TIDMCIHL
RNS Number : 6903M
Caribbean Investment Holdings Ltd
23 September 2021
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
CARIBBEAN INVESTMENT HOLDINGS LIMITED ANNOUNCES FINANCIAL
RESULTS FOR THE FISCAL YEARED MARCH 31, 2021 AND SHARE PURCHASE
PLAN
Road Town, Tortola, British Virgin Islands, 23 September 2021 --
Caribbean Investment Holdings Limited (London - AIM: CIHL; Bermuda
- CIHL) (the "Company" or "CIHL").
The Company produced net income before tax and non-recurring
items of $11.2 million in fiscal 2021 which represents a 78%
increase from prior year's results due largely to an $8.7 million
decrease in credit impairment charges as the credit position of the
larger watch listed group facilities either improved or stabilized.
The net income for the Company was further bolstered by an $8.5
million gain on the acquisition of Scotiabank (Belize) Limited, now
renamed Belize Bank Corporation Limited. The acquisition was a
bargain purchase as the Company paid $20.7 million for the net
identifiable assets and liabilities valued at $29.2 million on the
date of acquisition.
The impact of the COVID19 pandemic is reflected in the 8%
downturn in interest income and 37% decrease in non interest
income; however, these reductions in income were offset by
reductions in both interest costs and non interest expenses.
Net income per share for the year amounted to $0.12 in fiscal
2021 which represented an 33% increase from fiscal 2020's earnings
per share of $0.09.
The Company's balance sheet remains strong with shareholders'
equity of $125.0 million at 31 March 2021 compared with $92.5
million last year.
The Company also announces it has entered into a trading plan
(the "Share Purchase Plan") to buy back shares for cancellation.
The Share Purchase Plan will commence with immediate effect and
will, unless terminated at an earlier date, expire on March 31,
2022, when the Company will reconfirm its intentions. The Share
Purchase Plan, which will be funded from the Company's existing
cash resources, is intended to reduce the share capital of the
Company.
Under the Share Purchase Plan, the Company will instruct its
broker, Cenkos Securities Plc, to acquire ordinary shares of no par
value in the Company ("Ordinary Shares"). Purchases of Ordinary
Shares under the Share Purchase Plan will be limited to an
aggregate amount of GBP2.0 Million of Ordinary Shares (by market
value) for the period up to March 31, 2022.
Notwithstanding the price and daily volume restrictions set out
in the Commission Delegated Regulation (EU) 2016/1052, the Company
may make purchases outside of these price and volume restrictions,
subject to prevailing market conditions and liquidity.
With the ongoing COVID-19 pandemic causing significant
uncertainty within global banking markets including the Caribbean
and Belize, the Company's Board has decided not to a pay a final
dividend for the year ended 31 March 2021. The Board will review
its dividend policy for the current fiscal year once banking
markets have returned to a more stable state.
The Company confirms that the annual report and accounts are now
available to view on the Company's website, www.cihltd.co
For further information contact:
Caribbean Investment Holdings Limited
UK +44 (0)207 248 6700
Belize +501 227 7178
Cenkos Securities plc
Nicholas Wells +44 (0)207 397 8920
Note: This and other press releases are available at the
Company's web site: http://www.cihltd.co.
Background Information
Caribbean Investment Holdings Limited ("CIHL") is a parent
holding company with no independent business operations or assets
other than its investments in its subsidiaries, intercompany
balances and holdings of cash and cash equivalents. CIHL's
businesses are conducted through its subsidiaries. The Belize Bank
Limited ("BBL") and Belize Bank Corporation Limited ("BBCL") are
incorporated and based in Belize and focus on the provision of
financial services and lending to domestic clients. Belize Bank
International Limited ("BBIL") is incorporated and based in Belize
and focuses on the provision of financial services and lending to
international clients. CIHL also owns an international corporate
services business based in Belize, which operates as Belize
Corporate Services Limited. Within Belize, BBL and BBCL are full
service commercial and retail banking operations with a combined
total of twenty branches extended into each of the six districts of
Belize. The principal operations of BBL and BBCL are commercial
lending, consumer lending, deposit taking and related banking
activities.
REPORT OF THE CHIEF EXECUTIVE OFFICER
Caribbean Investment Holdings Limited and its subsidiaries (the
"Company") produced net income before tax and non recurring items
of $11.2 million in fiscal 2021 which represents a 78% increase
from prior year's results due largely to an $8.7 million decrease
in credit impairment charges as the credit position of the larger
watch listed group facilities either improved or stabilized. The
net income for the Company was further bolstered by an $8.5 million
gain on the acquisition of Scotiabank (Belize) Limited, now renamed
Belize Bank Corporation Limited.
The impact of the COVID19 pandemic is reflected in the 8%
downturn in interest income and 37% decrease in non interest
income; however, these reductions in income were offset by
reductions in both interest costs and non interest expenses.
Net income per share for the year amounted to $0.12 in fiscal
2021 which represented an 33% increase from fiscal 2020's earnings
per share of $0.09.
The Company's balance sheet remains strong with shareholders'
equity of $125.0 million at 31 March 2021 compared with $92.5
million last year.
Milestones
In June 2020, Caribbean Investment Holdings Limited entered into
an agreement with The Bank of Nova Scotia ("BNS") and its regional
subsidiary, Scotiabank Caribbean Holdings Limited, to purchase 100%
of the issued share capital of its Belizean subsidiary, Scotiabank
(Belize) Limited ("SBL"). On 31 March 2021 the Company completed
the acquisition and in so doing doubled the size of its banking
operations in Belize. The Company currently controls 43 percent of
the banking space in Belize.
Over the next 8 months the acquired entity, SBL, will operate as
a stand-alone banking operation as the intention is to formally
merge SBL and The Belize Bank Limited ("BBL") during the fourth
quarter of the current fiscal year. This acquisition, which is in
keeping with our overall strategic objectives, will lead to
improved earnings and provide the opportunity to leverage the BBL's
recently installed core banking system over a wider asset base.
Since taking over the management of SBL, which has since been
re-branded Belize Banking Corporation Limited ("BBCL"), the Company
has conducted a comprehensive review of BBCL's operations with a
view to implementing new processes and procedures that are required
to address services which will no longer be provided through BNS's
shared service portal.
In keeping with our Mobile First and Digitalization strategy,
the Company recently sought and received approval from the
regulators in Belize to launch and operate a digital wallet payment
service branded E-KYASH. The mobile wallet will be an innovation in
the banking market but nonetheless in consonance with and
supportive of the objectives of Belize's National Financial
Inclusion Strategy ("NFIS") 2019-2022. The benefits of this
strategy will be increased customer reach, better customer
engagement and retention and enhanced customer experience. The
product will also specifically target the un-banked and young
population which has historically had difficulty in accessing
banking products and services.
In December 2020, BBL, the major subsidiary of the Company, was
again rated by Caribbean Information and Credit Risk Limited
("CARIcris"). CARIcris assigned a Corporate Credit rating of CariB+
(foreign and local currency) on its regional rating scale and bzAA+
on the national scale to BBL.
CARIcris also assigned a stable outlook on the ratings. Among
other things, the rating drivers included the bank's strong
presence in the Belizean banking industry; its robust risk
management framework; comfortable capitalization and sustained
profitability supported by continued revenue growth.
BBL continues to be the only bank in Belize which has an
Investment Grade rating from a regional rating agency.
COVID-19
Following on from 2020, COVID-19 continues to have a
far-reaching and deep impact on the Belizean economy. With only a
few establishments unaffected by the COVID-19 crisis, almost all
businesses were forced to respond to the changed environment. From
a regulatory standpoint, on 17 March 2020, the Central Bank of
Belize issued amendments to the existing Practice Directions as a
part of its monetary and macro-prudential policy responses in
consideration of the hardships being experienced by businesses and
households in specific sectors adversely affected by COVID-19.
These amendments have allowed financial institutions to grant their
customers in the targeted sectors extended repayment periods for
credit facilities.
In June 2020, in an effort aimed at further easing the debt
service obligations of all borrowers, the Central Bank allowed
banks to provide further forbearance measures to assist customers
affected by the pandemic until 31 December 2020. More recently, a
further extension was granted in December to expire on 31 March
2021. These measures have significantly ameliorated the potential
impact of the fall-out from the pandemic and with the economy now
beginning to rebound, there has not been a significant increase in
the banking sector's NPL ratio.
Regulatory Changes
With the recent passage of the Deposit Insurance Act 2020, bank
deposits will now be insured in Belize for the first time thereby
adding another arsenal in the regulatory quiver of Belizean
regulators by providing an additional tool which will undoubtedly
provide additional comfort to Belizean depositors.
In 2019, the Central Bank of Belize began the modernization of
Belize's capital framework - Basel II/III - to align it with
international standards as set by the Basel Committee on Banking
Supervision. During this period, the first phase (Pillar 1: Minimum
Capital Requirements) was implemented. This involved a revision to
the measurement of the capital requirements for credit risk, the
introduction of capital measurements for both market and
operational risks. In October 2020 the Central Bank began the
implementation of Pillar 2 which will involve the advancement of
risk management principles and the implementation of the Internal
Capital Adequacy Assessment Process (AICAAP).
Outlook
The Belizean economy collapsed in 2020, pummelled by the
COVID-19 pandemic and related restrictions. It is estimated that
Belize's GDP contracted by 20.3% in 2020 with the tertiary sector
being most severely impacted. On 11 November 2020 the People's
United Party won the general elections defeating the incumbent
United Democratic Party by a significant and overwhelming margin.
Given its high dependence on tourism, and to a lesser extent
agriculture, the outlook for the Belizean economy will be heavily
dependent on the pace of recovery in the US market and the economic
proposals and new stimulus package of the new government. In this
environment, growth within the banking market is expected to be
measured.
Lyndon Guiseppi
Chief Executive Officer
22 September 2021
Consolidated statement of comprehensive income
Expressed in millions of US dollars except where otherwise
stated
2021 2020
Year ended 31 March Notes $m $m
------------------------------------------------------------ ------ ---------- ----------
Financial Services
Interest income 6 30.2 32.8
Interest expense 7 (4.2) (4.9)
------------------------------------------------------------ ------ ---------- ----------
Net interest income 26.0 27.9
Credit impairment charges (2.2) (10.9)
------------------------------------------------------------ ------ ---------- ----------
Net interest income after impairment charges 23.8 17.0
Non-interest income 8 5.4 8.6
Non-interest expense 9 (16.4) (17.0)
------------------------------------------------------------ ------ ---------- ----------
Operating income - Financial Services 12.8 8.6
------------------------------------------------------------ ------ ---------- ----------
Corporate
Corporate income 1.2 1.0
Corporate expenses (2.8) (3.3)
------------------------------------------------------------ ------ ---------- ----------
Operating loss - Corporate (1.6) (2.3)
------------------------------------------------------------ ------ ---------- ----------
Net income before tax and non-recurring item 11.2 6.3
Gain on acquisition 27 8.5 -
Reversal of share option provision 20 - 7.2
------------------------------------------------------------ ------ ---------- ----------
Net income before tax and before other comprehensive income 19.7 13.5
Taxation 21 (4.2) (4.1)
------------------------------------------------------------ ------ ---------- ----------
Net income after tax and before other comprehensive income 15.5 9.4
Other comprehensive (loss):
Net (loss) on financial assets at FVOCI (0.1) -
------------------------------------------------------------ ------ ---------- ----------
Total comprehensive income 15.4 9.4
Earnings per ordinary share (basic and diluted) 10 $ 0.12 $ 0.09
------------------------------------------------------------ ------ ---------- ----------
See accompanying notes which are an integral part of these
consolidated financial statements.
Consolidated statement of changes in shareholders' equity
Expressed in millions of US dollars except where otherwise
stated
Share Treasury Retained
capital shares earnings Total
$m $m $m $m
---------------------------------------- --------- ------------- ------------ ----------
As at 1 April 2019 53.3 (21.7) 58.5 90.1
Accumulated other comprehensive income - - - -
Dividends (7.0) (7.0)
Net income - - 9.4 9.4
---------------------------------------- --------- ------------- ------------ ----------
As at 31 March 2020 53.3 (21.7) 60.9 92.5
Accumulated other comprehensive (loss) - - (0.1) (0.1)
Cancellation of treasury shares (21.7) 21.7 - -
Issuance of shares 17.1 - - 17.1
Net income - - 15.5 15.5
---------------------------------------- --------- ------------- ------------ ----------
As at 31 March 2021 48.7 - 76.3 125.0
---------------------------------------- --------- ------------- ------------ ----------
At 31 March 2021, The Belize Bank Limited maintained a
non-distributable statutory reserve of $7.0 million (31 March 2020
- $7.0 million). At 31 March 2021, Belize Bank International
limited maintained a non-distributable statutory reserve of $0.3
million (31 March 2020 - $0.3 million). At 31 March 2021, Belize
Bank Corporation Limited maintained a non-distributable statutory
reserve of $6.1 million (31 March 2020 - $6.1 million).
See accompanying notes which are an integral part of these
consolidated financial statements.
Consolidated statement of financial position
Expressed in millions of US dollars except where otherwise
stated
2021 2020
At 31 March Notes $m $m
-------------------------------------------------- ------ ------------------ ------------------
Assets
Financial Services
Cash and cash equivalents 11 19.1 12.9
Balances with the Central Bank of Belize 12 218.9 46.4
Due from banks 13 62.2 34.9
Investment securities 14 129.2 119.8
Loans to customers (net of allowances) 15 472.3 233.7
Property, plant and equipment 16 21.0 18.4
Due from Government of Belize (net of allowance) 17 38.0 39.5
Other assets 2.9 2.9
Total Financial Services assets 963.6 508.5
-------------------------------------------------- ------ ------------------ ------------------
Corporate
Cash, cash equivalents, and due from banks 2.2 0.5
Other current assets 0.7 0.3
Total assets 966.5 509.3
-------------------------------------------------- ------ ------------------ ------------------
Liabilities and shareholders' equity
Financial Services
Customer accounts 18 826.0 408.9
Lease liability 0.6 0.3
Other liabilities 13.7 7.1
Total Financial Services liabilities 840.3 416.3
-------------------------------------------------- ------ ------------------ ------------------
Corporate
Current liabilities 1.2 0.5
Total liabilities 841.5 416.8
-------------------------------------------------- ------ ------------------ ------------------
Shareholders' equity:
Share capital 20 48.7 53.3
Treasury shares 20 - (21.7)
Retained earnings 76.3 60.9
Total shareholders' equity 125.0 92.5
Total liabilities and shareholders' equity 966.5 509.3
-------------------------------------------------- ------ ------------------ ------------------
The financial statements on pages 27 to 29 were approved and
authorised for issue by the Board of Directors on 22 September 2021
and were signed on its behalf by:
Lyndon Guiseppi Michael Coye
Chief Executive Officer Chief Financial Officer
See accompanying notes which are an integral part of these
consolidated financial statements.
Consolidated statement of cash flows
Expressed in millions of US dollars except where otherwise
stated
2021 2020
Year ended 31 March $m $m
-------------------------------------------------------------------- ------------------ ------------------
Cash flows from operating activities
Net income before tax and non recurring item 11.2 6.3
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2.6 2.6
Gain on disposal of property, plant and equipment - (0.1)
Credit impairment charges - loans 1.3 10.9
Credit impairment charges - securities 0.9 -
Changes in assets and liabilities:
Decrease in Government of Belize receivable 1.5 1.7
(Increase) decrease in other and current assets (0.7) 3.8
Increase in lease liability 0.3 0.3
Increase (decrease) in other liabilities and current liabilities 1.6 (1.7)
Tax paid (4.2) (4.1)
Net cash generated by operating activities 14.5 19.7
-------------------------------------------------------------------- ------------------ ------------------
Cash flows from investing activities
Purchase of property, plant and equipment (net of disposals) (1.2) (1.7)
Proceeds from sale of property, plant and equipment 0.2 0.2
Business acquisition - cash acquired net of cash paid 173.0 -
(Increase) decrease in investment securities (10.3) 13.1
Decrease (increase) in loans to customers 0.2 (7.7)
Net cash generated by investing activities 161.9 3.9
-------------------------------------------------------------------- ------------------ ------------------
Cash flows from financing activities
Decrease (increase) in customer accounts 14.3 (21.5)
Dividends - (7.0)
Share issue 17.1 -
Unrealized losses on securities (0.1) -
Net cash generated by (used in) financing activities 31.3 (28.5)
-------------------------------------------------------------------- ------------------ ------------------
Net change in cash, cash equivalents and due from banks 207.7 (4.9)
Cash, cash equivalents and due from banks at the beginning of year 94.7 99.6
Cash, cash equivalents and due from banks at the end of year 302.4 94.7
-------------------------------------------------------------------- ------------------ ------------------
Cash and cash equivalents - financial services 19.1 12.9
Balances with Central Bank of Belize - financial services 218.9 46.4
Due from banks - financial services 62.2 34.9
Cash, cash equivalents and due from banks - corporate 2.2 0.5
302.4 94.7
-------------------------------------------------------------------- ------------------ ------------------
See accompanying notes which are an integral part of these
consolidated financial statements.
Extracts from the notes to consolidated financial statements
Note 6 - Interest income
2021 2020
Year ended 31 March $m $m
------------------------------------------- -------- -------
Interest on loans to customers 24.8 27.2
Interest on securities 3.1 3.0
Interest on due from Government of Belize 2.3 2.4
Interest on deposits with banks - 0.2
Total interest income 30.2 32.8
------------------------------------------- -------- -------
Note 7 - Interest expense
2021 2020
Year ended 31 March $m $m
------------------------------- -------- -------
Interest on customer accounts 4.2 4.8
Interest on lease liabilities - 0.1
Total interest expense 4.2 4.9
------------------------------- -------- -------
Note 8 - Non-interest income
2021 2020
Year ended 31 March $m $m
-------------------------------------------- -------- -------
Foreign exchange income and commissions 1.8 3.6
Customer service and letter of credit fees 1.9 2.2
Credit card fees 0.8 1.7
Other financial and related services 0.8 0.8
Other income 0.1 0.3
Total non-interest income 5.4 8.6
-------------------------------------------- -------- -------
Note 9 - Non-interest expense
2021 2020
Year ended 31 March $m $m
---------------------------- -------- -------
Salaries and benefits 8.7 9.1
Depreciation expense 2.6 2.6
Premises and equipment 2.3 2.4
Other expenses 2.8 2.9
Total non-interest expense 16.4 17.0
---------------------------- -------- -------
Note 10 - Earnings per ordinary share
Basic and diluted earnings per ordinary share have been
calculated on the net income attributable to ordinary shareholders
and the weighted average number of ordinary shares in issue in each
year.
2021 2020
Year ended 31 March $m $m
------------------------------------------------------- ------------------- --------------------
Net income 15.5 9.4
------------------------------------------------------- ------------------- --------------------
Weighted average number of shares (basic and diluted) 134,741,886 98,967,443
------------------------------------------------------- ------------------- --------------------
Basic and diluted earnings per ordinary share $ 0.12 $ 0.09
------------------------------------------------------- ------------------- --------------------
During the year ended 31 March 2021 and 2020 the weighted
average effect of share options has been excluded from the
calculation of diluted earnings per ordinary share, since they were
anti-dilutive under the treasury stock method of earnings per share
calculation (Note 20).
Note 11 - Cash and cash equivalents
2021 2020
At 31 March $m $m
------------------------------------- --------- ---------
Cash in hand 18.0 12.4
Amounts in the course of collection 1.1 0.5
Total cash and cash equivalents 19.1 12.9
------------------------------------- --------- ---------
Currency, liquidity, and interest rates risks analyses of cash
and cash equivalents are disclosed in Note 26.
Note 12 - Balances with the Central Bank of Belize
2021 2020
At 31 March $m $m
-------------------------------------------- -------- --------
Statutory reserve balances 47.9 33.9
Operating balance 171.0 12.5
Total balances with Central Bank of Belize 218.9 46.4
-------------------------------------------- -------- --------
BBL and BBCLare required to maintain an average minimum
non-interest-bearing deposit balance with the CBB equal to 6.5
percent of their average deposit liabilities. At 31 March 2021, the
actual amount for BBL and BBCL was 6.5% and 6.5%, respectively (31
March 2020 - 8.5% and 8.5%, respectively). In addition, BBL and
BBCL must maintain an average aggregate of approved liquid assets
(which include the average minimum non-interest bearing deposit
balance maintained with the CBB) equal to 21 percent of their
average deposit liabilities. At 31 March 2021, the actual amount
for BBL and BBCL was 37.3% and 57.4%, respectively (31 March 2020 -
32.8% and 31.0%, respectively). The statutory reserve balances are
not readily available to finance the day to day operations of the
banks.
Note 13 - Due from banks
2021 2020
At 31 March $m $m
---------------------- -------- --------
Due from banks 62.2 34.9
Total due from banks 62.2 34.9
---------------------- -------- --------
The portfolio of balances held by BBL, BBCL, and BBIL represent
instruments of short-term placements of temporary available cash in
other banks.
As at 31 March 2021, all interbank loans and deposits placed in
other banks were current and not impaired
Currency, liquidity, and interest rate risk analyses of cash and
cash equivalents are disclosed in Note 26.
As at 31 March 2021, BBL has utilised $3.5 million (31 March
2020 - $4.3 million) of its balances held with other financial
institutions to be held as collateral for certain credit lines and
as required by the card brands. These particular financial assets
are pledged as collateral under terms that are usual and customary
for such transactions.
Note 14 - Investment securities
2021 2020
At 31 March $m $m
-------------------------------- ----------- ---------
Securities - at amortised cost 127.6 116.8
Securities - at FVOCI 2.3 2.8
Securities - at FVTPL 0.4 0.4
Less: impairment allowance (1.1) (0.2)
Total investment securities 129.2 119.8
-------------------------------- ----------- ---------
The following table details the impairment allowance by stage
and the investment securities by type.
2021 2020
At 31 March $m $m
----------------------------- ----------- ----------
Equity securities 0.4 0.4
Debt securities 129.9 119.6
Stage 1: 12 Month ECL - -
Stage 2: Lifetime ECL (0.7) -
Stage 3: Lifetime ECL (0.4) (0.2)
Total investment securities 129.2 119.8
----------------------------- ----------- ----------
Note 15 - Loans to customers (net of allowances)
At 31 March 2021 2020
-------------------------------------------------- ---------------------- -----------------
Performing loans 461.5 242.7
Non performing loans 45.5 9.7
-------------------------------------------------- ---------------------- -----------------
Total loans to customers, net of deferred income 507.0 252.4
Less: impairment allowance on loans to customers (34.7) (18.7)
Total loans to customers (net of allowances) 472.3 233.7
-------------------------------------------------- ---------------------- -----------------
The table below shows the staging of the loans to customers and
the related ECL's:
At 31 March 2021 2020
----------------------- --------- ---------
Gross loans 507.0 252.4
Stage 1: 12 Month ECL (12.4) (11.7)
Stage 2: Lifetime ECL (8.1) (3.5)
Stage 3: Lifetime ECL (14.2) (3.5)
472.3 233.7
----------------------- --------- ---------
The table below shows the movement in the impairment allowance
for expected credit losses by stage:
Impairment allowance
Stage 1 Stage 2 Stage 3 Total
$m $m $m $m
--------------------------------------------------------------------- ----------- ----------- ----------- -------
Impairment allowance for expected credit losses as at 01 April 2020 11.7 3.5 3.5 18.7
ECL on BBCL loan portfolio 3.4 7.1 4.9 15.4
ECL on new instruments issued
during the year 0.6 0.2 0.5 1.3
Other credit loss movements,
repayments, and transfers (3.3) (2.7) 6.5 0.5
Charge offs and write offs - - (1.2) (1.2)
Impairment allowance for expected credit losses as at 31 March 2021 12.4 8.1 14.2 34.7
--------------------------------------------------------------------- ----------- ----------- ----------- -------
The table below reflects outstanding loans by industry
classifications.
2021 2020
At 31 March Amount % Amount %
--------------------------- ------------ ------- ---------------- -------
Other consumer loans 290.7 57.3% 67.7 26.8%
Real estate 58.7 11.6% 60.5 24.0%
Building and construction 36.1 7.1% 32.1 12.7%
Distribution 32.6 6.4% 18.9 7.5%
Tourism 27.2 5.4% 20.0 7.9%
Agriculture 16.2 3.2% 13.2 5.2%
Transportation 15.5 3.1% 14.2 5.6%
Manufacturing 9.4 1.9% 9.7 3.8%
Utilities 7.8 1.5% 6.6 2.6%
Professional services 7.1 1.4% 3.3 1.3%
Marine Products 5.2 1.0% 5.7 2.3%
Government 0.2 0.1% 0.1 0.0%
Entertainment 0.1 0.0% 0.2 0.1%
Mining and exploration 0.1 0.0% 0.1 0.0%
Financial institutions 0.1 0.0% - 0.0%
Forestry - 0.0% 0.1 0.0%
Total loans 507.0 100.0% 252.4 100.0%
--------------------------- ------------ ------- ---------------- -------
At 31 March 2021, the Group had total loans outstanding to
certain officers and employees of $12.3 million (31 March 2020 -
$11.7 million) at preferential rates of interest varying between
0.0 percent and 12.0 percent per annum, repayable over varying
periods not exceeding 25 years. The transfer value loss on these
loans had not been considered material and therefore had not been
included in these consolidated financial statements.
Note 16 - Property, plant and equipment
Property, plant and equipment of the Group as at 31 March 2021
and 2020 comprised the following:
Furniture, Right
fixtures, Computer Work of
and other and office Motor in use
Land Premises equipment equipment vehicles progress assets Total
-------------- ------- ---------------- ------------------ ------------------ --------------- ------------- ---------- ------------
Cost
As at 31
March
2020 1.5 15.4 6.7 10.4 2.2 0.3 0.5 37.0
Additions - 0.1 0.2 0.8 0.1 (0.1) - 1.1
Addition upon
acquisition - 3.2 2.8 2.4 0.5 - 0.9 9.8
Disposals - (0.2) (0.2) - (0.2) - - (0.6)
As at 31
March
2021 1.5 18.5 9.5 13.6 2.6 0.2 1.4 47.3
-------------- ------- ---------------- ------------------ ------------------ --------------- ------------- ---------- ------------
Depreciation
As at 31
March
2020 - (5.9) (4.7) (6.6) (1.3) - (0.1) (18.6)
Charge for
the
period - (0.5) (0.6) (1.0) (0.3) - (0.2) (2.6)
Addition upon
acquisition - (1.1) (1.7) (1.9) (0.4) - (0.5) (5.6)
Eliminated on
disposals - 0.1 0.2 0.1 0.1 - - 0.5
As at 31
March
2021 - (7.4) (6.8) (9.4) (1.9) - (0.8) (26.3)
-------------- ------- ---------------- ------------------ ------------------ --------------- ------------- ---------- ------------
Net book
value
As at 31
March
2021 1.5 11.1 2.7 4.2 0.7 0.2 0.6 21.0
-------------- ------- ---------------- ------------------ ------------------ --------------- ------------- ---------- ------------
As at 31
March
2020 1.5 9.5 2.0 3.8 0.9 0.3 0.4 18.4
-------------- ------- ---------------- ------------------ ------------------ --------------- ------------- ---------- ------------
Total capital expenditures for the year ended 31 March 2021 was
$1.1 million (31 March 2020 - $1.7 million). Total depreciation
expense for the year ended 31 March 2021 was $2.6 million (31 March
2020 - $2.6 million).
As at 31 March 2021 the Group's buildings, vehicles, ATMs and
other equipment were insured for $23.0 million. (31 March 2020 -
$18.5 million)
As at 31 March 2021 historical cost of fully depreciated fixed
assets amounted to $7.5 million (31 March 2020 - $7.5 million).
Note 17 - Due from Government of Belize (net of allowance)
2021 2020
At 31 March $m $m
--------------------------------- --------- ---------
Amounts receivable from the GOB 38.7 40.3
Less: impairment allowance (0.7) (0.8)
Total due from the GOB 38.0 39.5
--------------------------------- --------- ---------
Movements in impairment allowance on due from GOB.
2021 2020
At 31 March $m $m
-------------------------- --------- ---------
At beginning of the year (0.8) (0.8)
Credit during the year 0.1 -
At the end of the year (0.7) (0.8)
-------------------------- --------- ---------
On 23 March 2007, a loan note was issued to BBL by the
Government of Belize ("GOB") under the terms of a settlement deed
entered into by BBL and the GOB on the same date (the "2007 Loan
Note"). The 2007 Loan Note had been entered into by the GOB in
order to satisfy the GOB's liability under a 2004 guarantee for
debts and liabilities owed to BBL by Universal Health Services.
BBL commenced arbitration proceedings (the "Arbitration") under
the London Court of International Arbitration (the "LCIA") in order
to recover the sums due under the 2007 Loan Note. On 15 January
2013, the arbitral tribunal made its Final Award in the Arbitration
in favour of BBL. It declared that the 2007 Loan Note was valid and
binding and ordered the GOB to pay BBL the sum of BZD 36,895,509
plus interest and costs.
The LCIA Final Award confirmed that the 2007 Loan Note was valid
and binding on the basis of a judgement given by the Privy Council,
in The Belize Bank Limited v The Association of Concerned Belizeans
and Others (which was at that time Belize's highest court of
appeal). In this judgement, the Privy Council rejected a challenge
to the Loan Note that it did not comply with the Belize Finance and
Audit (Reform) Act.
In order to increase its enforcement options, BBL applied to the
English High Court for an order that the Final Award be enforceable
in the same manner as a judgement or order of an English Court to
the same effect. That order was granted on 20 February 2013 and was
served on the GOB on 15 May 2013 (the "English Judgement").
Award Enforcement proceedings were also commenced against GOB in
the Belize Supreme Court in 2013. On 17 February 2015, the Belize
Supreme Court refused to enforce the Final Award on the grounds
that enforcement would be contrary to public policy. BBL appealed
this decision to the Belize Court of Appeal and on 24 March 2017,
the Court of Appeal upheld the decision of the Belize Supreme
Court.
BBL appealed the Court of Appeal's decision to the Caribbean
Court of Justice (the "CCJ") and on 22 November 2017, the CCJ
reversed the Court of Appeal's decision and found in favour of BBL.
The CCJ's Order granted permission to BBL to enforce the LCIA Award
in the same manner as a judgement or order of the Supreme Court to
the same effect (the "Belize Judgement"). Twenty-one days after the
CCJ granted permission, BBL applied to the CCJ under section 25 of
the Crown Proceedings Act for a certificate certifying the amounts
payable to BBL by the Government.
On 3 January 2018, the CCJ issued the Certificate certifying the
amount payable to BBL by the Government under the LCIA Award and
the Certificate was served on the Attorney General, the Minister of
Finance and the Financial Secretary on 04 January 2018. The CCJ
held that the effect of the Certificate is to convert the CCJ Order
into a Judgement Debt.
On 4 January 2018, BBL applied for a further order from the CCJ
directing the Minister of Finance to pay the amount due under the
Judgement. On 1 June 2018 the CCJ decided that BBL's application
was premature but stated in its decision that if the Government
failed to enact the necessary legislation to satisfy the judgement,
then BBL should apply to the Belize Supreme Court for a declaration
that the Minister of Finance has failed to comply with his
obligations under section 25 of the Crown Proceedings Act and an
order that the Minister of Finance pay the amount due under the
judgement.
On 26 June 2018, BBL filed an application pursuant to Part 56 of
the Supreme Court (Civil Procedure) Rules, 2005 for an order
granting permission to BBL to apply for Judicial Review of: (i) the
decision of the Minister of Finance not to comply with his
mandatory duty within section 25(3) of the Crown Proceedings Act to
pay the sum certified as payable to BBL by the Certificate of Order
dated 3 January 2018 issued by the Registrar of the Caribbean Court
of Justice, and (ii) the decision of the Minister of Finance not to
satisfy the Judgement Debt with interest accruing at the rate of 6%
per annum.
On 9 July 2018 the Chief Justice granted permission to BBL to
apply for judicial review. BBL filed a fixed date claim form
applying for judicial review on 23 July 2018. The first hearing
took place on 17 September, 2018 and the Court granted BBL's
application for the trial of certain preliminary issues namely: (i)
whether the Minister of Finance failed to comply with his statutory
duty imposed by section 25(3) of the Crown Proceedings Act Cap 167
of the Laws of Belize; and (ii) whether an Order ought to be made
directing the Minister of Finance to pay the sum due under the
Certificate Order or Judgement Debt (less amounts set-off as
Business Tax) within 10 days of the Order. The trial of certain
preliminary issues took place in December 2018 and on 10 January,
2020 the Hon. Chief Justice ruled that the Government had not
failed to comply with its statutory duty imposed by section 25 of
the Crown Proceedings Act Cap 167 of the Laws of Belize and refused
the Order directing the Minister of Finance to pay the sum due
under the Certificate Order or Judgment Debt (less amounts set-off
as Business Tax for the 1st and 2nd Quarters of 2018) within 10
days. BBL appealed the decision of the learned Chief Justice on
these preliminary issues pursuant to leave granted by the Hon.
Chief Justice on the 10 February 2020 (the "Mandamus Appeal"). The
sittings of the Belize Court of Appeal have been impacted by the
covid pandemic and no date has been scheduled for the hearing of
the Mandamus Appeal, although a hearing date is expected in the
next sitting of the Belize Court of Appeal in October 2021.
On 28 June 2018 BBL filed a claim against the Commissioner of
Income and Business Tax and the Attorney General of Belize (both
being representatives of the GOB) in light of the Commissioner's
refusal to set-off the Business Tax owed to the Government by BBL
notwithstanding being duly authorised by BBL to satisfy the taxes
due by way of set-off against the Judgement Debt. The trial of
BBL's claim took place on 22 January 2019 at the Supreme Court of
Belize. The Court had difficulty accepting the Government's
arguments and found in favour of BBL. The Court ordered: (i) a
Declaration that the decision of the Commissioner; refusing to
set-off BBL's tax liability against the Judgement Debt is
unreasonable, disproportionate, unlawful and therefore inequitable;
(ii) a Declaration that the decision of the Commissioner not to
consider garnishing BBL's tax debt from the Judgement Debt is
unlawful; (iii) an Order restraining the Commissioner whether by
herself, her servants and her agents from seeking to enforce the
tax liability against BBL, and (iv) the Government to pay BBL its
cost to be agreed or assessed. The decision of the court was orally
delivered on 22 January 2019 and the written judgement handed down
on 8 February 2019. The decision of the Supreme Court of Belize
legally endorsed BBL's right to authorise the Government to set-off
all Business Tax owed to the Government by BBL against the
Judgement Debt. The Government has since appealed the decision
of the Supreme Court to the Belize Court of Appeal but no stay of
the effect of this decision has been granted to the Government (the
"Tax Appeal"). The sittings of the Belize Court of Appeal have been
impacted by the covid pandemic and no date has been scheduled for
the hearing of the Tax Appeal, although a hearing date is expected
in the next sitting of the Belize Court of Appeal in October
2021.
BBL has sought the permission of the Belize Court of Appeal to
have both the Mandamus Appeal and the Tax Appeal heard on the same
occasion at the next sitting of the Belize Court of Appeal
scheduled for October 2021.
In order to further increase its enforcement options, the Bank
filed a petition to enforce the Final Award in federal court in the
United States on 18 April 2014. The GOB filed a motion to dismiss
and a response to the petition to confirm the Final Award on 8
August 2014. The GOB applied for a stay pending the outcome of
similar litigation. However, the stay was denied on 9 January 2016.
On 8 June 2016 the US District Court confirmed the Final Award and
entered judgement in favour of BBL against the GOB for the monetary
portion of the Award; to be converted to US dollars, applying the
conversion rate as of the date the Award was issued plus interest
at the annual rate of 17.0% compounded annually between 8 September
2012 and 8 June 2016. On 12 July 2016, the United States District
Court ordered that judgement be entered in favour of BBL against
the GOB in the amount of USD 19,086,210 plus USD 16,099,216 in
pre-judgement interest, totalling USD 35,185,427 (the "US
Judgement").
The GOB appealed the decision of the US District Court to the US
Court of Appeals, D.C. Circuit. A hearing in the US Court of
Appeals took place on 9 February 2017. On 31 March 2017, the US
Court of Appeals, D.C. Circuit upheld the decision of the US
District Court and rejected all of the GOB's arguments on
appeal.
On 28 April 2017, the GOB filed a petition for an 'en banc'
review of the US Court of Appeal's decision in essence asking the
court to reconsider its decision. On 7 June 2017, the petition by
the GOB for an 'en banc' rehearing was denied by the US Court of
Appeal and its earlier judgement was confirmed.
The GOB then sought review by the United States Supreme Court.
On 13 November 2017, the United States Supreme Court denied the
GOB's petition for certiorari, rendering the US Judgement final and
not subject to further judicial review.
On 16 November 2017, BBL filed a motion in the United States
District Court for the District of Columbia pursuant to 28 U.S.C.
--1610(c) seeking judicial authorisation to seek enforcement of the
US Judgement against the GOB. On 12 March 2018, the United States
District Court ordered that BBL may now seek attachment or
execution of GOB property to satisfy the Court's judgement pursuant
to 28 U.S.C. -- 1610(a)-(b) in the jurisdictions where such
attachment or execution is appropriate.
The Award underlying the English Judgement, the US Judgement,
and the Belize Judgement has been recognised and declared
enforceable against GOB by the highest Belize and US Courts, and by
the English Courts.
Note 18 - Customer accounts
2021 2020
At 31 March $m $m
------------------------- ------------ --------------
Term deposits 187.5 151.5
Current/demand deposits 435.7 167.6
Savings deposits 202.8 89.8
Total customer accounts 826.0 408.9
------------------------- ------------ --------------
Included in term deposits at 31 March 2021 were $4.5 million (31
March 2020 - $5.2 million) of term deposits denominated in US
dollars and nil (31 March 2020 - nil) denominated in UK pounds
sterling. Included in demand deposits at 31 March 2021 were $44.9
million (31 March 2020 - $17.5 million) of demand deposits
denominated in US dollars and $0.1 million (31 March 2020 - $0.2
million) denominated in UK pounds sterling.
As at 31 March 2021, $14.4 million of customer account balances
(31 March 2020 - $6.3 million) is held as collateral for banking
operations.
Note 19 -- Commitments, contingencies and regulatory matters
(i) The Group is a party to financial instruments with
off-balance-sheet risks in the normal course of business to meet
the financing needs of its customers. These financial instruments
include commitments to extend credit, standby letters of credit and
financial guarantees. The Group grants short-term credit facilities
to customers for periods of up to twelve months generally to meet
customers' working capital requirements. These facilities are
repayable on demand and are subject to review at any time. In
practice, such reviews are carried out at periodic intervals agreed
with the customer.
Outstanding commitments to extend credit at 31 March 2021
amounted to $54.3 million (31 March 2020 - $24.3 million).
Since many of the commitments are expected to expire without
being drawn upon in full, and because of the fluctuating aspect of
the facilities, the total commitment amounts do not necessarily
represent future cash requirements. The Group evaluates each
customer's creditworthiness on a case-by-case basis. The amount of
collateral required by the Group for the extension of credit is
based on the Group's credit evaluation of the counterparty.
Collateral held varies, but may include accounts receivable,
inventory, property, plant and equipment, and income-producing
commercial properties and assets.
Standby letters of credit and financial guarantees written are
conditional commitments issued by the Group to guarantee the
performance of a customer to a third party. The terms of such
guarantees do not normally exceed more than one year.
The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities
to customers. The Group holds similar collateral to that held for
the short-term facilities described above and such commitments are
generally fully secured. Outstanding standby letters of credit and
financial guarantees written at 31 March 2021 amounted to $8.8
million (31 March 2020 - $5.4 million).
(ii) In the ordinary course of business, the Group is subject to
pending and threatened legal actions and proceedings. As litigation
develop that may have a material effect, the Group, in conjunction
with outside counsel, evaluates the matter on an ongoing basis in
light of potentially relevant factual and legal developments. These
may include settlement discussions and rulings by courts,
arbitrators or others.
(iii) As explained in Note 17, BBL is engaged in legal
proceedings in which it is vigorously pursuing a claim against the
GOB. Having received the advice of external advisers, the Company
expects BBL to fully recover amounts recorded as due from GOB in
Note 17. Legal costs are expensed as incurred.
(iv) In the ordinary course of business, the Company's
subsidiaries are subject to regulatory examinations, information
gathering requests, enquiries, and investigations. As a regulatory
matter develops that may have a material effect, the Company and
the relevant subsidiaries, in conjunction with outside counsel,
evaluate the matter on an ongoing basis in light of potentially
relevant factual and legal developments. These may include
settlement discussions and rulings by courts, arbitrators or
others. Based on current knowledge and discussions with independent
legal counsel, Management does not believe that the outcome of any
regulatory matter that is unresolved at 31 March 2021 would have a
material adverse effect on the financial position or liquidity of
the Company or its subsidiaries as of 31 March 2021.
(v) BBL, BBCL, and BBIL, as fully authorised banking entities,
are subject to detailed regulatory requirements in Belize. These
requirements are principally set by the CBB. As of 31 March 2021
and 2020, and for the years then ended, BBL, BBCL, and BBIL
substantially met all of its obligations and requirements under
such regulations. These regulations may, in the future, change or
be amended. At such time, BBL, BBCL, and BBIL will make all
endeavours to follow, as soon as reasonably practicable, all such
revised regulations.
(vi) The Labour Act of Belize states that where an employee has
been continuously employed for a period of five to ten years and
his employment is terminated by the employer, the employee is
entitled to be paid a severance pay for each complete year of
service. However, if the employee resigns, is terminated due to
gross misconduct, or dies prior to the completion of ten years,
then the Group is not liable to pay severance. The Group has
estimated the contingent liability related to such severance
payment for employees with more than five but less than ten years
to be $0.4 million (31 March 2020 - $0.2 million).
Note 20 - Share capital
2021 2020
At 31 March m m
------------------------------------ --------------- --------------
Authorised
Ordinary shares:
200,000,000 shares of no par value 200.0 200.0
Preference shares:
14,000,000 shares of $1.00 each 14.0 14.0
Total authorised 214.0 214.0
------------------------------------ --------------- --------------
Share capital
--------------------------------- ------------- ------------------------
Number Share
of shares capital
m $m
--------------------------------- ------------- ------------------------
As at 1 April 2019 103.3 53.3
Issuance of shares - -
Cancellation of treasury shares - -
Other movements - -
As at 31 March 2020 103.3 53.3
--------------------------------- ------------- ------------------------
As at 1 April 2020 103.3 53.3
Issuance of shares 35.8 17.1
Cancellation of treasury shares (4.3) (21.7)
Other movements - -
As at 31 March 2021 134.8 48.7
--------------------------------- ------------- ------------------------
Treasury Shares
During the year ended 31 March 2021, 4,296,557 in treasury
shares were cancelled.
Number $m
------------------ ---------------- ----------------
At 31 March 2020 4,296,557 21.7
------------------ ---------------- ----------------
At 31 March 2021 - -
------------------ ---------------- ----------------
Share Options
The Company had granted employee share options which are issued
under its share option plan which reserves ordinary shares for
issuance to the Company's executives, officers and key employees.
The options had been granted under the Long-Term Incentive Plans
(the "Incentive Plans"). The Incentive Plans are administrated by a
committee of the Board of Directors of the Company. Options are
generally granted to purchase the Company's ordinary shares at
prices which equate to or are above the market price of the
ordinary shares on the date the option is granted. Conditions of
vesting are determined at the time of grant but options are
generally vested and become exercisable for a period of between
three and ten years from the date of grant and all have a maximum
term of ten years.
Weighted
Number average
of share exercise
options price
------------------------------- ---------------- ---------
Outstanding at March 31, 2020 250,000 $1.95
------------------------------- ---------------- ---------
Outstanding at March 31, 2021 - $0.00
------------------------------- ---------------- ---------
During the year ended 31 March 2021, no outstanding options were
exercised.
In May 2009, the Company granted options over a further 250,000
ordinary shares at the exercise price of $6.50 per share which vest
and are exercisable in three instalments on 1 June 2013, 1 June
2014 and 1 June 2015. The term of these options extends to 1 June
2020; they have now expired.
The exercise price of all options was adjusted to $1.95
following the demerger of Waterloo Investment Holdings Limited from
the Group in 2011.
The Group measures compensation cost in connection with share
option plans and schemes using the Black-Scholes option-pricing
model.
Share Issue
Effective 5 June 2020, the Company completed a merger with
Normandy Limited wherein 35,774,443 new shares were issued to
former shareholders of Normandy Limited.
Lord Michael Aschroft was the majority shareholder in Normandy
with 82.78 per cent of Normandy's issued share capital at the time
of the merger.
Merger-related costs amounting to $0.2 million have been
recognised as an expense in the consolidated statement of
comprehensive income, as part of other expenses.
Note 21 - Taxation
At 31 March 2021 2020
------------------------ ------- --------
Business tax 4.2 4.1
Corporate income tax - -
Total taxation expense 4.2 4.1
------------------------ ------- --------
The computation of business tax is provided in the table
below:
At 31 March 2021 2020
-------------------------------------- -------- --------
Component subject to 12% tax rate
Net interest income 1.8 25.9
Other income 0.6 15.9
Less:
Exempted income (0.2) (7.3)
Donations - -
Profit subject to tax for the period 2.2 34.5
-------------------------------------- -------- --------
Total business tax charged at 12.0% 0.3 4.1
-------------------------------------- -------- --------
Component subject to 15% tax rate
Net interest income 22.0 -
Other income 6.4 -
Less:
Exempted income (2.2) -
Donations - -
Profit subject to tax for the period 26.2 -
-------------------------------------- -------- --------
Total business tax charged at 15.0% 3.9 -
-------------------------------------- -------- --------
Note 27 - Acquisition of Scotiabank (Belize) Limited
On 31 March 2021, the Group acquired 100% of the shares of
Scotiabank (Belize) Limited. With this acquisition, the Group
expects to gain a significant increase in market share of the
domestic banking sector in Belize. The acquisition, which is
accounted for as a business combination under the "acquisition
method" as defined by IFRS 3, resulted in a gain on bargain
purchase of $8.5 million as computed in the table that follows and
as reflected in the consolidated statement of income
$m
-------------------------------------------------- -----------
Amount settled in cash 19.7
Stamp duties paid 1.0
Total 20.7
-------------------------------------------------- -----------
Recognised amounts of identifiable net assets
-------------------------------------------------- -----------
Cash and cash equivalents 193.7
Other assets 3.0
Prepayments 0.1
Loans to customers (net of impairment allowance) 236.7
Property and equipment - net 4.2
Demand and term deposits (402.9)
Other liabilities (4.5)
Long term employee benefits payable (1.1)
Net identifiable assets and liabilities 29.2
-------------------------------------------------- -----------
Gain on acquisition (8.5)
-------------------------------------------------- -----------
Consideration transferred
The acquisition was settled in cash of $19.7 million; stamp
duties of $1.0 million was also paid on the transfer of the 12
million shares.
Acquisition-related costs amounting to $0.4 million have been
recognised as an expense in the consolidated statement of
comprehensive income, as part of other expenses and with no impact
on the bargain gain.
No contingent assets or liabilities were taken over in the
acquisition.
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END
FR DXGDCCGDDGBD
(END) Dow Jones Newswires
September 23, 2021 02:00 ET (06:00 GMT)
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