Non-Consolidated Annual Report 2020

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | NON-CONSOLIDATED ANNUAL REPORT 2020 62 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Non-consolidated Financial Statements For the year ended March 31, 2020 (Expressed in Barbados dollars) 45 21. Related Party Disclosures, continued Other transactions Cash resources include deposits held with Capita Financial Services Inc. amounting to $15,344,669 (2019 - $15,038,890) which resulted in interest income of $379,524 (2019 - $444,274). Sale of Investment During the financial year ended March 31, 2020, the Credit Union sold Strip One of its series B bonds to its subsidiary, Capita Financial Services Inc. in the amount of $1,347,778.01. The bond was sold at its credit impaired value (carrying value) of $1,171,760.95. Deed of Sale and Administration agreement In November 2015, the Credit Union entered into a Deed of Sale and Administration agreement with Capita Financial Services Inc. for the sale of a portfolio of real estate loans amounting to $20 million over a two year period at a rate of $10 million per year starting in fiscal year 2016-2017. The Credit Union has determined that substantially all the risks and rewards of the said loan portfolio have been transferred to Capita Financial Services Inc. and consequently, the loans were eliminated from the Credit Union’s non-consolidated statement of financial position. During the financial year ended March 31, 2020, the Credit Union sold $2,395,407 in loans to its subsidiary, Capita Financial Services Inc. as per the Deed of Sale and Administration agreement. The balance as at March 31, 2020 was $11,086,977 (2019 - $9,480,589). The Credit Union receives an administrative fee for the collection and remittance of loan payments on behalf of Capita Financial Services Inc. The administrative fees for March 31,2020 was $55,576 (2019 - $56,291). Capitalization of New Subsidiary Allied Co-operators Inc. (ACI) was established to offer co-operative shared services to credit unions and their members. Phase 1 of its development, will provide assurance services to affiliated credit unions of the Barbados Co-Operative Credit Union League Ltd. These services will include corporate governance, operational risk management, compliance and internal audit. In subsequent phases of its expansion ACI will provide similar services to micro, small and medium sized enterprises (MSMEs) and not for profit organizations locally. Additionally, it will leverage the brand of Capita Financial Services Inc. to further expand into the OECS and other Caribbean regions. Finally ACI’s suite of services will be broaden to include finance and financial planning, information technology, strategic planning, marketing, customer experience and research. The balance of $9,600 presented in the non- consolidated financial statements as due from ACI represents stipends paid to its Directors for attendance at its Board of Directors meetings. The capitalisation of ACI as a wholly owned subsidiary of the Credit Union invoked section 34(A) of the Co- operative Societies Act, CAP. 378A, which states that any such investments shall be limited to ten percent of the Credit Union’s statutory reserves. In accordance with the Co-operative Societies Act, CAP. 378A, on May 19, 2020 the Credit Union sought approval from the Financial Services Commission to capitalized its fully owned subsidiary Allied Co-operators Inc. in the amount of $1,000,000. Approval of the same was received on July 21, 2020. However, completion of this transaction is deferred pending the establishment of ACI’s banking facilities.