to the Financial Statements At 31st December, 2016 ...continued 22.
FINANCIAL RISK MANAGEMENT ...(continued) Management of liquidity risk The Credit Union’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Credit Union’s reputation. The Credit Union monitors its risk to a shortage of funds by considering planned and probable expenditures against projected cash flows from operations and from the settlement of financial assets such as loans receivable and investments. Exposure to liquidity risk The table below analyses the Credit Union’s financial liabilities into relevant maturity grouping based on the remaining period at the statement of financial position date to the contractual maturity dates.
Members’ deposits Non-interest bearing liabilities Balance at 31st December, 2016 Members’ deposits Non-interest bearing liabilities Balance at 31st December, 2015
On Demand
Up to 1 year
Total
10,514,330
3,765,495
14,279,825
435,320
-
435,320
$10,949,650
$3,765,495
$14,715,1458
8,582,360
3,650,531
12, 232,897
149,735
-
149,735
$8,732,104
$3,650,531
$12, 382,632
Currency Risk Currency risk is the risk that the value of future cash flows of financial instrument will fluctuate due to changes in foreign exchange rates. The Credit Union operates primarily in Eastern Caribbean Currency and is therefore not subject to significant foreign currency risk. However, some of the Credit Union’s transactions are in United States dollars but as the Eastern Caribbean Dollar is pegged to thee United States Dollar, there is no significant currency risk exposure. Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Exposure to interest rate risk Floating rate instruments expose the Credit Union to cash flow interest risk whereas fixed rate instruments expose the Credit Union to fair value interest rate risk.
RSCCU Annual Report • 2016
53
Notes to the Financial Statements
At 31st December, 2016 ...continued
22.
FINANCIAL RISK MANAGEMENT ...(continued) Management of interest rate risk The Credit Union’s exposure to interest rate risk is managed through the matching of funding products with financial services and monitoring market conditions and yields. Operational Risk Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Credit Union’s processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those rising from legal and regulatory requirements and generally accepted standards of good corporate behaviour. Operational risks arise from all of the Credit Union’s operations. The Credit Union’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Credit Union’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity. The primary responsibility for development and implementation of controls to address operational risk is assigned to senior management. This responsibility is supported by the development of overall Credit Union standards for the management of operational risk in the following areas: »» Requirements for appropriate segregation of duties, including the independent authorization of transactions »» Requirements for the reconciliation and monitoring of transactions »» Compliance with regulatory and other legal requirements »» Development of contingency plans »» Training and professional development »» Risk mitigation, including insurance where this is effective
54
RSCCU Annual Report • 2016
Schedule of General and Administrative Expenses For the year ended 31st December, 2016
GENERAL AND ADMINISTRATIVE EXPENSES 2016
2015
325,863
319,598
Gratuity
21,000
-
National Insurance contributions
13,295
12,247
LP/LS insurance
81,637
58,208
League dues
32,707
27,357
Insurance
10,867
8,353
Stationery and printing
58,425
44,361
Donations
4,573
1,422
Uniforms
8,080
3,552
Audit and accounting fee
18,060
17,250
Legal fees/Professional fees
37,898
26,692
Advertising
53,177
30,628
Annual general meeting
12,309
11,126
Board and committee meetings
3,260
794
Education and seminars
1,490
8,946
Travel and conference expenses
2,881
23,649
71,210
10,743
Telephone, electricity and cable
48,453
53,568
Honorarium
36,890
16,380
26
-
Computer maintenance
26,602
27,896
Repairs and maintenance
43,347
41,208
Water rates and taxes
1,434
1,264
Credit Union Day expenses
5,093
3,465
Depreciation
44,728
37,246
Cash shortage/(overage)
57,704
(286)
Rent
13,800
13,800
Security
47,232
5,951
Unidentified differences
-
73,765
Motor vehicle expenses
3,356
-
$1,085,397
$879,183
Salaries and wages
Interest and bank charges
Miscellaneous
RSCCU Annual Report • 2016
55
Budget 2016 AUDITED 2015
AUDITED 2016
2016 BUDGET
2017 BUDGET
Interest: Loans
$632,950
$986,568
$1,020,000
$1,200,000
Interest : Investmens
$134,690
$119,551
$120,000
$120,000
Forex Exchange gain
$20,881
$15,151
$25,000
$25,000
Rental Income
$15,458
$7,640
$15,000
$15,000
Other Income
$237,851
$231,550
$240,000
$240,000
Bad Debt Recovery
$277,923
$171,870
$50,000
$50,000
Loss on dispoal of fixed assets
$(41,763)
$(886)
$-
$-
$1,277,990
$1,531,444
$1,470,000
$1,650,000
Interest Expenses
$106,786
$337,727
$360,000
$360,000
Salaries & Wages
$319,598
$325,863
$312,000
$350,000
$12,247
$13,295
$13,800
$15,000
$8,353
$10,867
$16,000
$16,000
Loan Protection/Savings
$58,208
$81,637
$78,000
$65,000
Utilities (Electricity, Cable, Telephone, etc)
$53,568
$48,453
$78,000
$65,000
Professional Fees (Legal, Valuation etc)
$26,692
$37,898
$15,000
$25,000
Interest on Borrowings & Bank Charges
$-
$71,210
$55,769
$56,000
$1,264
$1,434
$1,000
$1,000
Compuer Network Maintenance
$27,896
$26,602
$25,700
$25,000
Audit Fess
$17,250
$18,060
$20,000
$20,000
Motor Vehicle Expenses
$-
$3,356
$12,000
$12,000
Computer software
$-
$-
$12,500
$12,500
General Insurance
$-
$-
$10,000
$-
Stationery & Office Supplies
$44,361
$58,425
$45,000
$45,000
Honorarium
$16,380
$36,890
$44,400
$44,400
$794
$3,260
$2,000
$2,500
$11,126
$12,309
$12,000
$15,000
$-
$13,800
$13,800
$13,800
$27,357
$32,707
$32,000
$35,000
INCOME
Gross Income EXPENDITURE
National Insurance Scheme Insurance: Property etc
Water & Property Taxes
Board meeting expenses Annual General Meeting Rent League Dues
56
RSCCU Annual Report • 2016
Budget 2016 ...(continued) AUDITED 2015
AUDITED 2016
2016 BUDGET
2017 BUDGET
$30,628
$53,177
$50,000
$35,000
$8,946
$1,490
$20,000
$20,000
Travel & Conferences
$23,649
$2,881
$25,000
$25,000
Repairs & Maintenance: Building
$41,208
$43,347
$2,000
$25,000
Equipment
$-
$-
$1,000
$-
GARFIN License
$-
$-
$5,000
$5,000
ICU Celebration
$3,465
$5,093
$10,000
$6,000
$10,743
$3,855.31
$6,000
$6,000
Other Staff Costs (Health & Pension)
$-
$-
$5,000
$5,000
Local Travel
$-
$-
$7,200
$1,000
Donations
$1,422
$4,573
$5,000
$5,000
Uniforms
$3,552
$8,080
$12,000
$-
Security
$5,951
$47,232
$46,080
$48,000
$-
$26
$2,000
$2,000
$37,246
$44,728
$-
$-
Cash overage/shortage
$(286)
$57,704
$-
$200
Unidentified differences
$73,765
$-
$-
$-
Gratuity
$-
$21,000
$-
$-
Commission Paid
$-
$1,078.56
$-
$-
Total Expenditure
$972,169
$1,428,057.87
$1,355,249
$1,361,400
SURPLUS BEFORE APPROPIATION
$305,821
$103,386.13
$114,751
$288,600
Advertising & Public Relations Training
Bank Charges
Miscellaneous Depreciation
RSCCU Annual Report • 2016
57
Resolutions 1. APPROVAL OF THE BUDGET Whereas the by-law article XI, Section thirty-eight (38), two (2), (h) mandate that the budget should be approved by the Annual General Meeting. And whereas the Budget for 2017 is presented to this Annual General Meeting. Be it resolved that the Budget as presented and / or amended be approved by this Annual General Meeting.
2. APPROVAL OF BORROWING LIMIT Whereas the by-law article XI section thirty-seven (37), (2), (m) stipulates that the Annual General Meeting must set the maximum borrowing limit of the Credit Union. Be resolved that the maximum borrow limit for 2017 be one million dollars ($1,000,000.00).
3. APPOINTMENT OF AUDITORS Whereas the accounting Firm Pannell-Kerr Forster (PKF) continues to provide satisfactory service to the River Sallee Co-operative Credit Union as its Auditors. Be it resolved that PKF be reappointed as the Auditor of the River Sallee Co-operative Credit Union for 2017.
58
RSCCU Annual Report • 2016
Credit Union Prayer
Credit Union Song
Lord, make me an instrument of thy peace
With us there are no barriers ‘cause we are all the same
Where there is hatred, let me sow love
The more of us the happier the louder we’ll proclaim
Where there is injury, pardon
That we are owners’ members our rule is honesty,
Where there is doubt, faith
We are the Credit Union and all the world can see.
Where there is despair, hope Where there is darkness, light and
Chorus
Where there is sadness, joy
Together we give together we receive Together we help each other to achieve,
O Divine Master, grant that I may not
‘Cause in our world today, it’s not safe to be alone
So much seek to be consoled as to console
Let’s make each other’s cares to be our own.
To be understood as to understand To be loved as to love
We all will be true savers though it be great or small We will become shareholders providing loans for all,
For it is in giving that we receive
So when great need arises there’s no uncertainty,
It is in pardoning that we are pardoned and
Once in the Credit union there’s help for you and me.
It is in dying that we are born to eternal life. We pledge to be of service to better our land Bless, O Lord, our deliberations and grant that
We harbour no prejudice upon this theme we stand,
Whatever we may say and do will have thy
One man, one vote for members of high or low degree,
Blessing and guidance through Jesus Christ Our Lord
For in the Credit Union there’s pure democracy.
Amen
RSCCU Annual Report • 2016
Caring for the Community
59
60
RSCCU Annual Report • 2016
Notes
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RIVER SALLEE COOPERATIVE CREDIT UNION MAIN OFFICE: SAUTEURS BRANCH River Sallee, St. Patrick’s Main Street, Sauteurs Grenada, West Indies St. Patrick’s Telephone: (473) 442-1727/442-9870 Telephone: (473) 442-2732 Fax: (473) 442-2677 Fax: (473) 442-2732 Email: rscu@Spiceisle.com Web: www.riversalleecreditunion.Com