81 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | SEPARATE FINANCIAL STATEMENTS 2022 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Separate Financial Statements For the year ended March 31, 2022 (Expressed in Barbados dollars) 54 21. Related Party Disclosures, continued Other transactions Cash resources include deposits held with Capita Financial Services Inc. amounting to $31,462,241 (2021: $25,394,996) which resulted in interest income of $720,562 (2021: $478,780). Subsequent to year end the organisation placed a further $34,000,000 in term deposits with Capita, at an average rate of 2.52%, bringing the total deposits to $65,750,950. At March 31, 2022 accrued interest receivable was $952,843 (2021: $366,528). The Credit Union receives a management fee for the provision of support services to Capita Financial Services Inc. on an annual basis which is reported within fee income (Note 4). During the fiscal ending March 31, 2022 the Credit Union recorded management fees of $144,000 (2021: $ 144,000). Deed of Sale and Administration agreement During the financial year ended March 31, 2022, the Credit Union purchased loans from its subsidiary, Capita Financial Services Inc. in the amount of $5,363,161. Substantially all the risks and rewards of the said loan portfolio have been transferred to the Credit Union and consequently, the loans were included in the Credit Union’s statement of financial position. The balance as at March 31, 2022 was $8,702,377 (2021: $9,978,784). 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 the year ended March 31, 2022 was $51,288 (2021: $68,274). 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 statement of financial position. 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 broadened to include finance and financial planning, information technology, strategic planning, marketing, customer experience and research. The capitalisation of ACI as a wholly owned subsidiary of the Credit Union invoked section 34(A) of the Cooperative 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 capitalize its fully owned subsidiary Allied Co-operators Inc. in the amount of $1,000,000. The Credit Union completed the investment of $1,000,000 for 10,000 shares in ACI on July 5, 2021 for sole ownership in the subsidiary.
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