Grenada Teachers Co-operative Credit Union Annual Report 2014

Vision To be the financial institution of choice for members.

Mission Statement To provide the best possible service to members while meeting their primary financial needs as measured by achieving the highest standards in benefits and membership satisfaction.

Core Values Commitment and Teamwork Honesty and Integrity An environment where innovation is encouraged and recognized A commitment to continuously doing things better Taking pride in outstanding performance Provide first class service to our members Fulfilment of our responsibility to the environment in which we operate

Value Translation Team work

- Let us work together

Honesty

- Tell me what you really think

Risk Taking

- Nothing ventured – nothing gained

Continuous Improvement - We are always looking to do things better Pride

- We are proud of our successes

Service

- Giving our members what they need

Environment

- We take it seriously

Annual Report 2014

Table of Contents Corporate Information

Page 02

Notice of 31st Annual General Meeting

Page 03

Standing Orders

Page 04

Agenda 31st Annual General Meeting

Page 05

President’s Message

Page 06

Minutes of the 30th Annual General Meeting

Page 07

Board of Directors’ Report

Page 16

Credit Committee’s Report

Page 24

Supervisory and Compliance Committee’s Report

Page 28

Treasurer’s Report

Page 35

Auditor’s Report

Page 41

Resolutions

Page 69

Terms of Office

Page 70

Member Bill of Rights

Page 71

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Annual Report 2014

Corporate Information Main Office

Auditors

Management

Cnr. Grenville & St. John’s Streets St. George’s, Grenada, West Indies P.O. Box 2040 Telephone: (473) 440-1354 Fax: (473) 435-6950 E-mail: gutcu@spiceisle.com gutcu@gutcu.com Website: www.gutcu.com

Pannell Kerr Forster

General Manager Samuel Britton (Mr.)

Grenville Branch Ben Jones Street Grenville, St. Andrew’s Phone: (473) 438-3526 Fax: (473) 438-4814

Bankers Grenada Co-operative Bank Republic Bank RBTT

Solicitors/Attorneys Alban John Scott Street, St. George’s Lindo & Co. Hillsborough Street, St. George’s

Executive Officers

Grand Anse Branch

President Kim Parris (Ms.)

Le Marquis Complex Grand Anse, St. George’s Phone/Fax: (473) 439-7228

Vice President Carl Andall (Mr.)

Sub-Offices Victoria Queen Street Victoria, St. Mark’s Phone/Fax: (473) 437-1502 Carriacou Main Street, Hillsborough, Carriacou Phone/Fax: (473) 443-7676

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Secretary Egbert La Geer (Mr.) Assistant Secretary David Thomas (Mr.) Treasurer Decima Blake-Thomas (Mrs.) Assistant Treasurer Andre Martin (Mr.)

Deputy General Manager Retesha Smith-Boyd (Mrs.) Financial Manager Damani Brizan (Mr.) Operations Manager Paula Mc Meo (Ms.) Loans Manager Nicole Roberts (Ms.) Communication/Marketing Manager Camille Goddard (Mrs.) Manager - Grenville Branch Alice Mc Queen (Ms.) Manager – Grand Anse Branch Matonia Cox-Munroe (Mrs.)

Annual Report 2014

Notice of 31st Annual General Meeting TO:

All Members of the G.U.T. Co-operative Credit Union Ltd.

FROM:

Secretary: G.U.T. Co-operative Credit Union Ltd.

SUBJECT:

31st Annual General Meeting

DATE:

25th March, 2015

Fellow Members, In compliance with Article 42 (1) of the Co-operative Societies Act 2011, notice is hereby given that the 31st Annual General Meeting of the G.U.T. Co-operative Credit Union Limited will be held at the St. Rose Modern Secondary School, St. John’s. The meeting will commence at 10:00 a.m. Thursday 9th April, 2015 for the following purposes: To receive the Report of the Board of Directors and other Committees for 2014 To receive the Audit Financial Report for 2014 To elect members to the Board of Directors and other Committees To discuss and approve the Budget for 2015 To appoint auditors and fix their remuneration.

To take action on such matters as may come before the 31st Annual General Meeting.

All members are invited to attend.

Yours sincerely,

Egbert La Geer Secretary Board of Directors

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Annual Report 2014

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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Annual Report 2014

31st 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

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Annual Report 2014

President’s Message Fellow Members, As we reflect on the year 2014 indications are that we have experienced successes and challenges along the way. Despite the challenges, your management committees along with the staff of G.U.T. Cooperative Credit Union were able to realize accomplishments of which we are satisfied. The year 2014 saw the completion of the Strategic Plan which is the navigation tool used to chart the way forward for our credit union, the hosting of our inaugural Secondary School Financial Literacy Quiz, the employment of additional staff and overall significant growth.

Despite the gloomy economic conditions in which we operate, we were able to realize growth in a number of areas. There was a 14.13% growth in Total Assets, Equity shares grew by 12.36%, Savings grew by 14.53 %, Loans grew by 10.71%, Membership grew by 7.87%, Income grew by 7.43%, and there was an increase of 47.84 % in surplus over 2013.

As we look toward the horizon, additional challenges are imminent as we are being called upon to play our part in shared sacrifice and nation building. Consequently, it’s a time when we are each being asked to claim GUTCCU as My Credit Union (I am a member), to understand that it’s local (home grown), it’s trusted (the continued confidence I have placed in the credit union over the years)and it’s making a difference (contribution toward nation building, empowering the nation’s youth as well as its members).

During the year under review we were able to host a number of activities for our youth as well as organize empowerment sessions for members willing to serve on various committees.

This initiative was undertaken to ensure that a pool of trained members are readily available to serve on the various committees whenever the need arises.

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As we chart the way forward I implore all members to focus on our watch words or theme for the year 2015, ‘My Credit Union! Local, Trusted, Making a difference.’ You are urged to take pride in your credit union, promote its products and services to non- members, give of your time where necessary, play your part to reduce delinquency, utilize as the financial institution of choice, and contribute to the success of this noble institution.

Indeed, this can only be achieved if we each remain committed to the survival of our credit union. Your Board of Directors and Management staff remain committed to working with Grenada Authority for the Regulation of Financial Institutions (GARFIN) and the recommendations put forward by the Supervisory and Compliance Committee to ensure compliance is upheld.

The opportunity to serve as president of this noble institution was indeed a rewarding experience. I wish to thank all my fellow Directors, members of the Supervisory and Compliance Committee, Credit Committee, the Manager and staff, and the general membership for your support and cooperation.

Let us all continue to cherish our credit union as the place where we all belong.

Best wishes for a productive 2015 and beyond.

Yours Co-operatively,

Kim Parris (Ms.) President

Annual Report 2014

Minutes of the 30th Annual General Meeting of the Grenada Union of Teachers’ Co-operative Credit Union Held at the St. Andrew’s Anglican Secondary School on the 23rd April, 2014 1. 1.

Call to Order 1.1 At approximately10:25 a.m. the meeting was called to order by the chairperson, Ms. Elizabeth Peters, who apologized for the delayed start which was due to technical difficulties with the P.A. system.

2.

2.

Prayers, National Anthem and Silence 2.1 Prayers were led by Ms. Marjorie Thomas, a member of the Board of Directors. The Credit Union Prayer was also recited. The National Anthem was then sung, followed by a minute’s silence that was observed for the deceased members.

3. 3.

Opening Remarks 3.1 The Chairperson, Ms. Elizabeth Peters, welcomed everyone present including the President of the Caribbean Confederation of Credit Unions (CCCU), Mr. Aaron Moses; the President of the Grenada Cooperative Credit Union League, Mr. Leroy Cadet; and Mr. Alister Phillip, representative from GARFIN. She stated that she was very happy to see the members present, and reminded members that the Credit Union’s business is their business.

3.2 Fraternal greetings were extended on the behalf of the Communal Co-operative Credit Union which congratulated the G.U.T. Co-operative Credit Union on its 30th Annual General Meeting. Reference was

made to the theme, emphasizing the importance of innovation in management for development in these challenging economic times.

4.

4.

President’s Remarks 4.1 In her remarks, the President, Ms. Florina Thomas, stated that she was pleased to address the 30th Annual General Meeting of the G.U.T. Co-operative Credit Union.

4.2 She made reference to the challenging times and the financial crisis that our country is still experiencing.

She referred to the low room occupancy rate in the hotel industry, the closing of branches of commercial banks, reduced remittances from relatives overseas and foreign investment in the country, the last not being a reality.

4.3 Ms. Thomas stated that the implementation of the three-year home-grown Structural Adjustment Programme (SAP), to combat the national financial problems has negatively impacted on our members through the introduction of Income Tax; increase in property and land taxes; and other taxes.

4.4 The President referred to the theme, “Facing Challenging Times with Innovation and Enterprise,” as she urged members to reflect on the growth of the G.U.T. Co-operative Credit Union and to continue to support the credit union, since it is a sound financial co-operative.

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Annual Report 2014

4.5 Reference was made to the Asset value of over one hundred and one million dollars ($101,000,000.00) - Income of seven point eight million dollars ($7.8m), the Loans portfolio of seventy five point four million dollars ($75.4m), Savings of eighty four point six million dollars ($84.6m);and a membership of eight thousand six hundred and seventy three (8,673).

She further emphasized that this could only have been as a result of sound financial management and the vision of the Management of the credit union.

5. 5.

5.1 Mr. Leroy Cadet, President of the Grenada Cooperative League Limited extended greetings from the League to the members of the G.U.T. Co-operative Credit Union. He stated that he was honoured to address the gathering and to bring greetings from the Grenada Co-operative League and the Grenville Co-operative Credit Union.

5.2 He congratulated the Credit Union on the hosting of its 30th Annual General Meeting. He commended the Credit Union on the choice of the theme in these trying economic times.

4.6 In looking forward, Ms. Thomas stated that a Small Business Unit would be established; mortgage interest rate lowered by 1%; and debt consolidation on loans as initiatives geared towards increasing the disposable income of members.

4.7 The President alluded to the aborting of plans for Nishe Debit Card due to the reluctance and tardiness of the other credit unions that were on board with the venture. She however stated that the Board of Directors will pursue other avenues to make the Debit Card, ATM machines and Internet Banking a reality for our members.

4.8 The President informed members that the continuity of the credit union is important, hence the continuation of the youth programmes like the Financial Literacy Seminars; Smart Savers accounts; the TAMCC Scholarship Fund; and the Secondary Schools Junior Financial Co-operative.

Further to this, an audit of the Management Staff and volunteers would be undertaken; training and education programs would be introduced so as to increase the capacity of staff and volunteers.

4.9 The President finally took the opportunity to thank the members of the Board of Directors; Credit and Supervisory Committees; staff; and members for their support during the time she served on the Board.

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Address: Grenada Co-operative League

He further applauded the credit union on its growth in savings, loans, income, equity, assets and membership.

He went on to highlight the high level of attendance of members of the Board of Directors to meetings and that this reflected their strong commitment to the credit union.

5.3 He further urged the Management of the credit union to continue to use co-operation for the growth of the credit union movement in Grenada. He admonished members to continue to support the plans of the G.U.T. Co-operation.

5.4 Mr. Cadet applauded the Credit Union for its continued support to the League. He expressed his gratitude to the members of the G.U.T. Co-operative Credit Union who are on the Board of the League, for their support and service to the League.

6. 6.

Remarks: Caribbean Confederation of Credit Unions (CCCU) 6.1 Mr. Aaron Moses, the President of CCCU, brought greetings from the 353 credit unions across seventeen (17) Caribbean countries with 2.1 million members.

Annual Report 2014

6.2 He stated that it was quite pleasurable to congratulate a successful credit union on its successes over the past year. He further stated that the G.U.T. Co-operative Credit Union is one of the ‘Bright Stars’ within the credit union family across the Caribbean.

milestone in the history of the credit union. He went on to commend the credit union on this and all other achievements and he emphasized that the credit union is a successful and sustainable business model for the future.

7.3 He went on to state that GARFIN has developed its own regulatory framework with common and effective tools and powers to tackle crises preemptively, safeguarding national stability and minimizing member exposure through losses.

6.3 He went further to recognize the ‘sterling work’ of the Board of Directors for the continued successes of the credit union.

6.4 He went on to say that in these challenging times the credit union movement is a ‘unique organization’.

He referred to the core values and the philosophy of the credit union as he reflected on the contributions that credit unions are making to the socio-economic stability of members.

7.4 The framework consists of three main pillars: Preparatory and Preventative Early Intervention Measures Resolution Tools and Powers

6.5 Additionally, he stated that credit unions are institutions that provide financial services to the poor, disadvantaged and indigent. He went on to mention that credit unions are the second largest mobilizer of savings within the community and that they assist all people in the creation of assets through the coming together if its members in groups and pooling their resources, thus allowing small people to become credit worthy.

7.5 In closing, he alluded to the healthy relationship between GARFIN and the G.U.T. Co-operative Credit Union and he admonished Management to focus on members’ best interests while providing innovative products and services. He finally commended management and staff for their commitment and strong leadership.

6.6 Finally, he urged members to defend the core values and the philosophy of the credit union movement.

7. 7.

Remarks: GARFIN 7.1 Mr. Alister Phillip addressed the AGM on behalf of GARFIN. He stated that it was his honour and pleasure to bring greetings from the management and staff of GARFIN to the G.U.T. Co-operative Credit Union on hosting its 30th AGM. 7.2 He stated that the 30th AGM is a significant

These measures are aimed at preserving national stability by protecting public and market confidence, putting prevention and preparation first, providing creditable resolution tools, enabling fast and decisive actions, reducing moral hazards and minimizing to the fullest extent possible the overall cost to our members.

8.

8.

Vote of Thanks 8.1 Ms. Kim Parris expressed appreciation on the behalf of the G.U.T. Co-operative Credit Union to all who made contributions to the formal opening.

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Annual Report 2014

8.2 Profound thanks were extended to Mr. Aaron Moses, President of CCCU, for his insightful remarks. She made reference to the admonishing words he expounded, as he urged members to remember, ‘who we are and what we do’, as he reminded members of the core values of the credit union.

8.3 Gratitude was also expressed to Mr. Alister Phillip, for highlighting the achievements of the credit union thus far, and for underscoring the importance of adhering to regulations and advising the credit union on the regulatory framework toolkit for crisis management.

8.4 Thanks were also expressed to Mr. Leroy Cadet for his invaluable remarks that he shared today, and for the important words, “save regularly, borrow wisely and repay promptly”.

8.5 Thank you was also expressed to the President, Ms. Florina Thomas, for her inspiring and informative remarks and for providing an in-depth explanation of the financial environment in which we operate; and for insight into the plans for the future.

8.6 Gratitude was also expressed to Ms. Marjorie Thomas, for invoking the presence of God; to Ms. Akesha Ettienne for leading the National Anthem; and to Ms. Elizabeth Peters for chairing the morning’s proceedings.

8.7 The morning’s proceedings ended at 12:30 p.m.

9. 9.

Business Session 9.1 In accordance with the Section 40:1d of the Bye-Laws of the Grenada Union of Teachers Co-operative Credit Union, a quorum must be ascertained before the business could proceed.

Based on the membership, the quorum should

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be 300 persons. There were fewer than 300 persons present, and therefore permission had to be sought from the Registrar of Co-operatives (GARFIN), to conduct the meeting. Permission was granted and the meeting duly proceeded.

9.2 The first part of the Business Session commenced at 12:32 p.m. This first part was to receive the Auditors’ Report, and the Audited Statements.

10.

10.

Adoption of the Standing Orders

10.1 A motion for the adoption of the Standing Orders for the Annual General Meeting was moved by Ms. Janis Henry and seconded by Ms. Imogene Howard. The motion carried.

11.

11.

Reports

11.1 A motion for the adoption of all reports was moved by Ms. Magdalene Carmichael and was seconded by Ms. Dulice Williams.

11.2 THE AUDITOR’S REPORT (a) This report was presented by Mr. Khalil Steele, a member of Pannell-Kerr Foster (PKF) accounting firm. In his report, he highlighted and gave an overview of the auditors’ responsibilities in conducting the audit. He further gave an overview of the procedures that were employed.

These procedures were deemed to be in accordance with International Standards.

11.3 THE AUDITED STATEMENT (a) The Statement of Financial position as at 31st December 2013 was presented by the Accountant, Mr. Damani Brizan.

Annual Report 2014

(b) In his presentation, he highlighted the following: The total Earning Assets ($90,174,177.00) Non-Earning Assets ($6,959,321.00)

12.

12.

Business Session

12.1 After the lunch break, the business session resumed at 2:09 p.m. The presence of the members from Carriacou was acknowledged by the President.

Total Assets ($101,718,771.00) Institutional capital ($11,627,457.00)

13.

13.

Funds and Reserves ($4,607,699.00) Total Members’ Equity ($16,235,156.00)

Total Liabilities ($85,483,615)

Minutes of the 30th Annual General Meeting

13.1 A motion that the minutes of the 30th Annual General Meeting be taken as read was moved by Ms. Judy Lewis-Joseph and was seconded by Ms. Janis Henry. The motion carried.

(c) In the Statement of Comprehensive Income the following were highlighted: Net interest income and other income ($4,495,351.00) General and Administrative Expenses ($3,630,293.00)

Net Operating Surplus before appropriation ($865,058) Transfer to Reserve and Development Funds ($216,265.00) Net Surplus for the year ($648,793.00) Total Comprehensive Income ($688,793.00)

11.4 Clarifications were sought by members on the following: The composition of Available for Sale Financial Assets. The explanation was on page 56 of the AGM booklet, Note 6.

The policy on revaluation of investment property. It was noted that the IAS-40 policy is followed where annual revaluation is done.

14.

14.

Corrections and Omissions

14.1 In paragraph 23.3, the word ‘wereas’ should be corrected to read ‘whereas’.

15.

15.

Confirmation of the Minutes

15.1 A motion for the confirmation of the minutes was moved by Ms. Glenis Belfon and was seconded

by Mr. Randy Boyke Cadet. The motion carried.

16.

16.

Matters Arising

16.1 One member expressed concern over the absence of a quorum for the meeting. In response the President told the meeting that the AGM was advertised on radio and television, members were sent text messages and the booklets were delivered on time. She further stated that members need to see it as their responsibility to attend meetings, since the Board of Directors has done all in its powers to inform members of the meeting.

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Annual Report 2014

16.2 Another member asked for an update on the Nishe Debit Card. The Manager in responding informed the meeting that the idea was aborted. This was as a result of the fact that two of the four credit unions pulled out from plans. The plans for that Debit Card are no more. However, the G.U.T. Credit Union will be exploring new ways of making the Debit Card a reality to our members.

16.3 A member questioned as to why the AGM booklet was not sent to members in PDF format. The meeting was informed that it was a suggestion from last year, and that should be put forward in a resolution. A vote was taken on the idea, and the majority voted in favour of sending the AGM booklets in PDF format online to members.

16.4 One member enquired as to whether the idea of finding insurance besides CUNA to insure members’ loans was feasible. The meeting was informed that the Board is still looking at that possibility, so as to get the best bargain for our members.

17.

17.

Board of Directors Report

17.1 The President, Ms. Florina Thomas tabled this report.

17.2 A listing of the executive and other members of the Board of Directors and heads of the ad hoc committees was presented.

17.3 The following were highlighted in the report:

A financial comparison of the development of the G.U.T. Co-operative Credit Union from 2009- 2013.

Major activities that were undertaken during 2013.

Developments at the various sub offices.

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Delinquency rating.

Contributions and donations.

Attendances at board meetings.

Plans for 2014.

17.4 A member enquired as to the cost for implementing components of the Strategic Plan. The meeting was informed that the budget for 2014 is guided by the Strategic Plan and that it is a reflection of what is intended to be done during 2014.

17.5 One member enquired as to what method is used to choose persons to attend training and seminars.

The meeting was informed that persons are chosen dependent upon the topics that are dealt with at the different sessions as it relates to their area of responsibility.

17.6 Another member asked about the criteria which are used to choose students for the TAMCC Scholarship Award. The President informed the meeting that it was advertised and persons applied for the scholarship. Further to this, students and parents were interviewed to determine the level of need.

17.7 A member asked about the performance of the TAMCC Scholarship Awardees. The meeting was informed that the recipients were asked to submit reports of their performance to the credit union.

Excellent performers would have the possibility of a second year award.

17.8 Another member inquired as to what would be done with the building which housed the former Tivoli Credit Union. The meeting was informed that it would be put for rent or for sale.

17.9 A member of the Carriacou delegation asked about training for the young calypsonians in Carriacou.

Annual Report 2014

The President told the meeting that serious consideration would be given to this in the very near future.

18.

18.

Schedule of work A review of Share Capital, Delinquency Control, Institutional Capital, Key performance indicators, Large Loans/ Investments, Internal Controls, and Board, committee and Staff Members Accounts.

Credit Committee Report

18.1 This report was tabled by Ms. Retesha Smith-Boyd.

Visits to offices.

18.2 The following were the main points of the report:

Expression of gratitude for the support it received from the Board, Credit Committee and Management and Staff of the credit union.

A record of member’s attendance A review of the Credit Committee’s work A breakdown of the loans granted according to purpose, value, by age and gender.

Observations in relation to applications for loans.

Expression of gratitude to the Board of Directors, Supervisory and Compliance Committee, Manager and Staff and members of the Credit Committee for their support and assistance throughout the year.

18.3 One member suggested that members should be encouraged to take loans for more productive purposes, and that the interest rate for such loans should be attractive.

19.

19.

Supervisory and Compliance Committee Report

19.1 This report was tabled by Mr. Abel Newton, chairperson of the committee.

19.2 This report highlighted the following: The composition of the committee.

20.

20.

Treasurer’s Report

20.1 This report was presented by the Treasurer, Ms. Joslyn Augustus-LaTouche.

20.2 In the report she highlighted the following: An overview of the financial performance for 2013.

Income and expenditure in relation to the 2013 budget.

Performance in relation to Assets, Loans, Deposits, Capital and External Credit.

Actual performance in relation to the PEARLS RATIO.

20.3 The Budget for 2014 was presented by the Manager, Mr. Samuel Britton. He highlighted the following.

An Income of eight million, four hundred twenty four thousand, six hundred and seventy six dollars ($8,424,676.00) was projected.

Methods of operation.

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Annual Report 2014

A projected Expenditure of seven million, five hundred fifty six thousand, four hundred and thirteen dollars ($7,556,413.00).

The projected Surplus was eight hundred sixty eight thousand two hundred sixty three dollars ($868, 263.00).

Mr. Miguel A. Fortune - St. Andrew - Board of Directors

Brief notes for the Expenditure items were also listed.

Mr. Andre Martin - St. Mark - Board of Directors

Board of Directors - 7 persons 21.3 Based on the established criteria, the following persons were recommended:

Mr. Edison Francis - St. David - Board of Directors

Ms. Sobrina La Rose - Supervisory and Compliance Committee

20.4 A motion for the adoption of the Budget for 2014 was moved by Ms. Imogene Howard and was seconded by Ms. Marjorie Thomas.

Ms. Lu-Melina Fortune - Supervisory and Compliance Committee

20.5 The vote for the adoption of the 2014 Budget was unanimous.

21.

21.

Nominating Committee’s Report

21.1 This report was tabled by Mr. Carl Andall, Head of that Committee. The composition of the committee was: Mr. Carl Andall - Board of Director - Chairperson Mr. James Alexander - G.U.T. Co-op Credit Union - Member Mrs. Angela Pierre - G.U.T. Co-op Credit Union – Member 21.2 Nominations were sought from the general membership through advertisements in the weekly newspapers and on the radio stations.

Nine nominations were received to serve in the following areas: Supervisory and Compliance Committee - 2 persons

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Mr. Kelley Calliste - Credit Committee 21.4 There were no nominations from the floor. The meeting agreed that the recommended persons will form the Board of Directors, Credit and Supervisory and Compliance Committees for the recommended period of time.

22.

22.

Resolutions

22.1 The following resolutions were presented by the Manager, Mr. Samuel Britton for approval by the AGM. 22.2 Whereas as the Bye Laws, Article XI section 37 (2) (h), mandate that the Budget should be approved by the Annual General Meeting: And whereas the Budget for 2014 is presented to this Annual General Meeting; Be it resolved that the Budget as presented be approved by the Annual General Meeting.

Annual Report 2014

A vote for the approval of the Budget was taken.

Members unanimously voted in favour of its approval.

22.3 Whereas the Bye Laws, Article XI section 37 (2) (m), stipulates that the Annual General Meeting must set the maximum borrowing limit for the Credit Union.

Be it resolved that the maximum borrowing limit for the Credit Union for 2014 be $3,000,000.00.

Members voted unanimously in favour of the borrowing limit.

22.4 Whereas the Accounting Firm Pannell Kerr Foster (PKF) continues to provide satisfactory service to the G.U.T. Co-operative Credit Union as its auditors;

Be it resolved that PKF be reappointed as the auditors of the G.U.T. Co-operative Credit Union for 2014.

This resolution was seconded by Mr. Augustine Vesprey.

Unanimous support was given to this resolution.

The motion carried.

After lengthy discussions on this resolution by the general membership, the dividend payment of 3% was amended to 3.5%. The motion for the amendment was moved by Ms. Pamela Adolphus and was seconded by Ms. Judy Lewis- Joseph.

Twenty-nine (29) voted in favour and twenty four (24) against the amendment.

22.6 The amended resolution reads: Whereas the G.U.T. Co-operative Credit Union realized a surplus on its operation for 2013

And, whereas the Institutional Capital of the credit union has increased beyond 10% of the Total Assets as recommended by the Pearls Ratio

Be it resolved that this Annual General Meeting approve a dividend payment of 3.5% of the value of members’ share account for 2013

A vote was taken for the amended resolution. Forty (40) persons voted in favour of the new resolution.

There were no votes against. The motion carried.

23.

22.

Adjournment

23.1 The meeting ended at 4:44 p.m.

22.5 Whereas the G.U.T. Co-operative Credit Union realized a surplus on its operation for 2013.

And, whereas the Institutional Capital of the credit union has increased beyond 10% of the Total Assets as recommended by the Pearls Ratio Be it resolved that this Annual General Meeting approve a dividend payment of 3% of the value of members’ share account for 2013.

Egbert La Geer Secretary

Kim Parris President

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Annual Report 2014

Board of Directors’ Report The Board of Directors is pleased to present to the 31st Annual General Meeting, its report on the financial year 2014.

1. 1.

Composition

1.1

The Board of Directors during the first quarter of the period comprised the following members: Ms. Florina Thomas

President

St. Andrew

Ms. Elizabeth Peters

Vice President

Independent

Mr. Egbert La Geer

Secretary

Independent

Mr. David Thomas

Assistant Secretary

Independent

Ms. Joslyn Augustus-La Touche

Treasurer

St. David

Ms. Decima Blake-Thomas

Assistant Treasurer

Independent

Ms. Kim Parris Director Independent Ms. Marjorie Thomas

Director

St. Mark

Ms. Janis Henry

Director

St. George

Ms. Alma Du Bois-Calliste

Director

St. John

Mr. Carl Andall Director Independent Ms. Lystra Mark

Director

St. Patrick

Mr. Henry Stiell Director Carriacou 1.2

The term of office expired for some members during the first quarter of the period but some were eligible for re-election.

Retired Members

16

Replacement

Region

Ms. Florina Thomas

Mr. Miguel Fortune

St. Andrew

Ms. Joslyn Augustus-La Touche

Mr. Edison Francis

St. David

Ms. Marjorie Thomas

Mr. Andre Martin

St. Mark

Ms. Decima Blake-Thomas

Ms. Decima Blake-Thomas

Independent

Annual Report 2014

1.3

Composition of the new Board The following members were elected during the first meeting to fill the established executive positions: Ms. Kim Parris

President

Mr. Carl Andall

Vice President

Mr. Egbert La Geer

Secretary

Mr. David Thomas

Assistant Secretary

Ms. Decima Blake-Thomas Mr. Andre Martin

Treasurer Assistant Treasurer

Other members of the Board: Ms. Elizabeth Peters Ms. Janis Henry Ms. Alma Du Bois- Calliste Mr. Edison Francis Ms. Lystra Mark Mr. Henry Stiell Mr. Miguel Fortune

1.4

Adhoc Committees Committees were appointed to assist with various duties and responsibilities. The Chairman for each committee is as follows: Committee Education

Chairman Mr. Egbert La Geer

Staff

Mr. Carl Andall

Investment

Ms. Decima Blake-Thomas

2. 2.

Year in Review The financial and economic challenges which have been affecting economies of the world continue to negatively affect the Grenadian economy.

However the fiscal and economic policies of the Government of Grenada, through the Home Grown Structural Adjustment Programme with the support of the International Monetary Fund (IMF), would have brought some stability to the economy, but at the same time has impacted adversely on our credit union members.

Moreover, the credit union continues to operate in an increasingly competitive environment.

Realizing this, the Board of Directors continued with measures that would have a positive impact on members, since it would allow members to have more spending power. These included: (i) The reduction of the interest rate on mortgages by one percent (ii) Implementing a special loan promotion for debt consolidation that waives the six month waiting period for new members (iii) Extension of loan repayment periods Over the five (year) period there was a positive movement from a loss in 2010 and 2011 to a surplus in 2012, 2013 and 2014.

17

Annual Report 2014

3. 3.

Financial Highlights

The following charts show the financial achievements of the G.U.T Co-operative Credit Union for the period 2010 - 2014: Savings

Total Assets 140,000,000

12,000,000

$116,095,097

120,000,000

$101,718,771 $91,098,838

100,000,000

70,000,000

8,000,000

$81,456,950

80,000,000

7,000,000

$73,994,251

6,000,000

60,000,000

$96,842,152 $84,556,573

10,000,000

$77,090,777 $68,634,067 $64,349,887

4,000,000

40,000,000

2,000,000

20,000,000

0

0 2010

2011

2012

2013

2010

2014

2011

2012

2013

2014

In 2014, there was a 14.13% increase in Total Assets over 2013

In 2014, there was a 14.53% increase in savings over 2013

There was a 56.90% increase in Total Assets from 2010 to 2014

There was a 50.49% increase in savings from 2010 to 2014

Loans

Equity Shares 90,000,000

12,000,000

$9,762,414

10,000,000

$8,688,332

$75,465,616 $68,992,638

70,000,000

8,000,000

$7,398,812

60,000,000

7,000,000

$60,842,955 $52,110,855

50,000,000

6,000,000

$3,696,042

4,000,000 2,000,000

$83,550,178

80,000,000

40,000,000

$2,296,413

30,000,000 20,000,000

0 2010

2011

2012

2013

2014

In 2014, there was a 12.36% increase in Equity Shares over 2013 There was a 325% increase in Equity Shares from 2010 to 2014

10,000,000 0 2010

2011

2012

2013

2014

In 2014, there was a 10.71% increase in Loans over 2013 There was a 60.33% increase in Loans from 2010 to 2014

18

Annual Report 2014

Membership 9357

$1,854,186

1,500,000

8673

1,000,000

7995

8,000

Surplus

2,000,000

10,000

$1,018,335

500,000 0

6115

5763

6,000

$688,793

-500,000

2010

2011

2012

2013

2014

-1,000,000

4,000

-1,500,000 -2,000,000

2,000

-$1,281,977 -$1,496,900

In 2014, there was a 47.84% increase in Surplus over 2013

0 2010

2011

2012

2013

Over the five (year) period there was a positive movement from a

2014

loss in 2010 and 2011 to a surplus in 2012, 2013 and 2014.

In 2014, there was a 7.87% increase in membership over 2013 There was a 62.40% increase in membership from 2010 to 2014

4. 4.

$6,9 78,0 07 $7,8 43,0 65 $7,1 05,7 49

$6,3 10,3 07 $7,1 01,3 90

$6,6 61,3 48

$6,3 04,6 50

6,000,000

$5,3 97,4 03

8,000,000

$6,2 94,3 03

10,000,000

$8,4 25,6 78

4.1 Income and Expenses

4,000,000

Supervision and Inspection During the month of July, the Grenada Authority for the Regulation of Financial Institutions (GARFIN) assessed the credit union’s operations and performance. Operational strengths as well as weaknesses were identified. One matter raised by GARFIN is that of our deficiency in institutional capital. The Board assessed the report and developed plans to address the issues, so as to ensure full compliance with the regulations.

2,000,000

0 2010

2011

2012

Expenses

2013

2014

5.

5.

Strategic Plan

Income

5.1 In 2014, there was a 7.43% increase in Income over 2013 There was a 56.11% increase in Income from 2010 to 2014 In 2014, there was a 1.83% increase in expenses over 2013 There was a 12.89% increase in expenses from 2010 to 2014

During 2014 the Strategic Plan that was developed in 2013 was reviewed and modified to cushion the effects of the structural adjustment programme on the credit union and our members. The Board of Directors did this in conjunction with the other committees and management staff of the credit union. This strategic plan encompasses a three year period (2014 -2016) and has been put into action.

19

Annual Report 2014

6. 6.

Delinquency

6.1

7. 7.

The year 2014 was a challenging one for the credit union as delinquency continued to be of concern.

The Board employed a number of strategies to curb the growth of delinquency among members. The rate of delinquency for 2014 was 2.49% compared with 5.56% in 2013.

Secondary Schools. The launch of the Junior Financial Co-operative would take place on January 13th, 2015.

8. 8.

8.1

Activities

7.1

Financial Literacy Quiz- Sixteen (16) secondary schools participated in the inaugural Secondary Schools’ Financial Literacy Quiz which started in June and concluded in July. St. David’s Catholic Secondary School was the winner of the competition.

9. 9.

Member Education Workshop for members – in the month of November, a two-day training workshop was held for members who were interested in serving on the Board of Directors, Credit Committee and Supervisory Committee. A total of thirty four (34) persons attended.

Sponsorships, Scholarships and Grants

7.2

Children Financial Seminar- The Smart Savers Seminar was again held this year from August 15th21st, 2014. Four hundred and twenty four students participated.

9.1

The TAMCC Necessitous Scholarship Fund administered by the G.U.T Co-operative Credit Union, assisted fourteen (14) students with tuition fees.

7.3

Pass the Torch Calypso Workshop- This programme continued to assist students in developing their skills in writing and performing calypso. The workshop is facilitated by some of our top local calypsonians. In 2014, a centre in St. George’s was added to supplement the already existing centres in St. Andrew and St. David. Some of the young calypsonians performed at the ICU Day Celebrations at La Sagesse, and a larger number of them would showcase their talents in an independence extravaganza in 2015.

9.2

The CPEA grant was given to one hundred (100) members along with Smart Savers vouchers at a total value of $25,000.

9.3

G.U.T Co-operative Credit Union continues to provide major sponsorship for sporting competitions and is the sole sponsor of the following:

7.4

20

Junior Financial Co-operative- Workshops for teacher guides were conducted prior to the launch of the Junior Financial Co-operative for students of

• Inter-Primary School Table Tennis Championship in which sixteen (16) schools participated in 2014. It was the 4th year of sponsorship.

• Magaret Dowe Netball Tournament which was sponsored for the 5th year.

Annual Report 2014

10.

10.

Staffing

• Ms. Donlyn Telesford successfully completed the mortgage underwriting course. This course was facilitated by the Eastern Caribbean Home Mortgage Bank and the Real Estate Institute of Canada.

10.1 Ms. Karen Mapp was promoted to Senior Member Service Representative 10.2 Ms. Alice Mc Queen was repositioned as Manager of the Grenville Branch

• Four members attended the 12th Annual OECS Summit in Antigua. They were Ms. Kim Parris, Ms. Karen Mapp, Ms. Retesha Smith-Boyd and Mr. Randy Boyke Cadet.

10.3 Ms. Matonia Cox-Munroe was repositioned as Manager of the Grand Anse Branch 10.4 Ms. Yonette Roberts-Ross was repositioned as Secretary to the Loans Department

• Ms. Karen Mapp and Ms. Imogene Howard attended a workshop on how to conduct an effective fraud investigation.

10.5 Mr. Damani Brizan was repositioned as Financial Manager

• Ms. Matonia Cox-Munroe and Ms. Retesha Smith-Boyd attended a workshop in Barbados on Improving Operating Efficiencies.

10.6 Ms. Paula McMeo was repositioned as Operations Manager 10.7 There were several new appointments in 2014: • Ms. Camille Goddard was appointed as the Communications Manager • Ms. Nicole Roberts was appointed as the Loans Manager

12.

12.

• Ms. Retesha Smith-Boyd was appointed as the Deputy General Manager

Sub-Offices The Grenville Branch office was redesigned, painted in the corporate colours and the floor was carpeted. This upgrade makes the office more member-friendly and provides an atmosphere that is conducive to conducting business.

• Mr. Nevion Cox was appointed as Marketing Field Officer • Mr. Elwin James was appointed as Member Service Representative

11.

11.

Human Resource Development

11.1 During the year, staff and committee members attended workshops and seminars to develop their knowledge and skills, in order to improve the service offered to members.

13.

13.

Donations and Contributions

13.1 Financial support was given to various charities, non- profit organisations and community groups, such as Grenada Girl Guides, Grenada Netball Association, Grenada Red Cross, GRENSAVE, Resource Centre for the Blind, The Salvation Army, GRENCODA, among others. Contributions were also given to numerous schools and some needy individuals.

21

Annual Report 2014

14.

14.

Board Meetings

14.1 The Board of Directors had fourteen (14) ordinary meetings and five (5) Joint Committee meetings.

Names

Board Meetings

Joint Committee

Total Attendance

Florina Thomas*

4/4

2/2

6/6

Elizabeth Peters

9/14

4/5

13/19

Egbert La Geer

14/14

5/5

19/19

Joslyn Augustus-La Touche*

4/4

2/2

6/6

Majorie Thomas*

3/4

2/2

5/6

David Thomas

14/14

5/5

19/19

Kim Parris

14/14

4/5

18/19

Decima Blake-Thomas**

14/14

5/5

19/19

Janis Henry

14/14

5/5

19/19

Alma Du Bois-Calliste

13/14

5/5

18/19

Carl Andall

13/14

4/5

17/19

Lystra Mark

10/14

4/5

14/19

Henry Stiell

11/14

3/5

14/19

Mr. Miguel Fortune***

6/10

3/3

9/13

Mr. Edison Francis***

10/10

3/3

13/13

Mr. Andre Martin***

8/10

2/3

10/13

* Demitted office at the last Annual General Meeting in 2014 ** Re-elected at the last Annual General Meeting in 2014 *** Elected at the last Annual General Meeting in 2014

15.

15.

Condolences

15.1 The management and staff of the G.U.T Co-operative Credit Union extend deepest sympathy to those who have lost family and friends in 2014.

22

Annual Report 2014

16.

16.

Plans for 2015

17.

17.

• Launch of Junior Financial Cooperative in Secondary Schools

Appreciation • The Board of Directors extends deep gratitude to all those who continue to contribute to the success of the G.U.T Co-operative Credit Union. Special thanks to the Directors, Credit Committee and Supervisory Committee, General Manager and Staff for their continued hard work.

• Expanding the services offered by the credit union including facilitation of bill payment • Relocation of Carriacou sub- office to enhance the services offered to members • Improving the operations of the credit union by providing additional training for staff

• Appreciation is extended to the general membership for the opportunity to serve you and for making G.U.T Co-operative Credit Union your financial institution of choice.

• Making the Debit Card a reality for members.

• Implementing Performance Appraisal for staff members.

• Developing and implementing the Business portfolio • Online banking • Development of Head Office • Financial growth in: Loans (10%) Savings (10%)

Egbert La Geer Secretary

Kim Parris President

• Institutional capital (20%)

Teamwork

Let us work it out together

23

Annual Report 2014

Credit Committee Report 1. 1.

Introduction The Credit Committee is pleased to present, to the 31st Annual General meeting, this report of its activities for the year 2014.

2. 2.

Composition The Credit Committee comprised the following members: Chairman Kelley Calliste Secretary Magdalene Carmichael Member Kevin Andall Member Irva Alexander Member Wayne Horsford

3. 3.

Attendance Records MEMBERS

Kelley Calliste Magdalene Carmichael Kevin Andall Retesha Smith-Boyd* Joyce John* Irva Alexander** Wayne Horsford** *Member resigned from committee in 2014 **Replaced members who resigned

24

Credit Committee

Joint Committee

Meetings Scheduled

Meetings Attended

Meetings Scheduled

Meetings Attended

27 27 27 18 18 9 9

24 25 9 18 8 9 7

5 5 5 4 4 1 1

4 4 3 3 2 1 1

Annual Report 2014

4. 4.

Year in Review In 2014, the Credit Committee held twentyseven (27) meetings. The purpose of these meetings were to evaluate and process loan applications, sign and ratify loan applications already approved by the loans department, assess and monitor loan delinquency and evaluate existing credit policies. Five hundred and fifty-three (553) loans were forwarded to the committee for processing. These loans were evaluated and three hundred and seventy-four (374) were approved.

As part of the evaluation process, the committee also conducted interviews with loan applicants in cases where additional information or clarification was required and also to provide financial counselling to our valuable members. A loans manager joined our organisation in September and has proven to be immeasurably resourceful in the evaluation process. Additionally, the delinquency issue continues to be addressed and is within acceptable parameters.

$28.5m Value of Loans Granted

3004 Loans Granted

25% Increase in Loans Granted

As at December 2014, the delinquency ratio was 2.49% The total number of loans granted during the period was three thousand and four (3004). Total value of loans granted amounted to $28,505,575.37.

Risk Taking

Nothing ventured – nothing gained

25

Annual Report 2014

Loan Report LOAN PURPOSE DESCRIPTION

COUNT

TOTAL VALUE

PERCENT

Computer

25

54,556.00

0.19

Education-back to school

86

139,970.09

0.49

140

648,983.98

2.28

74

70,166.78

0.25

Medical bills

186

469,592.68

1.65

Grocery bills

3

2,500.00

0.01

Legal & professional fees

35

195,514.83

0.69

Wedding expenses

22

110,655.02

0.39

Funeral expenses

36

108,117.65

0.38

Vehicle purchase

108

3,270,395.39

11.47

Vehicle repairs

97

309,730.49

1.09

Vehicle expenses, license ins

99

301,696.60

1.06

131

584,909.28

2.05

Refinancing loans

17

938,973.59

3.29

Livestock and farming

14

42,600.00

0.15

Consumer/personal expenses

693

1,455,551.46

5.11

Travel/vacation

265

1,101,142.99

3.86

Debt consolidation

340

7,261,953.40

25.48

58

4,669,078.46

16.38

227

1,926,140.86

6.76

3

17,100.00

0.06

26

483,517.30

1.7

Christmas loan

118

831,621.71

2.92

Land purchase

29

1,938,657.26

6.8

Heavy duty equipment

1

2,000.00

0.01

Land development

1

4,000.00

0.01

Professional & other service

2

5,992.19

0.02

106

721,816.64

2.53

Refinance loan balance

18

491,022.20

1.72

Ready money

28

211,644.28

0.74

Self-loan (education)

16

135,974.24

0.48

3004

28,505,575.37

Education -long term studies Utility bills

Household furniture/appliance

Mortgage/building construction Building repairs/renovations Catering & other services House insurance

Business enterprises

26

Annual Report 2014

5. 5.

Observations 5.1 The number of loans has increased from two thousand nine hundred and ninety-five (2995) in 2013 to three thousand and four (3004) in 2014. This reflects an increase of 0.30%. A significant amount of members continue to face unprecedented financial challenges: shrinking disposable incomes mainly due to the prevailing tax burden, loss of jobs and the uncertainty that the future brings. Despite this however, the loan value showed an increase over the previous year.

When compared to 2013, the value of loans granted increased in 2014 by 25.25% from $22,758,603.38 to $28,505,575.37 compared with a 4.74% increase from 2012 to 2013.

This significant increase in loan value speaks to the confidence that both present and new members continue to bestow in this financial institution.

5.2 The significant increase in the total loan loans granted was primarily driven by a 154% spike in loans for debt consolidation moving from $2,856,566.50 or 12.55% in 2013 to $7,261,953.40 or 25.48% in 2014.

The debt consolidation promotion which was the flagship initiative of the credit union in 2014, realised this overwhelming success through attracting new members to the organisation due the attractive interest rate and flexibility it provides compared to other financial organisations. The promotion did have its challenges, nonetheless, and is presently under review with the objective to produce an even better product in 2015.

5.3 Mortgage/building construction and vehicle purchase continue to form a significant part of the overall loan value as in previous years, with the former realising a value of $4,669,078.46 or 16.38% and the latter a value of $3,270,395.39 or 11.47%.

5.4 The majority of loans granted were to persons 45 years and under (67.6%); as well as the greater percentage of the value of loans (70.9%). This is very encouraging as it reflects the significant effort the credit union has placed into financial counselling and getting our youthful population into early financial security and wealth accumulation.

6. 6.

Appreciation Profound gratitude is extended on behalf of the Credit Committee to the Board of Directors, Supervisory Committee, General Manager and Staff for their invaluable assistance and continued support in a year where loan value soar to a new high, during the first year of the structural adjustment programme.

We extend appreciation to Mrs. Retesha SmithBoyd for her years of dedicated service to the committee and congratulate her on her new assignment as Deputy General Manager. We also thank Mrs. Joyce John for her service to the committee in the years spent with us.

The committee is forever cognisant of its role in protecting the financial assets of its members and eagerly anticipates deepening that resolve as we continue to successfully forge ahead through this most critical time in our financial history.

Kelley N. Calliste Chairman

27

Annual Report 2014

Supervisory and Compliance Report The Supervisory and Compliance Committee submits this report on its guardianship to its members at the 31st Annual General Meeting of the G.U.T. Co-operative Credit Union. The report covers the period, January to December 2014. This report provides an assessment and reflection of work, activities, observations and actions completed during the year under review.

Composition and Meetings for the Period At the 30th Annual General Meeting, Ms. Sobrina La Rose, and Ms. Lu–Melina Fortune were nominated and elected to serve on the Supervisory and Compliance Committee. Subsequently, the committee was constituted on 2nd May, 2014 and Ms. Imogene Howard was elected chairman and Ms. Lisa Lewis as secretary.

Your esteemed committee comprises of the following members and particulars of attendances are concluded in the table below: Regular Meetings Members

Joint Committee Meetings

Portfolio No. Of Meetings

Times Attended

No. Of Meetings

Times Attended

Imogene Howard

Chairman

11

10

5

5

Lisa Lewis

Secretary

11

11

5

5

Randy Boyke Cadet

Member

11

10

5

5

*Sobrina La Rose

Member

8

8

3

3

*Lu-Melina Fortune

Member

8

6

3

3

**Abel Newton

Member

3

3

2

2

*Elected in April 2014

28

**Term expired April 2014

Annual Report 2014

Method of Operation Your Committee’s main mandate was to promote the efficient operation of our Credit Union. Our task was designed to ensure that there were compliance with the Co-operative Societies Act, the Credit Union Bye–Laws, other governing policies and procedures; adherence to recommendations provided by GARFIN, our regulatory authority, auditors and other governing entities. Compliance was monitored by reviewing documents and the systems, and making necessary suggestion and recommendations for improvements. Our work ensured that the integrity, soundness of management, effective use of resources, financial stability, sound internal control and other functions and values were maintained and attained.

The schedule of work included: 1.

Review of Minutes and Reports of the Board of Directors, Credit Committee, and other committees

2.

Verification of Monthly Financial Reports

3.

Review of Auditors Statement and Report of Accounts for 2013

4.

Workshop and Training on Roles and Responsibilities of the Supervisory and Compliance Committee , Emortelle System and Risk Based Analysis

5.

Review of Delinquency Control Unit and its operations

6.

Visits and Re-visits to branches: Grenville, Tivoli, St. Mark’s, Carriacou, Grand Anse

7.

Review of Educational and Marketing programmes

8.

Review of cash control, teller operations and loans operations

9.

Cash count visits

10. Examination at random, samples of loan applications and files (new, existing and large), and loans files of delinquent members (large, old, new)

11. Compliance review of legal and regulatory procedures and documents governing the Credit Union 12. Review of staff accounts, employee files and payroll listings 13. Review of membership listings 14. Assessment of human resource management 15. Review of Credit/loans policy, fixed deposits listings and investment portfolio 16. Review of general membership holdings, deposits, loans and institutional investors/members 17. Verification of Assets Register Management and Assets Protection.

18. Review of Declaration of Fund Files To enhance productivity and members’ involvement in the organisation, your committee made the following recommendations: 1.

Update information of members that came from Tivoli Credit Union and also expand the Tivoli office to include other services such as bill express

2.

The relocation of the Carriacou office

3.

More incentive programmes for our Smart Savers

4.

Showcase of work done/sponsorship in offices through pictorial displace on walls and in albums

5.

Implement a shift system to facilitate the extension of hours of operations

6.

Develop and promote new products for members

7.

Stimulate interest and encourage more member participation in Credit Union activities especially Annual General Meeting and Credit Union Day Celebrations

8.

More training opportunities for staff and committee members

29

Annual Report 2014

9.

The Level of GUTCCU Liquidity 2010 - 2014

Individual educational upgrade by staff members

800

10. Finding attractive and lucrative long term investment opportunities

600

400

Financial Position Your Committee examined the Financial Statements submitted during the period under review and can conclude that the Credit Union’s accounting records and financial statements truly, fairly and accurately reflected its financial condition and results of its operations.

Loans and Deposits Your Committee recognised an improvement in the rate of growth in Members Loans and Members Deposits.

Loans are the lifeblood of the Credit Union and they are very important for the growth and sustainability of the Credit Union. For the period ending December 2014, Members Loans grew by 10.7 percent from $75,465,616 to $83,550,178. At the same time, Members Deposits grew by 14.5 percent from $84,556,573 to $96,842,152.

30

0 2010

2011

2012

2013

2014

Membership Loans and Deposits Growth 2010 - 2014 G r o w

R

t 10.0 e

t h

2.0

a 15.0

(%)

Total Assets Total assets increased by 14.1 per cent, from $101,718, 771 at the end of December 2013, to $116,095,097 at the end of December 2014. The increase in total assets was mainly due to a significant increase in cash and cash equivalent from $ 2,626,037 to $7,469,521.

Although cash is needed to provide a cushion to weather unexpected situations such as a shortfall in revenue and to cover short or medium term expenses, this high amount of liquidity suggested to your Committee, that the Credit Union needs to find attractive and lucrative longer term investment opportunities to deploy some of its cash reserves.

200

5.0 0.0 2010

2011 Members Loans Growth

2012

2013

2014

Members Deposit Growth

The Level of members’ Equity Shares 2010 - 2014 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 2010

2011

2012

2013

2014

Annual Report 2014

Since the current economic environment in which the Credit Union operates remains fragile, the growth experienced in Deposits and Loans is commendable.

Your Committee encourages the Board of Directors to remain steadfast in looking for ways to increase loan volume while at the same time putting systems in place in mitigating risks and potential losses. Additionally, there is always a need to market the loan products and to educate existing and potential members on the advantages of doing business with the credit union.

Members Share Capital The Member Share Capital represents the money members invest in the Credit Union. These monies form part of the capital base of the Credit Union.

As at December 2014, Share capital accumulated to Nine million, seven hundred sixty–two thousand, four hundred and fourteen dollars ($9,762,414). This represented a 12.4 percent increase compared to end of the previous year where the share capital amount was eight million, six hundred eighty- eight thousand, three hundred thirty two dollars ($8,688, 332).

The Level of the GUTCCU Institutional Capital 2010 - 2014 15,000,000 10,000,000 5,000,000 0 2010

2011

2012

2013

2014

Review of the Delinquency Status Your committee reviewed samples of loan applications to determine the adequacy and effectiveness of the internal control system. The status of the delinquent accounts was also monitored throughout the period under review. Procedures and structures were put in place to minimize the flow of accounts in such portfolio. In reviewing the delinquent loans the committee opted to ensure that; the approval procedures were adhered to, relevant supporting documents and security were available and follow up actions were taken by the Delinquency Unit.

As at December 2014, there were 101 delinquent accounts which amounted to two million, three hundred forty-nine thousand, four hundred and fifty five dollars ($2,349,455). The delinquency ratio achieved for the period under review was 2.49 percent.

Institutional Capital Over the past three years, the Credit Union’s Institutional Capital has been on a growth path. During the year under review, Institutional Capital grew by 17.7 percent from $11,627,457 to $13,684,622. A special point to consider is that, the Institutional Capital as a percentage of Total Assets was recorded at 11.8 percent, which remains above the industry standard of 10.0 percent.

The Internal Control Structure Your committee reviewed the control structure and procedure and found that transactions are executed in accordance with management’s specific authorization; all transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles.

The Institutional Capital is critical since it provides a basis for future growth and it ensures that the credit union remains a going concern.

Board, Committee and Staff Members Accounts The accounts of these departments were reviewed so as to ascertain the leadership and management’s confidence and extent of business conducted by these members in the organisation.

31

Annual Report 2014

The table demonstrates an overview and gives a clear picture of committee members and management involvement in the credit union.

Personnel

No. Of Persons

Shares $

Savings $

Loans $

13 5 5 35 58

$68,186.99 18,955.01 15,967.83 93,430.94 196,540.77

385,574.89 269,362.73 96,498.89 542,395.78 1,293,832.29

445,314.10 284,875.19 315,290.93 2,091,346.65 3,136,826.87

Board of Directors Credit Committee Supervisory Committee Staff Total

Education and Marketing The Credit Union operates for the purpose of promoting thrift and providing services intended to support community welfare and development. Your Credit Union has done its part in such by successfully completing the following projects: The G.U.T. Co-operative Credit Union National Secondary Schools Financial Literacy Quiz

it effectively. Risk Based Assessment and Investments were also discussed and analysed so as to assist in making recommendations and understanding the business and financial aspects in operating our credit union. This serves to assist the committee in ably performing its functions especially to ensure compliance at all times.

The Annual Smart Savers Financial Seminar The distribution of the CPEA Grant

Visits to Various Branches

Granting of the TAMCC scholarship

St. Mark’s Sub-Office The committee visited the St. Mark’s office to examine the practices and requisite duties related to their operations and made recommendations that seek to help improve the overall aesthetics, efficiency and security of the office. The office was also revisited to ensure that recommendations

Grenada Union of Teachers Co-operative Credit Union Junior Calypso Monarch GUTCCU Junior Calypso Workshops Promotion of the Credit Unions in many ways: Advertisements and Sponsorship Training for staff and committee members

Training Members of your committee organised and attended training sessions to familiarise and obtain more knowledge on how to use and manipulate the Emortelle system so as to monitor

32

made were implemented. It was found that necessary recommendations were being administered.

Carriacou Sub-Office The Carriacou office has continued to deliver in terms of its efficiency and productivity. There is a clear delineation of tasks among the two employees there. Upon examination of the physical condition of the building, we must commend the workers for operating effectively under the strenuous and decrepit conditions. Your committee is in firm agreement

Annual Report 2014

with the Board’s decision to relocate the office. The proposed site is more spacious and is located in closer proximity to the central business district. We deem this as a move that will definitely maximize service delivery.

Tivoli Sub-Office After a thorough examination of the operations at this relatively new location your committee is satisfied with its performance. The employee there must be commended for her community oriented spirit. Recommendations to ensure security and more effective functioning of this outlet were made. This outlet can also facilitate other business ventures such as bill express.

Grenville Office The Grenville office continues to operate efficiently and effectively and is aesthetically a model for the vision of our Credit Union. This branch was visited on two occasions.

Your committee applauds the efforts of the staff for their professionalism and for subscribing to the core values of the Credit Union.

Grand Anse Office The ambience is welcoming and comfortable. The attendants and staff were very cordial, accommodating and assisted the committee members in performing their task effectively. A physical cash count was completed and it was evident that the all monies reconciled with the necessary compared documents.

The Credit Committee We are pleased with the work of the Credit Committee.

The committee worked diligently in cohesion with the loans department to ensure that our members have access to all loan products offered. There have been some adjustments to the committee, two members resigned including the chairman, who was appointed a new position within in the credit union thereby causing new members to join the team.

The committee from time to time looks for ways and methods to enhance the performance of the loans department and in so doing make recommendations. Your committee trusts that these recommendations will be adopted to encourage growth in the department and better service to members.

Management The management and staff have worked exceptionally hard in regulating, monitoring and supporting the policies, procedures, mission and vision of the credit union. They must be commended for the commitment and dedication and we encourage them to continue the good work.

Making a difference Donation to pre-school

33

Annual Report 2014

Human Resource

Conclusion

One of the main objectives of the committee was to conduct a thorough investigation into the productivity of the credit union by monitoring the level of effectiveness of the employees. The business world is dynamic and it is imperative that we continue to align our workforce to the mission and vision of the credit union.

The Supervisory and Compliance Committee wishes to express gratitude and appreciation for the invaluable assistance, guidance and commitment of the Board of Directors, the Credit Committee, other committees, manager, and staff in making it possible for this committee to accomplish its task during its tenure.

The committee is extremely pleased that the Board has appointed a Deputy General Manager, and an experienced Loans Manager. The continuous growth of our credit union warrants the services of such individuals and we are truly contented with their performance thus far. Similarly, we applaud the Board in the effort of securing a qualified Communications Manager and Marketing Field Officer; the innovative ideas have surely promoted the image of our credit union to date. However, there is still a dire need for the recruitment of an Internal Audit Officer. This appointment will surely strengthen the internal auditing capacity of our credit union.

To you the members we express our profound appreciation for your continued confidence and support in our ability; to supervise and encourage transparency, accountability and good governance in an atmosphere where honesty and integrity, commitment, the provision of first class service to our members, which remain part of our core values.

The committee appreciates the dedication of our staff and their compliance to governing policies. We recommend that the staff take full advantage of educational opportunities as well as professional training that may arise. The job market is a competitive arena and in order for our credit union to maintain its prosperity, employees must constantly upgrade themselves.

Your committee will continue to play its pivotal role in the overall corporate governance process. We will be diligent, fair, assertive, observant and challenge, but at the same time work with management and all stakeholders to ensure value for money and ultimately, the development of our credit union in making it the number one credit union in the triisland State of Grenada, Carriacou and Petite Martinique.

Imogene Howard Chairman

Continuous Improvement

We are always looking to do things better

34

Annual Report 2014

Treasurer’s Report

Profitability Total Income of$8,454,066 was earned during the financial year. This was 7.24% above the amount earned in 2013.

The total cost to carry out the operation of the credit union during that period amounted to$ 7,105,752. This was 1.83% more than what was spent in 2013.

Growth in this portfolio was driven by a surge in application in the last quarter of 2014. An adjustment in the lending policy of the credit union by the Board of Directors where non members were encouraged to consolidate their many loans with the credit union assisted in the growth in the loans portfolio.

Surplus The total income for the year was $1,018,335. This was 47.84% above what was earned in 2013. This achievement must be viewed in the context of the unfriendly economic condition and the fierce competition among financial institutions.

Savings A total amount of $12,285,579 was added to the savings portfolio during the year which resulted in a 14.53% increase in Savings. Confidence in the credit union is manifested in the amount of new money deposited in the credit union for 2014.

Assets Growth The assets of the credit union increased from $101,718,771 in 2013 to $116,095,097 on 31, December 2014. This represents growth of 14.13% for the financial year. This growth is greater than what was achieved annually for the previous five (5) years.

Loans A total amount of $28,546,421 was added to the net loan portfolio for the financial year.

Performance for 2014 The Board of Directors estimated targeted growth in the key areas for 2014 as follows: Areas

Projected Growth

Actual Growth %

Loans

10%

10.71

Savings

10%

14.53

Members Equity

12%

12.36

Assets

10%

14.13

35

Annual Report 2014

Below are tables highlighting the Credit Union’s performance in major areas.

Table 1

Items

Bal 2014

Bal 2013

Growth

%

Loans

83,550,178

75,465,616

8,084,562

10.71

Savings

96,842,152

84,556,573

12,285,579

14.53

Liabilities

97,775,073

85,483,615

12,291,458

14.38

Capital

18,320,024

16,235,156

2,084,868

12.84

Assets

116,095,097

101,718,771

14,376,326

14.13

Table 2

Description

Actual 2014

Budgeted 2014

Variance Actual vs. Budget

Personnel

1,609,691

1,506,708

( 102,983)

Interest Payment

3,429,161

3,810,000

380,839

Marketing

381,216

350,000

(31,216)

Governance

382,741

858,300

475,559

Administration

1,302,940

1,031,405

( 271,538)

Sub Total

7,105,749

7,556,413

450,661

Net Operating Surplus add other comprehensive income

1,348,317

866,263

329,982

216,566

Total Comprehensive Income

1, 018,335

649,697

TOTAL

8,454,066

8,422,676

450,661

Interest on Personal Loan

5,986,177

6,295,000

(430,973)

Interest on Second Loan

1,095,129

750,000

121,102

Interest on Loan 3

667,621

700,000

(187,649)

Interest on Loan four

119,312

140,000

7,565

Horizon Plaza Income

83,381

48,000

(4,518)

Other Income

85,709

118,000

29,504

3,063

2,000

685

Bill of Sale

21,670

15,000

2,337

League Deposit Interest

35,319

66,994

1,585

Interest on Investment

86,894

81,000

(42,360)

Fixed Deposit Interest

241,402

206,682

56,639

8,422,676

(489,407)

Transfer to Reserve and Development Fund

Sale of Pass Books

Other Comprehensive Income Total 36

28,388 8,454,066

Annual Report 2014

Table 3

Products

Bal 2014

Bal 2013

Growth

% Growth

Regular Savings

47,554,255

39,433,325

8,120,930

20.59

Term Deposits

29,798,041

28,443,644

1,354,397

4.76

Special Savings

3,536,747

2,843,424

693,323

24.38

13,825,149

12,087,047

1,738,102

14.38

802,462

670,235

132,227

19.73

1,102,596

913,009

189,587

20.76

2014

2013

Total Income

8,454,066

7,883,063

Total Comprehensive Income

1,018,335

688,793

Solid Gold School Accounts Smart Saver

Earnings Data

Pride

We are proud of our successes

37

Annual Report 2014

Budget 2015 DESCRIPTION

BUDGET 2014

ACTUAL 2014

BUDGET 2015

Loan interest

7,885,000

7,868,240

9,173,000

Other income

120,000

88,772

117,000

Rental income

-

-

-

Horizon plaza income

48,000

83,381

132,000

Bill of sale

15,000

21,670

20,000

League deposit interest

66,994

35,319

65,543

Interest on investment

81,000

86,894

135,495

Fixed deposit interest

206,683

241,402

214,446

28,388

-

8,422,676

8,454,066

9,857,484

Personnel

1,506,708

1,609,691

2,060,969

Interest payments

3,810,000

3,429,161

4,312,500

Marketing

350,000

381,216

393,327

Governance

858,300

382,741

516,800

1,031,405

1,302,940

1,456,534

7,556,413

7,105,749

8,740,129

Shortfall/surplus

866,263

1,348,317

1,117,355

Transfer to reserve/development fund

216,566

329,982

279,339

Total comprehensive income

649,697

1,018,335

838,016

8,422,676

8,454,066

9,857,484

INCOME

Other comprehensive income Total Expenditure

Administration Sub total

Total

Description: The items under: Personnel: Salaries, Allowances, Travelling, Pension Fund, Health Plan, Entertainment/Refreshments National Insurance, security and uniforms Interest Payments: Interest Payments Marketing: Advertising and Training, Governance: Insurance, Audit, Provisioning, Annual General Meeting and Statutory Requirements, bad debts, honorarium, ICU day,League dues.

Administration: Utilities, Office Supplies,Rent,Depreciation, Tax, Computer and Office Maintenance and Donations.

38

Annual Report 2014

Pearls ratio comparison Table 4

Area Protection Delinquent Loans greater than 12 months

Required Ratio

December Ratio 2013

December Ratio 2014

100%

106.80%

100.%

35%

35%

35%

Effective Financial Structure Net Loans / Total Assets

70%-80%

74.19%

71.97%

Savings Deposit / Total Assets

70%-80%

83.13%

83.42%

Institutional Capital / Total Assets

min 10%

11.42%

11.79%

Liquid Investment / Total Assets

max 20%

8.67%

12.38%

Financial Investment / Total Assets

max 10%

7.71%

8.66%

Asset Quality Total Delinquent Loan / Loan Balance

Max5%

5.56%

2.49%

Non-Earning Assets / Total Assets

Max5%

6.84%

5.93%

Rates of Return Total Operating Expenses / Average Total Assets

Max5%

6.86%

6.12%

Market rate

3.96%

2.64%

Min10%

12.34%

15.65%

Max1%

1.91%

7.48%

Signs of Growth Growth in Loans

Min10%

9.38%

10.71%

Growth in Savings

Min10%

12.61%

14.53%

Growth in Members Shares

Min12%

17.43%

12.84%

Growth in Total Assets

Min10%

11.66%

14.13%

Delinquent Loans less than 12 months

Total Financial Investment Income / Average Fin Inv. Liquidity Liquidity Reserves / Savings Deposit Non-Earning Liquid Assets / Total Assets

Conclusion The Credit Union Assets continue to grow and that is a testament of the vision to be the financial institution of choice for members. Amidst the financial turbulence, 2014 was a more productive year than 2013 as seen by the net operating surplus of $1,319,929 as compared to 2013 of $865,058. Our delinquency ratio has reduced from 5.56% in 2013 to 2.49% at the end of 2014.

39

Annual Report 2014

G.U.T. Credit Union remains focused and committed and would employ the necessary strategies to keep improving on the credit union’s performance.

The Credit Union grew in all key areas surpassing the targets set by the Board of Directors. Smart Saver accounts have surpassed 1 million dollars and that is a milestone and must be applauded.

Sincere thanks must be given to all for their support and confidence in the credit union. This is my first year as Treasurer and it has been a learning experience. Thanks to the General Manager and Staff of the Credit Union, my fellow board members, Credit and Supervisory Committees and to the general membership for the support, encouragement and opportunity given to me.

The budget, which is enclosed, highlights the projections for 2015.

Decima Blake-Thomas Treasurer

Service

Giving our members what they need

40

Annual Report 2014

The Grenada Union of Teachers Co-operative Credit Union Limited Audited Financial Statement for the year ended 31st December, 2014

41 41

Annual Report 2014

Notes Independent to the Financial Auditors’ Statements Report

to the Members’ At 31st of Grenada December, Union 2014 of Teachers (continued) Co-operative Credit Union Limited We have audited the accompanying financial statements of the Credit Union which comprise the statement of financial position at 31st December, 2014 and the related statement of comprehensive income, statement of changes in members’ equity and cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes.

Responsibility for the Financial Statements Those charged with governance are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the accompanying financial statements present fairly in all material respects, the financial position of the Credit Union as of 31st December, 2014 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

GRENADA: February 18th, 2015 Accountants & business advisers:

42

Annual Report 2014

Notes Statement to theof Financial Financial Statements Position At 31st At 31st December, December, 20142014 (continued)

Assets

2014 $

2013 $

8,015,200 83,550,178 6,902,560 2,040,860

6,864,800 75,465,616 6,197,901 1,645,860

100,508,798

90,174,177

7

6,881,081

6,959,321

8

1,208,758 26,939 7,469,521 8,705,218

1,939,856 19,380 2,626,037 4,585,273

$116,095,097

$101,718,771

9,762,414 1,664,611 2,257,597

8,688,332 1,398,728 1,540,397

13,684,622

11,627,457

68,992 3,838,149 113,534 614,727

41,289 3,838,149 113,534 614,727

4,635,402

4,607,699

18,320,024

16,235,156

96,842,152 932,921

84,556,573 927,042

97,775,073

85,483,615

$116,095,097

$101,718,771

Notes

Earnings Assets Investment property Members’ loans Loans and receivables financial assets Available-for-sale financial assets

4 5 6 6

Total earnings assets Non-Earning Assets Property, plant and equipment Other Assets Accounts receivable Inventory Cash and cash equivalents

9

TOTAL ASSETS MEMBERS’ EQUITY AND LIABILITIES Institutional Capital Members’ equity shares Statutory reserve Accumulated surplus Other Funds and Reserves Development fund Revaluation reserve Disaster Reserves Other reserve

10 11

12 13 14

TOTAL MEMBERS’ EQUITY Current Liabilities Members’ deposits Non-interest bearing liabilities TOTAL LIABILITIES TOTAL MEMBERS’ EQUITY AND LIABILITIES

15 16

The notes on pages 47 to 67 form an integral part of these financial statements

: Director

: Director 43

Annual Report 2014

Statement Notes to the of Comprehensive Financial Statements Income At 31st At 31st December, December, 20142014 (continued)

2014 $

2013 $

Income Loan interest Interest on league deposits Interest on bank deposits

7,868,240 35,319 241,402

7,372,725 36,585 184,143

Deduct: Interest on members’ deposits

8,144,961 3,429,160

7,593,453 3,347,714

4,715,801 280,717

4,245,739 249,612

Deduct: General and Administrative Expenses (Schedule A)

4,996,518 3,676,589

4,495,351 3,630,293

Net operating surplus before appropriation

1,319,929

865,058

263,986 65,996

173,012 43,253

989,947

648,793

28,388 -

78,000 (38,000)

28,388

40,000

$1,018,335

$688,793

Notes

Net interest income Other income

18

Deduct: Transfer to reserve fund Transfer to development fund Net surplus for the year Other comprehensive income: - Gain on revaluation of investment property - Revaluation of available-for-sale financial assets

Total comprehensive income for the year

The notes on pages 47 to 67 form an integral part of these financial statements

44

Annual Report 2014

Statement Notes to of the Changes Financial in Members’ Statements Equity At 31st At 31st December, December, 20142014 (continued)

Balance at 1st January, 2013 1,289,520 -

7,398,812

Members’ Equity Shares

2,302

1,223,414

Statutory Reserve

-

1,020,123

Accumulated Surplus

-

4,590,108

Other Fund and Reserves

865,058 40,000 216,265 (216,265) (39,553) 35,071 (30,318) (159,381)

1,289,520 2,302

14,232,457

Total

16,235,156

(38,000) 43,253 51,891 (39,553) -

4,607,699

1,074,082 1,897

865,058 78,000 (268,156) 35,071 (30,318) (159,381) 1,540,397

-

173,012 1,398,728

-

8,688,332

1,897

Net movement in shares Entrance fees Total comprehensive loss for the year: Net profit for the year – previously reported Other comprehensive gain for the year Transfer from operations Transfer to reserve fund Payment of fund to league League contribution to Western Credit Union Tivoli Credit Union merger differences Dividends to members Balance at 31st December, 2013

1,074,082 -

1,319,929 28,388 329,982 (329,982) (38,293) 5,553 (306,688)

$18,320,024

65,996 (38,293) -

$4,635,402

1,319,929 28,388 (329,982) 5,553 (306,688) $2,257,597

263,986 $1,664,611

$9,762,414

Net movement in shares Entrance fees Total comprehensive income for the year: Net profit for the year Other comprehensive gain for the year Transfer from operations Transfer to reserve fund Payment of fund to league Interest and penalty – solid gold Dividends to members Balance at 31st December, 2014

The notes on pages 47 to 67 form an integral part of these financial statements

45

Annual Report 2014

NotesStatement to the Financial of CashStatements Flow At 31st December, 20142014 (continued) At 31st December,

2014 $

2013 $

1,018,335

688,793

304,123 299,139 (28,388)

282,183 84,559 (78,000)

Operating surplus before working capital changes Decrease/(increase) in accounts receivable Increase in non-interest bearing liabilities (Increase)/decrease in inventory

1,593,209 731,098 5,879 (7,559)

977,535 (842,476) 153,166 20,947

Net cash provided by operating activities

2,322,627

309,172

(225,883) (1,099,659)

(44,909) (1,826,391)

(1,325,542)

(1,871,300)

1,074,082 12,285,579 (8,084,562) (1,122,012) (306,688)

1,289,520 9,465,796 (6,472,978) (159,381)

3,846,399

4,122,957

Net increase in cash and cash equivalents

4,843,484

2,560,829

Cash and cash equivalents - at the beginning of year

2,626,037

65,208

$7,469,521

$2,626,037

Notes OPERATING ACTIVITIES Total comprehensive income for the year Adjustments for: Depreciation Net movements in reserves and funds Gain on revaluation of investment property

INVESTING ACTIVITIES Net purchase of property, plant and equipment Net increase in financial assets Net cash used in investing activities FINANCING ACTIVITIES Increase in members’ equity shares Increase in members’ deposits Increase in members’ loans Addition to investment property Dividends paid Net cash provided by financing activities

- at the end of year

9

The notes on pages 47 to 67 form an integral part of these financial statements

46

Annual Report 2014

Notes to the Financial Statements At 31st At 31st December, December, 20142014 (continued)

1.

CORPORATE INFORMATION The Credit Union was registered on 3rd April, 1983, under the Co-operative Societies Ordinance as amended by the Co-operative Societies Act No. 8 of 2011 for the purpose of affording members of the Grenada Union of Teachers 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 thirty-seven (37) persons during the year (2013: 28).

2.

SIGNIFICANT ACCOUNTING POLICIES a. Basis of Preparation These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and are expressed in Eastern Caribbean Currency Dollars. The financial statements have been prepared under the historical cost convention modified by the revaluation of land and buildings.

The preparation of financial statements in conformity with IFRS 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. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to these 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, 2014 that would be expected to have a material impact on the Credit Union financial statement. (ii) New standards, amendments and interpretations issued but not effective for the financial year beginning 1st January, 2014 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.

Standard

Description

Effective for annual periods beginning on or after

IAS 1

Presentation of Financial Statements – Disclosure Initiative Equity Method

1st January, 2016

IAS 16

Property, plant and equipment – Clarification of Acceptable Methods of Depreciation and Amortization

1st January, 2016

IAS 16

Property, plant and equipment – Bearer Plants

1st January, 2016

IAS 19

Employee benefits

IAS 27

Separate financial statements - Investment Entities

1st July, 2014 1st January, 2016

47

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

2.

SIGNIFICANT ACCOUNTING POLICIES (continued) b. New Accounting Standards, Amendments and Interpretations (continued) Standard

Description

Effective for annual periods beginning on or after

IAS 28

Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and it’s Associate or Joint Venture

1st January, 2016

IAS 38

Intangible Assets – Clarification of Acceptable Methods of Depreciation and Amortization

1st January, 2016

IAS 41

Agriculture – Bearer Plants

1st January, 2016

IAS 9

Financial Instruments – Classification, Impairment, Hedge Accounting and De-recognition

1st January, 2018

IFRS 10

Consolidated financial statements- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

1st January, 2016 1st January, 2016

IFRS 10

Consolidated financial statements- Applying the Consolidation Exception

IFRS 12

Disclosure of Interest in Other Entities – Applying the Consolidation Exception

1st January, 2016

IFRS 11

Joint Arrangements – Accounting for Acquisition of Interest in Joint Operations

1st January, 2016

1st January, 2016

Regulatory Deferral Accounts IFRS 14 IAS 36

Impairment of assets – Recoverable amount disclosures for non-financial assets

1st January, 2016 1st January, 2014

Revenue from Contracts with Customers IFRS 15

1st January, 2017

c. Property, Plant and Equipment Land and buildings are stated at 2010 valuation less subsequent depreciation on buildings. 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.

48

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

2.

SIGNIFICANT ACCOUNTING POLICIES (continued) c. Property, Plant and Equipment (continued) Increases in the carrying amount arising on revaluation of land and buildings 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 comprehensive income.

Land and buildings are stated at 2010 valuation less subsequent depreciation on buildings. 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 of land and buildings 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 comprehensive income.

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 % Freehold building 21⁄2 Furniture, fittings and equipment 10 - 162⁄3 Computer equipment 162⁄3 The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the 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 amounts. These are included in the statement of comprehensive income. When re-valued assets are sold, the amounts included in revaluation surplus are transferred to accumulated surplus.

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, use in the production or supply of goods or services or for administrative purposes.

49

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

2.

SIGNIFICANT ACCOUNTING POLICIES (continued) d. Investment Property (continued) Investment property of the Credit Union comprises of land and building situated at St. John’s Street, St. George’s and Lance Aux Epines held for long-term rental yields and which is not occupied by the Credit Union. Investment property is treated as a long-term investment and is carried at fair value.

e. Financial Assets The Credit Union classifies its financial assets into the following categories: Loans and receivables, held-to-maturity 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 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. They are included in current assets, except for maturities greater than twelve (12) months after the statement of financial position date. These are classified as non-current assets. The Credit Union’s loans and receivables comprise of treasury bills, corporate bonds and fixed deposits which are stated at cost.

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 or changes in interest rates or equity prices. These investments are carried at fair value, based on quoted market prices where available. However, where a 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. Where available-for-sale investments are carried at fair value unrealized gains or losses are recognized directly in equity until the investment is derecognised or determined to be impaired at which time the cumulative gain or loss previously recorded in equity is recognized in profit or loss. Available-for-sale investments are included in non-current assets unless management intends to dispose of the investment within twelve (12) months of the statement of financial position date.

Fair Value Fair value amounts represent the approximate values at which financial instruments could be exchanged in current transactions between willing parties. However, the maturity of the Credit Union’s financial instruments lack an available trading market and therefore it is not possible to determine independently the estimated fair values. In these cases the fair values of the financial instruments are therefore considered to approximate their book value.

50

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

2.

SIGNIFICANT ACCOUNTING POLICIES (continued) f. 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 recognised on the Credit Union’s statement of financial position when the Credit Union becomes a party to the contractual provisions of the instrument.

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 financial assets is a purchase or 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.

Impairment of financial assets The Credit Union assesses at each statement of financial position date 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 or 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 obligator. (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 reorganization. (iv) The disappearance of an active market for that financial asset because of financial difficulties.

51

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

2.

SIGNIFICANT ACCOUNTING POLICIES (continued) f. Financial Instruments (continued) Impairment of financial assets (continued) (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, 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 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) Financial assets measured at amortised 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 a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was 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 is reversed. The amount of the reversal is recognised in the statement of comprehensive income. (ii) Financial assets measured at cost The difference between the assets carrying amount and the present value of the estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the current market’s rate of return for similar financial assets is recognised in the statement of income. These losses are not reversed.

52

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

2.

SIGNIFICANT ACCOUNTING POLICIES (continued) f. Financial Instruments (continued) 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.

g. Cash and Cash Equivalents Cash and cash equivalents comprises of cash on hand and at bank. Bank overdraft is included as a component of cash and cash equivalents for the purpose of the cash flow statement. Bank overdraft is shown within borrowings in current liabilities on the statement of financial position.

h. Provisions Provisions are recognised when the Credit Union has a present legal or constructive obligation, as result of past events, if it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.

i. Revenue Recognition Revenue comprises the fair value of the consideration received or receivable in the ordinary course of the Credit Union’s activities. Revenue is shown net of rebates. Revenue is recognised as follows: (i) Sales of services Sales of services are recognised in the accounting period in which the services are rendered. (ii) Interest and investment income Interest income and investment income is recognized on an accrual basis using the effective interest method.

j. Shares Equity Members’ Ordinary shares are classified as equity.

53

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

2.

SIGNIFICANT ACCOUNTING POLICIES (continued) k. Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less, if not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortized cost using the effective interest rate method.

l. Borrowings Borrowings are recognised at fair value net of transaction cost incurred. Borrowings are subsequently stated at amortized cost: any difference between the proceeds, net of transaction cost, and the redemption value is recognised in the statement of comprehensive income over the period of borrowings. Borrowings are classified as current liabilities unless the Credit Union has an unconditional right to defer settlement of the liability for at least twelve (12) months after the statement of financial position.

m. Leases 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 recognized on a straight-line basis over the lease term. Leases entered into by the Credit Union are all operating leases. Payments made under operating leases are charged to the profit and loss account in accordance with the terms of the lease.

n. Dividends Dividends that are proposed and declared during the period are accounted for as an appropriation of retained earnings in the statement of changes in members’ equity.

Dividends that are proposed and declared after the statement of financial position date are not shown as a liability on the statement of financial position but are disclosed as a note to the financial statements.

o. Related parties Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operating decisions. Transactions entered into with related parties in the normal course of business are carried out on commercial terms and conditions during the year.

54

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

2.

SIGNIFICANT ACCOUNTING POLICIES (continued) p. Foreign currencies Transactions in foreign currencies are recorded at the rate 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.

q. Finance charges Finance charges are recognized in the statement of comprehensive income as an expense in the period in which they are incurred.

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 that may have the most effect on the financial statements are set out below.

Valuation of property The Credit Union utilizes professional valuators to determine the fair value of its properties. Valuations are determined through the application of a variety of different valuation methods which are all sensitive to the underlying assumptions chosen.

Impairment of loans Provision is made for doubtful debts based on the specific identification of doubtful balances. As debts become uncollectible they are written off against the provision.

Property, plant and equipment The Credit Union exercise judgment in determining whether future economic benefits can be derived from expenditures to be capitalized and estimates the useful lives and residual value of these assets.

55

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

4.

INVESTMENT PROPERTY

Horizon Plaza property Lance Aux Epines property

5.

Balance at 1st January, 2014

Addition/ Revaluation during the year

Balance at 31st December, 2014

Balance at 31st December, 2013

6,864,800 -

36,000 1,114,400

6,900,800 1,114,400

6,864,800 -

$6,864,800

$1,150,400

$8,015,200

$6,864,800

MEMBERS’ LOANS

6.

2014

2013

Total loans Less: Provision for doubtful debts

84,743,822 (1,193,644)

76,935,610 (1,469,994)

Balance at 31st December, 2014

$83,550,178

$75,465,616

787,500

750,000

2,000,000 1,584,576

2,000,000 1,536,186

260 1,991,016

260 1,923,600

1,118,861 298,312 93,750 520,760 507,525

1,089,392 292,463 112,500 493,500 -

Less: Provision for impairment

8,902,560 (2,000,000)

8,197,901 (2,000,000)

Balance at 31st December, 2014

$6,902,560

$6,197,901

FINANCIAL ASSETS (i) LOANS AND RECEIVABLES Grenville Co-operative Credit Union Limited Clico International Life Insurance Limited - Executive Flexible premium annuity Grenada Co-operative Bank Limited – Fixed deposit Public Service Co-operative Credit Union Limited - Special savings account - Fixed deposit Grenada Cooperative Credit Union League Limited - Fixed deposit - Regular deposit Grenada Electricity Services Limited – 10 year corporate bonds Government of Grenada – 365 day Treasury bill Government of Antigua & Barbuda – 180 day Treasury bill

56

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

6.

FINANCIAL ASSETS (continued)

(ii) AVAILABLE FOR SALE 2014

2013

525,000

630,000

41,600

41,600

418,880

418,880

80,244

80,244

4,000 ordinary shares in Republic Bank (Grenada) Limited

182,000

182,000

24,376 ordinary shares in Grenada Electricity Services Limited – market value

268,136

268,136

25,000

25,000

500,000

-

$2,040,860

$1,645,860

4,500 preference shares in Anric Company Limited 8,320 ordinary shares in The Grenada Cooperative Credit Union League Limited 59,840 ordinary shares in Grenada Co-operative Bank Limited 8,916 ordinary shares in RBTT Bank Grenada Limited

1,000 ordinary shares in Jonas Browne & Hubbard (Grenada) Limited 10,000 ordinary shares in Corporate Enterprise Finance Facility Limited

57

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

7.

PROPERTY, PLANT AND EQUIPMENT

Balance at 1st January, 2013 Cost/valuation Accumulated depreciation NET BOOK VALUE For the year ended 31st December, 2013 Opening book value Additions for the year Depreciation charge for the year NET BOOK VALUE Balance at 1st January, 2013 Cost/valuations Accumulated depreciation NET BOOK VALUE For the year ended 31st December, 2014 Opening book value Additions for the year Depreciation charge for the year NET BOOK VALUE Balance at 31st December, 2014 Cost/valuation Accumulated depreciation NET BOOK VALUE

$5,790,361

6,760,054 (969,693)

$5,790,361

5,903,712 55,650 (169,001)

$5,903,712

6,704,404 (800,692)

$5,903,712

6,071,322 (167,610)

$6,071,322

6,704,404 (633,082)

Building

$678,255

678,255 -

$678,255

678,255 -

$678,255

678,255 -

$678,255

678,255 -

$678,255

678,255 -

Freehold Properties

$258,997

899,922 (640,925)

$258,997

265,007 74,697 (80,707)

$265,007

825,225 (560,218)

$265,007

308,643 29,635 (73,271)

$308,643

795,590 (486,947)

Furniture, Fixtures and Equipment

$153,468

680,767 (527,299)

$153,468

112,347 95,536 (54,415)

$112,347

585,231 (472,884)

$112,347

138,375 15,274 (41,302)

$138,375

569,957 (431,582)

Computer Equipment

$6,881,081

9,018,998 (2,137,917)

$6,881,081

6,959,321 225,883 (304,123)

$6,959,321

8,793,115 (1,883,794)

$6,959,321

7,196,595 44,909 (282,183)

$7,196,595

8,748,206 (1,551,611)

Total

58

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

8.

ACCOUNTS RECEIVABLE

Sundry debtors Other receivable Government of Grenada receivable Balance at 31st December, 2014

9.

2013

113,640 313,961 781,157

72,463 255,036 1,612,357

$1,208,758

$1,939,856

1,437,600

1,223,932

35,971 917,618

36,422 125,824

3,255 48,707

3,255 44,267

704 4,530,029

704 1,191,633

495,637

-

$7,469,521

$2,626,037

CASH AND CASH EQUIVALENTS Cash on hand Republic Bank (Grenada) Limited - Current account – St. George’s - Current account – Carriacou RBTT Bank Grenada Limited - Savings account - Current account Grenada Co-operative Bank Limited - School current account - Current account Government of St. Lucia – 91 day Treasury bill Cash and cash equivalents in the statement of cash flow

10.

2014

EQUITY SHARES These are of a nominal value of $5.00 when fully paid up. Each member is required to own sixty shares of $5.00 each, which are payable over six (6) months.

11.

STATUTORY RESERVE Balance at 1st January, 2014 Add: Entrance fees Transfer from operations Balance at 31st December, 2014

1,398,728

1,223,414

1,897 263,986

2,302 173,012

$1,664,611

$1,398,728

59

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

11.

STATUTORY RESERVE (continued) In accordance with Section 125 (4) of the Co-operative Societies Act No. 8 of 2011, 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.

12.

DEVELOPMENT FUND 2014

2013

41,289

37,589

Transfer from operations Payment to league

65,996 (38,293)

43,253 (39,553)

Balance at 31st December, 2014

$68,992

$41,289

$3,838,149

$3,838,149

Balance at 1st January, 2014

13.

REVALUATION RESERVE Balance at 31st December, 2014

The Credit Union’s property was revalued in March, 2009 by Leslie S. Barry (Barry’s Engineering) professional valuator, using the open market method. This revaluation resulted in an excess over book value of $3,838,149.

14.

OTHER RESERVE This amount represents increase in the fair value of available-for-sale financial assets.

15.

MEMBERS’ DEPOSITS Regular savings Term deposits Special savings Miscellaneous savings Solid Gold Mortgage savings School accounts Smart saver Balance at 31st December, 2014

60

47,554,375 29,798,041 3,536,247 222,157 13,825,149 975 802,612 1,102,596

39,433,325 28,443,644 2,843,424 163,586 12,087,047 2,303 670,235 913,009

$96,842,152

$84,556,573

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

16.

NON-INTEREST BEARING LIABILITIES

Accrued interest – members’ savings and deposits Other liabilities Provision for audit Balance at 31st December, 2014

2014

2013

712,630 207,791 12,500

736,244 178,298 12,500

$932,921

$927,042

Interest is payable on these amounts at rates varying between 3.25 and 6.5% per annum.

17.

INCOME TAX

The Credit Union is exempt from the payment of Income Tax under Section 25(P) of the Income Tax Act 1994.

18.

OTHER INCOME Dividends Rental income Sundry

19.

89,690 66,491 93,431

$280,717

$249,612

$

$99,208

PRIOR YEAR ADJUSTMENT Interest expense understated

20.

86,894 83,381 110,442

-

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 Operational risk

61

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

20.

FINANCIAL RISK MANAGEMENT (continued) Risk management structure The Board of Directors is responsible for the overall risk management approach and for approving the risk strategies, principles, polices and procedures. Day to day adherence to risk principles are carried out by the executive management of the Credit Union in compliance with the policies approved by the Board of Directors.

The Credit Union’s risk management policies are established to identify and analyse the risk faced by the Credit Union, to set appropriate risk limits and controls, to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to deflect changes in market conditions, products and services offered. The Credit Union through its training and management standards and procedures, aims to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations.

The Board has established two committees, the Credit Committee and the Supervisory Committee, which are responsible for the developing and monitoring the Credit Union’ risk management policies in their specified areas.

Both committees report to the Board of Directors and their activities are as follows: Credit Committee The Credit Committee is elected by the members at the annual general meeting. This committee considers all applications for loans and makes recommendations to the Board in respect of the applications and performs such duties as prescribed in the articles of the Co-operative Act, the regulations and the By-Laws of the Credit Union.

Supervisory Committee The Supervisory Committee is elected by the members at the annual general meeting. The supervisory committee shall examine the books of the Credit Union, confirm the deposits of the members and perform such other duties as are prescribed by the Co-operative Act, the regulations and the By-Laws of the Credit Union.

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 the Credit Union’s receivables from the 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, and receivables to not materialize.

Management 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.

The Credit Union measures and manages credit risk on a aggregate basis by including all existing relationships with a particular customer or related entity of the same corporate organization. When measuring credit risk, the Credit Union takes a conservative view towards uncertainty and error in the direction of overstating the risk.

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.

62

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

20.

FINANCIAL RISK MANAGEMENT (continued) 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 counterparty. The Credit Union seeks to hold its funds with financial institutions which management regards as sound.

The markets for investments are monitored regularly to ensure the returns are guaranteed.

Exposure to credit risk The Credit Union’s maximum exposure to credit risk before collateral held and other credit enhancement is as follows: 2014

2013

7,469,521 8,943,420 1,208,758 83,550,178

2,626,037 7,843,761 1,939,856 75,465,616

$101,171,877

$87,875,270

Cash and cash equivalents Financial assets Accounts receivable Members’ loans

Concentration of credit risk:

Construction Business Land Finance Services Education Personal Vehicle Government Balance at 31st December, 2014

Cash and Cash Equivalents

Financial Assets

Accounts Receivables

Members’ Loans

Total

6,973,884 495,637

5,044,476 2,870,660 1,028,285

10,500 199,615 28,057 217,485 781,157

26,748,268 1,928,755 3,601,008 14,110,683 3,160,389 4,337,777 23,273,013 6,390,286 -

26,748,268 1,939,255 3,601,008 26,328,658 6,059,106 4,337,777 23,490,498 6,390,286 2,305,079

$7,469,521

$8,943,421

$1,236,814 $83,550,179 $101,199,935

63

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

20.

FINANCIAL RISK MANAGEMENT (continued) Concentration of credit risk (continued):

Construction Business Land Finance Services Education Personal Vehicle Government Balance at 31st December, 2013

Cash and Cash Equivalents

Financial Assets

2,626,037 $2,626,037

Accounts Receivables

Members’ Loans

Total

4,891,170 2,459,091 493,500

- 25,091,447 2,177,471 2,200,075 111,520 9,389,852 50,107 3,160,389 4,318,091 165,872 22,089,010 7,039,281 1,612,357 -

25,091,447 2,177,471 2,200,075 17,018,579 5,669,587 4,318,091 22,254,882 7,039,281 2,105,857

$7,843,761

$1,939,856 $75,465,616

$87,875,270

The entity has categorised the credit risk exposure from the following non- performing financial assets.

Past due and impaired Acceptable Substandard

Total

Superior

Desirable

Balance at 31st December, 2014 Members’ loans

$759,102

$553,028

$271,459

$765,866

$2,349,455

Balance at 31st December, 2013 Members’ loans

$185,926

$179,236

$355,042

$1,548,205

$2,268,409

The loan categories are as follows: Superior – These counter-parties have strong financial positions. Facilities are well secured and the businesses have a good track record.

Desirable – These counter-parties have a good financial position. Facilities are reasonably secured and the underlying businesses are performing well.

Acceptable – These counter-parties are of average risk with a fair financial position. Businesses may be new or industry may be subject to more volatility, and facilities typically have lower levels of securities.

Substandard – Non-performing and individually impaired.

64

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

20.

FINANCIAL RISK MANAGEMENT (continued) Analysis of financial assets that are past due but not impaired: Past due and impaired Neither past due nor impaired

1-3 months

3-6 months

6-12 months

Over 1 year

Total

2014

$81,200,723

$759,102

$553,028

$271,459

$765,866 $83,550,178

2013

$73,197,207

$785,285

$513,033

$352,390

$617,701 $75,465,616

Analysis of financial assets individually impaired: Past due and impaired Neither past due nor impaired

1-3 months

Financial assets

$2,000,000

$2,000,000

Members’ loans

$2,349,455

$1,193,644

3-6 months $

-

$1,155,811

6-12 months $

-

$2,268,409

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.

Provision for loan losses Allowance for doubtful loans are based on the requirement of The Co-operative Societies Act – (Act. No. 20 of 1996) and the 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.

Collateral The amount and type of collateral required depends on an assessment of the credit risk of the counter-party.

65

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

20.

FINANCIAL RISK MANAGEMENT (continued) Collateral (continued): The Credit Union has guidelines that set out the acceptability of different types of collateral.

The types of collateral held by the Credit Union are registered mortgages over property, bills of sale on motor vehicles and other assets, liens on deposits and shares, guarantees and promissory notes.

Estimates of fair value are based on the value of collateral assessed at the time of borrowing, and generally are 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 obligations from its financial liabilities.

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 Treasury department of the Credit Union is responsible for the overall management of liquidity. In addition, liquidity and funding risk, and related processes and policies are overseen by management of the Credit Union.

The management of liquidity of the Credit Union includes: Holding financial assets where there is a liquid market and therefore readily saleable to meet liquidity needs.

Holding financial assets which are not traded in a liquid market, but which can be expected to generate cash flows that will be available to meet cash outflows on liabilities.

Monitoring statement of financial position liquidity ratios against internal and regulatory requirements.

Maintaining debt financial plans.

Monitoring depositor’s concentration in order to avoid undue reliance on large individual depositors and ensuring a satisfactory overall funding mix.

Maintaining liquidity and funding contingency plans. These plans identify early indicators of stress conditions and describe actions to be taken in the event of difficulties arising from systemic or other

crises while minimizing adverse long-term implications for the Credit Union.

The company’s financial liability are all due within one year.

Currency rate risk: Currency rate risk is the risk that the value of cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Credit Union operates primarily in the Eastern Caribbean Dollars and is therefore not subject to significant foreign currency risk. However, some of its transactions are in United States Dollars but as the Eastern Caribbean Dollar is pegged to the United States Dollar, there are no significant currency risk exposure.

66

Annual Report 2014

Notes to the Financial Statements At 31st December, 2014 (continued)

20.

FINANCIAL RISK MANAGEMENT (continued) Interest rate risk: Interest rate risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Management of interest risk rate The Credit Union’s exposure to interest risk is managed through the matching of funding products with financial services and monitoring market conditions and yields.

Exposure to interest rate risk Floating rate instrument expose the Credit Union to cash flow interest risk where as fixed rate instruments expose the Credit Union to fair value interest rate risk.

Operational risk Operational risk is the risk or direct or indirect loss arising from a wide variety of causes associated with the Credit Union’s processes, personal, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of good corporate behaviour. Operational risk arises 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 Documentation of controls and procedures Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified Requirements for the reporting of operational losses and proposed remedial action Development of contingency plans Training and professional development Risk mitigation, including insurance where this is effective

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Annual Report 2014

Notes to the and Financial Statements Schedule of General Administrative Expenses At 31st December, 20142014 (continued) At 31st December,

GENERAL AND ADMINISTRATIVE EXPENSES SCHEDULE A 2014

2013

1,259,489

1,093,488

National Insurance contributions

50,799

47,044

Pension

54,100

50,170

League dues

115,000

115,000

Insurance

277,977

286,828

66,715

50,252

206,985

204,359

36,532

34,216

3,332

17,140

Audit and accounting fee

12,500

15,289

Legal and professional fees

39,452

81,664

197,053

203,874

Annual General Meeting

57,540

85,038

Education and seminars

184,163

161,387

36,834

29,650

6,984

55,175

319,086

280,841

Honorarium

35,050

35,800

Health benefit

18,585

19,658

9,077

8,763

Computer maintenance

18,595

19,930

Repairs and maintenance

75,163

30,103

4,499

9,267

Credit Union Day expenses

22,753

15,289

Office supplies

14,590

14,457

304,127

282,183

Officers allowance

22,500

22,500

Travel

62,303

44,491

Miscellaneous Security

6,128

4,647

Horizon Plaza expenses

101,748

96,682

56,930

38,661

-

176,447

$3,676,589

$3,630,293

Salaries and wages

Stationery and printing Rent Subscriptions and donations Uniforms

Advertising

Entertainment Interest and bank charges Telephone, electricity and cable

Property tax

Water rates

Depreciation

30th Anniversary celebrations

68

Annual Report 2014

Resolutions 1.

Approval of 2015 Budget Whereas, the Bye-laws Article XI Section 37 (2) (h) mandate that the Budget should be approved by the Annual General Meeting.

And whereas the Budget for 2015 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 for Borrowing Limit Whereas, the Bye-Laws, Article XI Section 37 (2) (m) Stipulates that the Annual General Meeting must set the maximum borrowing limit by the Credit Union Be it resolved that the maximum borrowing limit for the Credit Union for 2015 be $3,000,000.

3.

Whereas the Accounting Firm Parnell-Kerr Forster (PKF) continues to provide satisfactory service to the G.U.T. Co-operative Credit Union as its Auditors.

Be it resolved that PKF be reappointed as the auditor of the G.U.T. Co-operative Credit Union for 2015.

69 69

Annual Report 2014

Board of Directors Year

Name

Term

Expiration

Region

2012

Janis Henry

3 years

2015

St. George

2012

Lystra Mark

3 years

2015

St. Patrick

2012

Kim Parris

3 years

2015

Independent

2012

Alma Du Bois-Calliste

3 years

2015

St. John

2013

David Thomas

3 years

2016

Independent

2013

Carl Andall

3 years

2016

Independent

2013

Elizabeth Peters

3 years

2016

Independent

2013

Henry Stiell

3 years

2016

Carriacou

2013

Egbert La Geer

3 years

2016

Independent

2014

Decima Blake-Thomas

3 years

2017

Independent

2014

Andre Martin

3 years

2017

St. Mark

2014

Eddison Francis

3 years

2017

St. David

2014

Miguel Fortune

3 years

2017

St. Andrew

Supervisory Committee 2013

Lisa Lewis

2 years

2015

2014

Lu-Melina Fortune

1 year

2015

2013

Randy Boyke Cadet

2 years

2015

2014

Imogene Howard

3 years

2017

2014

Sobrina La Rose

3 years

2017

3 years

2015

Credit Committee 2012

*Joyce John

2012

Magdalene Carmichael

3 years

2015

2012

Kevin Andall

3 years

2015

3 years

2016

3 years

2017

2013 2014

*Retesha Smith-Boyd Kelley Calliste

*Ms. Joyce John resigned and was replaced by Mr. Wayne Horsford. *Ms. Retesha Smith-Boyd resigned and was replaced by Ms. Irva Alexander.

70

Annual Report 2014

Member Bill of Rights What’s good for you is good for your credit union. Because credit unions are not-for-profit financial service cooperatives— owned and controlled by the people who use their services—they work for the benefit of members. That means your opinions and expectations count. In fact, member needs and standards drive the credit union’s product and service offerings, and are the true measure of a credit union’s success.

Because you’re the force behind our credit union’s growth and prosperity, and because credit unions work for members, you and fellow members can expect: 1.

A financially secure institution complying with the laws and regulations that govern it.

2.

A solid financial condition; responsible management of members’ financial resources.

3.

Highly principled employees demonstrating integrity, professionalism, and ethical behavior.

4.

Respectful, courteous, timely, and unbiased personal service.

5.

Confidential records and transactions.

6.

The opportunity for your opinions to be heard and valued.

7.

An equal vote with other members, regardless of account balance.

8.

Volunteer credit union board and committee membership opportunities if you qualify and are elected.

9.

Dividend/interest and loan rates that compete with and, whenever possible, offer advantages over other financial institutions’ rates.

10. Truthful advertising and disclosure of product and service rates, risks, charges, obligations, terms and conditions.

11. Timely notification and correction of credit union errors or inaccuracies.

12. Timely response to loan requests, account problems, or suggestions.

13. Recourse appeal and fair resolution of problems.

14. Consumer information to help you make wise credit, saving, and purchasing decisions, and to effectively manage your money.

71

Annual Report 2014

Notes

72

CREDIT UNION PRAYER (PRAYER OF ST. FRANCIS OF ASSISI) Lord, make me an instrument of thy peace Where there is hatred, let me sow love Where there is injury, pardon Where there is doubt, faith Where there is despair, hope Where there is darkness, light and Where there is sadness, joy O Divine Master, grant that I may not So much seek to be consoled as to console To be understood as to understand To be loved as to love For it is in giving that we receive It is in pardoning that we are pardoned and It is in dying that we are born to eternal life.

Bless, O Lord, our deliberations and grant that Whatever we may say and do will have thy Blessing and guidance through Jesus Christ Our Lord Amen

CREDIT UNION SONG With us there are no barriers ‘cause we are all the same

We all will be true savers though it be great or small

The more of us the happier the louder we’ll proclaim

We will become shareholders providing loans for all,

That we are owners’ members our rule is honesty,

So when great need arises there’s no uncertainty,

We are the Credit Union and all the world can see.

Once in the Credit union there’s help for you and me.

Chorus

We pledge to be of service to better our land

Together we give together we receive

We harbour no prejudice upon this theme we stand,

Together we help each other to achieve,

One man, one vote for members of high or low degree,

‘Cause in our world today, it’s not safe to be alone

For in the Credit Union there’s pure democracy.

Let’s make each other’s cares to be our own.