Source - LSE Regulatory
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 YEAR ENDED 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 £2.0 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

 
 

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:

 

 

Land

Premises

Furniture, fixtures, and other equipment

Computer and office equipment

Motor vehicles

Work in progress

Right of use 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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