Investing in the Future
ANNUAL REPORT AND FINANCIAL STATEMENTS 2009
CONTENTS
Corporate Information .....................................................................................................................................4
Statement of Corporate Governance Principles ......................................................................................6
Chairman’s Statement ..................................................................................................................................... 7
Review of Operations .......................................................................................................................................9
Directors’ Report ............................................................................................................................................. 16
Auditors’ Report ................................................................................................................................................17
Consolidated Financial Statements .......................................................................................................... 18
Notes to the Financial Statements ............................................................................................................ 22
Listed Securities at 31 March 2009 ............................................................................................................ 31
Member Intermediaries at 31 March 2009 ............................................................................................. 33
ECSE Annual Report and Financial Statements 2009 3
CORPORATE INFORMATION
Board of Directors
Sir K Dwight Venner - Chairman Governor, Eastern Caribbean Central Bank
Mr D Michael Morton - Deputy Chairman Chairman/Managing Director, TDC Group of Companies
Mr Peter Blanchard Managing Director, General Insurance Company Ltd
Mr George S Goodluck Managing Director, St Vincent Insurances Ltd
Mrs Sephlin Lawrence Director, St Christopher & Nevis Social Security Board
Dr Garth Nicholls Senior Director – Research Department, Eastern Caribbean Central Bank
Mr Reginald Thomas Executive Director, National Insurance Services, St Vincent and the Grenadines
Company Secretary Ms Maria Barthelmy Adviser – Governor’s Office Eastern Caribbean Central Bank
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ECSE Annual Report and Financial Statements 2009
Management
Mr Trevor E Blake General Manager
Mr Tarlie Francis Senior Manager, Market Operations Division
Mrs Denise Parris-Mertins Manager, Administration Division
Auditors Pannell Kerr Forster North Independence Square, Basseterre, St. Kitts Bankers St. Kitts-Nevis-Anguilla National Bank Ltd Central Street, Basseterre, St. Kitts Subsidiary Companies Eastern Caribbean Central Securities Registry Limited (100%) Eastern Caribbean Central Securities Depository Limited (100%) Registered Office P O Box 94 Bird Rock Basseterre St. Kitts
ECSE Annual Report and Financial Statements 2009
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STATEMENT OF CORPORATE GOVERNANCE PRINCIPLES
The Eastern Caribbean Securities Exchange Limited (ECSE), the Eastern Caribbean Central Securities Registry Limited (ECCSR) and the Eastern Caribbean Central Securities Depository Limited (ECCSD) continue to advance high standards and principles of corporate governance throughout the Group. This statement of corporate governance practices provides a brief description of the Group’s approach to governance.
BOARD COMMITTEES
Committees of the Board have been established, in accordance with Article 80 of the ECSE’s Articles, to enhance the Board’s effectiveness in the proper governance of the Group. During the financial year, changes in the composition of the Board of Directors at the Annual General Meeting necessitated some changes in the membership of four of the five committees. The composition of the Committees at 31 March 2009 is as follows: Executive Committee Sir K Dwight Venner – Chairman Mr D Michael Morton Mrs Sephlin Lawrence Mr Trevor E Blake Audit Committee Mrs Sephlin Lawrence – Chairperson Mr D Michael Morton Mr Reginald Thomas Budget, Finance and Administration Committee Mr Reginald Thomas – Chairman Mr Peter Blanchard Mr George S Goodluck Listings and Registry Services Committee Mr D Michael Morton – Chairman Mrs Sephlin Lawrence Dr Garth Nicholls Intermediary Development and Market Structure Committee Mr Peter Blanchard – Chairman Mr George S Goodluck Dr Garth Nicholls The Company Secretary and the General Manager facilitate these Committees. ECCSR AND ECCSD The Boards of Directors of the ECCSR and the ECCSD each comprised five members, drawn from the ECSE’s Board of Directors. The composition of both Boards is as follows: Sir K Dwight Venner - Chairman Mr D Michael Morton - Deputy Chairman Mr Peter Blanchard Mr George S Goodluck Dr Garth Nicholls Company Secretary Ms Maria Barthelmy
LEGAL FRAMEWORK
The ECSE was incorporated in the Federation of St Christopher and Nevis under the Companies Act of 1996 as a public limited liability company. It is licensed under the Securities Act of 2001 – a uniform body of legislation in Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St Christopher and Nevis, Saint Lucia, and St Vincent and the Grenadines. The Act provides for the protection of the investing public by creating the Eastern Caribbean Securities Regulatory Commission (ECSRC), which regulates the securities market, securities exchanges, persons engaged in securities business and the public issue of securities. The ECSE is designed to facilitate the trading of financial products, including corporate stocks and bonds, and government securities. The ECCSR and ECCSD, both wholly owned subsidiaries of the ECSE, were also incorporated in St Christopher and Nevis in 2001 as public limited liability companies, under the 1996 Companies Act. The ECCSR and ECCSD are also both licensed and regulated by the ECSRC, under the Securities Act of 2001.
BOARD OF DIRECTORS
The Board of Directors of the ECSE is responsible for the strategic guidance of the Company. It is focused on protecting the interests of all stakeholders and on optimizing shareholder value. The Board of Directors consists of seven members elected in accordance with Article 81 of the Articles of Association of the ECSE. The Directors include regional business leaders and professionals, who bring considerable expertise and experience to the decision-making processes. The Board of Directors typically meets on a bimonthly basis and regularly reviews the Group’s financial and operational performance. In accordance with the Articles, all of the Directors retire at each Annual General Meeting of the company. Directors are eligible for nomination by their respective classes for reelection to the Board.
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ECSE Annual Report and Financial Statements 2009
CHAIRMAN’S STATEMENT
On behalf of the Board of Directors of the Eastern Caribbean Securities Exchange Limited (ECSE), I am pleased to present the Annual Report of the ECSE with the Audited Financial Statements for the year ended 31 March 2009. During the year the world economy experienced a global economic and financial crisis with the downturn in economic activity intensifying during the latter part of 2008. The United States which is at the epicenter of the current financial and economic crisis estimates that economic growth will contract by 2.8 per cent in 2009. Growth is projected to remain flat (0.00 per cent) in 2010. The outlook for the US economy rests, to a large extent, on the normalisation of conditions in financial markets. Although recent indicators have improved somewhat, significant risks remain that credit and financial market conditions will continue to be fragile. Continued decline in the financial sector is likely to result in declines in real sector activity, exacerbating the downturn even further. The crisis has had a major impact on the world’s leading stock markets. The high volatility of these markets has resulted in significant losses to investors. It is estimated that US$30 trillion has been lost so far. The demise of the world capital markets is likely to be deep and its impact on the ECCU member states will be acute. Already within the Eastern Caribbean Currency Union (ECCU) we note that growth slowed to 1.7 per cent in 2008, down from 5.2 per cent in 2007. Construction, which has been the main driver of economic activity in the region for the last few years, continued to slow in 2008. Contractions were also recorded in the manufacturing sector partly due to plant closures, and in the hotel and restaurant sector, as a result of a decline in stay over arrivals. The crisis revealed the exposure of the economy to a vast network of speculative investments. The interconnectedness of risks across different markets, institutions and financial products and countries exacerbated the situation. The crisis has pointed to, among other things, the importance of ensuring the existence of appropriate regulatory and supervisory systems and the need for effective risk assessment and risk management. The protracted negative impact of external shocks on the economies of the ECCU has prompted members governments to articulate a set of consistent policies and approaches, which are presented in the form of a comprehensive plan of action to stabilise and transform our small and vulnerable states. The elements of this strategic approach include the following: 1. Suitably adapted Financial Programmes for each country 2. Fiscal Reform Programmes 3. Debt Management Programmes 4. Public Sector Investment Programmes 5. Social Safety Net Programmes 6. Financial Safety Net Programmes 7. Amalgamation of the Indigenous Commercial Banks 8. Rationalisation, Development and Regulation of the Insurance Sector. Despite the severe challenges in the global financial markets, the Eastern Caribbean Securities Market performed well. As at 31 March 2009, the aggregate market capitalisation of the 13 equities that traded during the year stood at $3.9 billion, an increase of $635.3 million or 19.4% over the year. Contributing to this expansion, were three companies in Grenada, Grenada Electricity Services Ltd, Grenreal Property Corporation Limited and Republic Bank (Grenada) Limited, which listed during the financial year, taking the number of listed equities to 14. The ECSE’s EC-Share Index stood at 136.16, a decrease of 2.89 points or 2.1% in the index value which, at the start of the year was 139.05. The index’s negative performance during the year was mainly due to declines in the share prices, particularly in the third quarter. This decline is relatively small when considered within the global context. I am heartened to note that secondary market activity more than doubled in the financial year ended 31 March 2009, compared to 2007/2008. Trading in both corporate and sovereign securities contributed to the increase in transactional activity. The Regional Government Securities Market (RGSM) also maintained its buoyancy during the year, driven by the active participation of the Governments of Antigua and Barbuda, Grenada, Saint Lucia and St Vincent and the Grenadines. The market continued to play a critical role in terms
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of providing governments with an organized, integrated regional market in which to finance their short and longterm expenditure, thereby reducing their direct reliance on short-term bank lending. An efficient government securities market also facilitates lower debt service costs over the medium to long-term and enables an efficient price discovery mechanism. The ECSE’s continued focus on improving corporate governance in the region is commendable. Companies must develop effective risk assessment and risk management within their corporate governance frameworks. Directors need to pay particular attention to their fiduciary duties in the performance of their functions. Accordingly, the Directors’ Education and Accreditation Programme and the recently introduced Continuing Professional Development seminars, which enable directors to maintain their currency in the field, are quite timely. Shareholders, the ECSE has recorded another year of positive financial results. Your company has declared a profit on operations of $0.23 million for the year ended 31 March 2009. This is a significant improvement on last year’s results. As we embark on our eighth year of operations, we look forward to building on achievements, and to move the ECSE Group to another successful year. I thank you, the Shareholders, for your continuing support, and the Board of Directors, Management and Staff for their tireless efforts, during the course of the year.
Sir K Dwight Venner Chairman
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ECSE Annual Report and Financial Statements 2009
REVIEW OF OPERATIONS
In 2008/2009, in spite of the turmoil in financial markets globally, the ECSE group managed to produce another successful year. There was encouraging growth in the number of listed securities; secondary market activity increased significantly; there was expansion in registry services; the Regional Government Securities Market remained buoyant; and the Group experienced a significant increase in net profit for the year. and was followed in July, by the listing of Grenada Electricity Services Ltd (GESL), and Grenreal Property Corporation Limited (GPCL).
Listed Sovereign Securities at 31 March 2009
LISTINGS
At 31 March 2009, 56 securities were listed on the ECSE, representing an increase of seven or 14.6% over the year. Both equities and debt securities contributed to this increment, with equities increasing from 11 to 14 and fixed income securities moving from 37 to 42. The 56 listed securities comprised 36 sovereign debt securities, 14 equities and six corporate bonds.
Listed Securities as at 31 March 2009
MARKET CAPITALISATION
At 31 March 2009, the aggregate market capitalisation of the 13 equities that traded on the ECSE stood at $3.9 billion, an increase of $635.3 million or 19.4% over the year. This marked expansion in market capitalization is mainly attributable to four securities being included for the first time. These comprised the three new equity listings in Grenada, RBGL, GESL and GPCL, which together contributed $332.9 million to the market capitalization, and CWKN, which traded for the first time in 2008/2009, contributing $215.3 million.
Market Capitalization of Listed Equities (excluding FCI)
As in the previous year, 41 new securities were listed on the markets during 2008/2009. This included 37 sovereign debt instruments, one corporate bond, and 3 equities. During the year, 33 listed sovereign debt instruments matured resulting in a net increase of four compared to 11 in the previous year. Sovereign Debt Securities At the end of the financial year there were 36 listed sovereign debt securities on the ECSE, four more than at the end of the previous year. The Government of Saint Lucia remained the largest single issuer of listed securities, with 17 issues. Corporate Securities At the end of the financial year, there were 20 corporate securities listed on the ECSE, comprising 14 equities and six bonds. During the year, three new companies listed on the market. In June, Republic Bank Grenada Limited (RBGL) became the first company in Grenada to list on the ECSE,
There was, in addition, a significant 55.6% increase in TDC’s market capitalization, driven by a stock split and a bonus issue during the year.
PRIMARY MARKET ACTIVITY
RGSM The Regional Government Securities Market (RGSM) maintained its buoyancy during. Four Governments, Antigua and Barbuda, Grenada, Saint Lucia and St Vincent and the Grenadines, continued to be active, issuing 37 instruments,
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comprising 34 Treasury bills, two bonds and a note. From these issues, the Governments raised in aggregate, $712.4 million, $52.2 million or 7.9% more than the amount raised in the previous financial year. The Government of Saint RGSM Primary Market Activity Lucia continued to be the RGSM market leader, with 36.2% of the market. The Government raised $258.0 million in 11 auctions during 2008/2009, $30.1 million or 13.2% above the amount raised in 2007/2008. The Government of St. Vincent and the Grenadines raised $221.3 million, exceeding the sum raised in the last financial year by $15.3 million or 7.4%. The Government of Antigua and Barbuda’s RGSM auctions grossed $196.1 million, $9.1 million or 4.9% more than in the previous year. In aggregate, Governments have raised approximately $3.1 billion on the RGSM since inception in November 2002. ECSM Primary market activity on the Eastern Caribbean Securities Market (ECSM) declined markedly in the financial year ended 31 March 2009. During the year there was only one issue of corporate securities, compared to three in the previous financial year. The sole issuer in this market was the Eastern Caribbean Home Mortgage Bank. SECONDARY MARKET ACTIVITY Secondary market trading more than doubled in the financial year ended 31 March 2009 due to a strong pickup in the trading of both corporate and sovereign securities. Sovereigns
Sovereign Securities Secondary Market Activity
During the year, secondary trading of government securities totaled $37.6 million compared to $20.5 million in 2007/2008, indicating a marked increase of 83.4%. The Government of Saint Lucia’s securities led the activity in 2008/2009 with trades of $22.5 million, accounting for 34.0% of the trading value recorded for the year. Corporate Securities In 2008/2009, 15 million units of corporate securities traded at a value of $28.6 million, compared to 5.4 million units at $11.2 million in 2007/ 2008. Both equity and corporate debt contributed to the over 100% increase in activity in the secondary market in the year During the year under review, 11.7 million units of corporate debt traded at par, 158.5% above the 4.5 million units in the previous finanEquities Secondary Market Activity cial year. This segment of the market led overall secondary market trading volume, accounting for 22.7% of the total volume traded in the year. Secondary market trading in equities also showed a marked increase in 2008/2009. The 3.4 million units that traded at $16.8 million represented significant growth when compared to Equities Traded the 0.9 million units valued at $6.7 million traded in 2007/ 2008. All of the listed securities, with the exception of FCI, contributed to the buoyancy in the secondary market.
EC-SHARE INDEX
At March 31 2009, the ECSE’s ECShare Index stood at 136.16, a decrease of 2.89 points or 2.1% in the index value which, at the start of the year was 139.05. The decline in the index during the year was due to decreases in the share prices, particularly in the third quarECSE EC-Share Index
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ECSE Annual Report and Financial Statements 2009
ter, when the index fell to 135.86. In the fourth quarter, prices rebounded somewhat, resulting in an encouraging rise in the index, and mitigating the year on year decline.
Interest, Redemption and Amortisation Payments
Corporates The ECCSR made payments totalling $17.3 million dollars to bondholders on behalf of two corporate issuers, ECHMB and GRENLEC. These payments, which were $3.1 million or 21.8% higher than the sum paid in the previous year, comprised interest of $12.5 million and principal repayments of $4.8 million on the GRENLEC’s amortised 10-year bond.
Principal & Interest Payments
REGISTRY ACTIVITY
The ECSE Group continued to record growth in its registry business in the 2008/2009 financial year. At the end of the year, the Eastern Caribbean Central Securities Registry Ltd (ECCSR) maintained on its register 67 securities on behalf of 18 corporate and six sovereign clients. These securities were held by 33,745 securities holders, in 23,844 accounts, representing an increase of 32.0% over the previous year. New Registrations During the year, the ECCSR attracted eight net new registrations. This comprised 37 new sovereign debt issues, offset by 33 redemptions, three new equities and two corporate bonds. The net increase was 50% below the increment recorded in the previous year, due to a decline in the number of sovereign and corporate debt issues in 2008/2009. Notwithstanding, the eight net new registrations led to a 13.1% increase in the number of securities maintained by the ECCSR. Corporate Actions Corporate actions processed on behalf of 11 corporate and six sovereign clients amounted to $735.2 million. This was 16.6% higher than the payments processed in the previous year.
Dividend Payments
Sovereigns During the year $674.1 million were paid out to holders of securities issued by the six sovereign clients of the ECCSR, exceeding the amount paid in the previous year by 16.4%. The main contributors to this were the Governments of Antigua and Barbuda, St Vincent and the Grenadines and Saint Lucia, which accounted for 32.8%, 31.1% and 26.1%, respectively. Interest The interest paid on sovereign securities during 2008/2009 amounted to $58.1 million, $14.4 million or 33.0% above the payout in the previous year. Included in the total was US$2.1 million paid on Governments’ US dollar denominated securities.
Interest Payments
During 2008/ 2009, the ECCSR on behalf of 10 client companies paid and/ or processed dividends, amounting to $61.1 million, 50.5% higher than the dividends processed in the previous financial year. The main contributors to this $20.5 million increment were three of the four new client companies, which accounted for $16.8 million, and the ECFH, which increased its dividends by $6.4 million.
Dividends
The Government of Saint Lucia, as the biggest issuer of sovereign bonds on the market, accounted for 52.8% of the aggregate interest payment. The Governments of Antigua and Barbuda and St Vincent and the Grenadines, which are both active on the market, accounted for 11.7% and 11.5% respectively.
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Principal Repayments Principal repayment on maturing and amortised sovereign debt securities amounted to $598.7 million, inclusive of US$3.7 million, in 2008/2009. This represented a $63.4 million or 11.9% increment on the total redeemed in the previous year. The GovMaturity & Amortisation Payments ernments of Antigua and Barbuda and St Vincent and the Grenad i n e s , which both had Treasury bills maturing on a monthly basis, accounted for 35.8% and 33.9%, respectively.
On the secondary market, the depository processed 15.0 million units of corporate securities in 518 transactions valued at $28.6 million, and 36.4 million units of government securities at a value of $37.6 million in 50 transactions.
INTERMEDIARY SERVICES
Intermediary Working Group The Intermediary Working Group (IWG) held several meetings during the year, all of which took the form of teleconferences. A special meeting was held in March to discuss the preparations for migration to the continuous order match trading methodology on the secondary market. ECSM Certification Workshop During 2008/2009, two ECSM Certification Workshops were held in April and November 2008. These workshops attracted a total of 31 participants, 18 in April and 13 in November, drawn from institutions across the ECCU, Barbados and Trinidad and Tobago. Intermediary Market Activity In 2008/2009, brokers’ buy side activity in both the primary and secondary markets amounted to $713.8 million, a decrease of $87.8 million or 10.1% over the year. This regression, however, was concentrated in the primary market, and masked the encouraging increase in secondary market activity.
Buying Broker Activity
DEPOSITORY ACTIVITY
ECCSD Activity
During the 2008/2009 financial year, a total of 1,110 transactions, involving 770.4 million units of securities at a value of $780.0 million, were cleared and settled by the Eastern Caribbean Central Securities Depository Ltd (ECCSD). On the primary market, the ECCSD processed 1.5 billion units of equities and 5.0 million units of corporate bonds in 86 transactions with a total value of $12.6 million. The ECCSD also processed 712.4 million units of government securities valued at $701.3 millionin 456 transactions. All of the member broker-dealers were active on the buy side of transactions in the primary market and all, but one, in the secondary market. The activity of individual brokerage firms varied significantly, with CMMB, EGI and NCB (SVG) leading the market.
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ECSE Annual Report and Financial Statements 2009
Selling Broker Activity
Administration Division, who has been serving on the JA Advisory Committee for some time, assumed the Chairmanship in August. Support of the JA Trade Fair and the Awards ceremony was also maintained. 7th Anniversary/Financial Literacy Month In October the ECSE reached its 7th Anniversary, and celebrated the occasion with activities that coincided with the Financial Literacy Month celebratory events. Financial Literacy Month activities were undertaken jointly with the ECCB and other financial institutions to promote financial literacy to all. The General Manager and staff of the ECSE took the opportunity to reach out to community groups and students in churches, at schools, at the public library and through the publication of articles in the press and on the ECSE’s website, and took part in a radio interview. As in previous years, members of the ECSE’s intermediary network also participated in similar activities in their respective islands to emphasize the importance of financial literacy. Other
Aggregate broker sales, which amounted to $66.1 million, more than doubled in 2008/2009, reflecting the significant increase in secondary market activity. Similar to the buy side, all of the intermediaries, with the exception of the ACB, participated in the offer side of transactions during the year, with marked variation in individual activity.
MARKETING, EDUCATION AND AWARENESS
In 2008/2009, the ECSE continued to promote financial literacy in general and awareness of the markets of the ECSE both regionally and internationally. This was undertaken through media reports, radio and television programmes, and participation in other fora. Media Reports Reports on trading activity, primary market auctions, current market prices, press releases, and financial tips are issued to the media throughout the Eastern Caribbean on a daily basis. This information is also posted on the ECSE’s website (www.ecseonline.com), as are other market developments, such as information on dividend payments, schedules of shareholder meetings, material and other disclosures and filings by corporate and sovereign issuers. TV Programme The live one-hour TV Programme, “Investing in Your Future”, continued in 2008/2009. Three editions were produced during the year and broadcast live in St Kitts. These were recorded, edited and distributed to media houses, financial institutions and utility companies across the region for re-broadcast. Junior Achievement Programme The ECSE continued to support the St Kitts Junior Achievement (JA) Programme during the year. The Manager,
St Kitts and Nevis Independence Celebrations
On the occasion of the 25th Anniversary of Independence of the Federation of St Kitts and Nevis, the ECSE provided promotional materials for display at a one-day exposition of products and services held by the Embassy of St Kitts and Nevis in Washington, DC, USA and contributed to the commemorative publication.
Community Outreach
The ECSE continued to make presentations to specific groups and other interested parties throughout the year, and maintained a focus on the youth in 2008/2009. Presentations were made to students of high schools in St Kitts and to the YES programme that prepares school leavers for work life. The ECSE also supported the activities of the Special Olympic Committee and the Rotary Clubs’ Advancement of Children’s Foundation.
CORPORATE GOVERNANCE
During the year, the ECSE continued to be a strong proponent of good corporate governance standards, and a leading provider of director training throughout the Caribbean. DEAP The ECSE continued its exclusive partnership with the Institute of Chartered Secretaries and Administrators/ Chartered Secretaries Canada (ICSA/CSC) to deliver the
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Directors’ Education and Accreditation Programme (DEAP) in the Caribbean. During the year, three DEAP sessions were held, which attracted 82 participants from the private and public sectors across the Caribbean. At 31 March 2009, 184 persons had completed the DEAP training, most of whom have been awarded the designation of Accredited Director (Acc.Dir.), by the ICSA/CSC. CPDs The ECSE has collaborated in the development of a series of Continuing Professional Development (CPD) seminars to enable accredited directors to maintain their currency in the field and to meet the ICSA/CSC’s continuing professional development requirements. The current series, which focuses on Improving Board Effectiveness, comprises of three short half-day seminars on Meetings Management, Performance Evaluation and Audit and Board Audit Committees The seminars, which complement the DEAP, attracted not only accredited directors, but other corporate officers interested in the subject areas. Three CPD sessions were held during the year, which attracted 62 participants from across the region. CAACM During the year, the ECSE continues its involvement in, and support of, the Caribbean Association of Audit Committee Members (CAACM). In June, two members of the Board Audit Committee attended the CAACM Conference and Annual Meeting and Training Seminar held in St Lucia. Other In March, the General Manager made a presentation on “Improving Standards of Corporate Governance in the Caribbean: Recent Regional Initiatives” at the Corporate Governance Training for Private Sector and Supervisors in Grenada, which was sponsored by the Caribbean Regional Technical Assistance Center.
Appointments During the year, two positions in the Administrative Division were filled for the first time. In April, Ms Charlene Corbette of Dominica was appointed to the position of Administrative Clerk, and in May, Mr Mahendra Singh of Grenada took up the position of Research and Marketing Officer. In December, Ms Sherizan Mills of St Kitts and Nevis was appointed to the position of Operations Officer, Market Operations Division. In March, Mr Tarlie Francis of Grenada took up the position of Senior Manager, Market Operations Division. Promotions In August, Ms Kerina Browne, Operations Assistant in the Registry Services Unit of the Market Operations Division was promoted to the position of Operations Officer I within the same unit. Ms Browne had recently completed her BSc degree in Management Studies from the University of the West Indies and was awarded upper second class honours. Transfers Consequent on Mr Laws’ resignation, Mr Singh was transferred to the position of Accounting Officer. The ECSE welcomes the joining staff and extends best wishes to the departing staff in their new endeavours. The ECSE also places on record its warmest congratulations to Ms Kerina Browne on her educational achievement.
ADMINISTRATION
Personnel Changes In 2008/2009, there were a number of staff movements, including two resignations, four new appointments, one promotion and one transfer. Resignations In September, Mr Losana Laws, Accounting Officer, resigned from the Group to pursue graduate studies in the USA, after three years of service. In December, Ms Johanna Marsham, Operations Officer, Market Operations Division resigned to pursue a career change, after more than five years of service.
Staff of the ECSE
Training and Staff Development The ECSE continued its training and other staff development activities to enhance the competency and skill sets of staff members and to increase their knowledge of the securities industry. In 2008/2009, several staff members participated in regional and international training courses and conferences in the areas of regulation, capital market development and Portfolio Management, including the following:
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ECSE Annual Report and Financial Statements 2009
Institution US Securities and Exchange Commission World Bank
Program International Institute on Securities Market Development Capital Markets Workshop
Association of Central 8th Annual Seminar Securities Depositories of the Americas General Assembly SWIFT SIBOS 2008 ECIB/Gravitas/VFH Inc Global Portfolio Management Caribbean Group of Securities Regulators Ministry of International Trade, Industry & Commerce, St. Kitts & Nevis 5th Annual Conference CARIFORUM-EC Economic Partnership Agreement (EPA) Investment & Services, Sensitization seminar
Membership and Trading Income grew by $14,945 or 11.6%; and Interest Income grew by $8,912 or 3.16%. However, Primary Market Income declined by a significant $150,187 or 39.3%.
ECSE Group Income
Expenses The ECSE’s operational expenses amounted to $2.1 million in 2008/2009. The major expenditure categories were Compensation Costs of $1.14 million, which accounted for 54.5% of total expenditure; Administrative Expenses totalling $0.55 million, representing 26.5% of overall expenses; Depreciation and Amortisation of $0.17 million or 8.4% of aggregate expenses; and Software Maintenance of $0.15 million or 7.4% of total expenses.
ECSE Group Expenditure
FINANCIAL PERFORMANCE
The ECSE Group recorded a profit of $0.23 million for the year ended 31 March 2009, a significant improvement on the net profits declared in the last financial year. Revenue grew by $0.3 million or 13.7% to $2.3 million, while the expansion in operational expenses, which totaled $2.1 million, was contained at $0.01 million or 2.8%. Revenue During 2008/2009 the ECSE Group’s revenues amounted to $2.3 million. The main contributors to income continued to be Listing and Registry Income which totalled $1.07 million and contributed 46.1% to total income; Other Income of $0.58 million, representing 25.1% of total revenue; Interest Income of $0.29 million or 12.6% of the total; and Primary Market Income of $0.23 million, or 10.0% of overall revenues. Most of these major revenue sources also contributed to the $279,987 or 13.7% increment in total income realised during the year. Listing and Registry Income expanded by $287,697 or 36.9%; Other Income grew by $117,621 or 25.4%;
Income Sources for 2008-2009
During the year the growth in expenditure was effectively contained to $56,926 or 2.8% over the previous year. The main contributors to this increment were Compensation costs which increased by 24.3%, as vacant positions were filled during the year, and cost of living increases were awarded; and Administrative Expenses which increased by 15.9%. Depreciation and Amortisation expenses decreased by 56.7% mainly as the result of the full amortisation of a fixed asset item.
ECSE Group Expenditure
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DIRECTORS’ REPORT
The Directors are pleased to submit their Report for the Financial Year ended 31 March 2009. Principal Activities The ECSE Group’s principal activities consist of facilitating the primary issuance and secondary trading of corporate and sovereign securities, facilitating the clearance and settlement of issues and trades, maintaining securities holders’ records, and providing custodial, registration, transfer agency and paying agency services in respect of listed and non-listed securities. There were no significant changes in the nature of the Group’s activities during the year. The ECSE and its subsidiaries are licensed by the Eastern Caribbean Securities Regulatory Commission to carry out these activities. Directors In accordance with the Articles of Association, all of the Directors retire by rotation at the Annual General Meeting. The retiring Directors are eligible for nomination for re-election by their respective shareholder classes. Directors’ Interests As at 31 March 2009, no director held a beneficial or other interest in the issued capital of the Company. Financial Results The Company recorded a net profit of $227,352 on a consolidated basis for the year ended 31 March 2009. Share Capital At 31 March 2009, the following shareholders held 5% or more of the issued capital of the company: SHAREHOLDER Eastern Caribbean Central Bank National Insurance Services, St Vincent and the Grenadines Antigua Commercial Bank Ltd National Commercial Bank (SVG) Ltd HOLDING 30.85% 15.42% 7.97% 5.14%
Auditors The auditors, Pannell Kerr Forster, Chartered Accountants, retire at the Annual General Meeting of the Company. Messrs Pannell Kerr Forster, being eligible, offer themselves for re-appointment. The Directors, being satisfied with their performance, propose the reappointment of Pannell Kerr Forster as Auditors for the financial year ending 31 March 2009.
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ECSE Annual Report and Financial Statements 2009
AUDITORS’ REPORT TO THE SHAREHOLDERS EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED
We have audited the accompanying financial statements of Eastern Caribbean Securities Exchange Limited and its subsidiaries (‘the Group’), which comprise the consolidated balance sheet as at 31 March 2009, and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity ‘s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group as of 31 March 2009, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
PANNELL KERR FORSTER Chartered Accountants: BASSETERRE - ST KITTS 27 May 2009
ECSE Annual Report and Financial Statements 2009
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EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2009 (Expressed in Eastern Caribbean Dollars)
ASSETS Non-Current Assets Property, Plant and Equipment Intangible Assets Current Assets Cash and Short Term Funds Accounts Receivable Held-to-maturity Investments 5 6 7 3 4 140,953 133,393 274,346 6,000,368 261,115 174,305 6,435,788 Total Assets EQUITY AND LIABILITIES Capital and Reserves Share Capital (Page 20) Accumulated Deficit (Page 20) 8 9,725,810 (7,719,223) 2,006,587 Non-Current Liabilities Provisions Due to Eastern Caribbean Central Bank 9 10 27,230 2,874,845 2,902,075 Current Liabilities Accounts Payable and Accruals Total Liabilities Total Equity and Liabilities The attached Notes form an integral part of these Consolidated Financial Statements. Approved by the Board of Directors on 24 June 2009. 11 1,801,472 4,703,547
$6,710,134 $6,710,134
Notes
2009
2008
185,733 230,775 416,508 5,176,847 135,764 167,198 5,479,809
$5,896,317
9,725,810 (7,946,575) 1,779,235
4,536 2,874,845 2,879,381
1,237,701 4,117,082
$5,896,317
_______________________________________ Sir K Dwight Venner, Chairman
____________________________________ Mr D Michael Morton, Director
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ECSE Annual Report and Financial Statements 2009
EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 31 MARCH 2009 (Expressed in Eastern Caribbean Dollars)
2009 144,307 1,067,703 231,750 290,757 580,173 2,314,690 GENERAL AND ADMINISTRATIVE EXPENSES Compensation Costs Staff Training Depreciation and Amortisation (Page 21) Legal and Professional Costs Promotional Activities Software Maintenance Administrative Expenses 1,136,712 16,387 174,235 12,996 39,677 154,768 552,563 2,087,338 Profit for the Year (Page 20) Earnings per share (Basic and Diluted) (Note 12)
$227,352 $0.23
INCOME Membership and Trading Income Listing and Registry Income Primary Market Income Interest Income Other Income
2008 129,362 780,006 381,937 281,845 462,552 2,035,702
914,201 14,931 402,786 12,995 54,534 154,537 476,428 2,030,412
$5,290 $0.01
The attached Notes form an integral part of these Consolidated Financial Statements.
ECSE Annual Report and Financial Statements 2009
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EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2009 (Expressed in Eastern Caribbean Dollars)
Share Capital $ Balance at 1 April 2007 (Page 18) Profit for the Year (Page 19) Balance at 31 March 2008 (Page 18) Profit for the Year (Page 19) Balance at 31 March 2009 (Page 18) 9,725,810 9,725,810 $9,725,810
Accumulated Deficit $ (7,951,865) 5,290 (7,946,575) 227,352
$(7,719,223)
Total $ 1,773,945 5,290 1,779,235 227,352
$2,006,587
The attached Notes form an integral part of these Consolidated Financial Statements.
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ECSE Annual Report and Financial Statements 2009
EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2009 (Expressed in Eastern Caribbean Dollars)
2009 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the Year (Page 19) Adjustments to reconcile loss to net cash from operating activities Depreciation and Amortisation (Page 19) Accounts Receivable Accounts Payable Provisions Adjustment for Interest NET CASH INFLOW FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Interest Received Purchase of Intangible Assets Investment in Securities Proceeds from Sale of Securities Purchase of Property, Plant and Equipment 294,921 (2,767) (7,107) (29,306) 255,741 CASH INCREASE FOR THE YEAR CASH AND SHORT TERM FUNDS AT THE BEGINNING OF THE YEAR CASH AND SHORT TERM FUNDS AT THE END OF THE YEAR (Page 18) COMPRISED AS FOLLOWS: Cash in Hand (Page 25) Cash at Bank (Page 25) Short term Deposits (Page 25) 12,747 2,187,621 3,800,000
$6,000,368
The attached Notes form an integral part of these Consolidated Financial Statements.
2008
227,352
5,290
174,235 (129,515) 563,771 22,694 (290,757) 567,780
402,786 (29,561) 365,243 30,508) (281,845) 431,405
278,657 (142,924) (167,198) (31,465) 399,940 4,776,907
$5,176,847
823,521 5,176,847
$6,000,368
13,763 1,363,084 3,800,000
$5,176,847
ECSE Annual Report and Financial Statements 2009
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EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009 (Expressed in Eastern Caribbean Dollars)
1 INCORPORATION AND PRINCIPAL ACTIVITY The Eastern Caribbean Securities Exchange Limited was incorporated as a public limited company on 8 May 2001 under the provisions of the Companies Act (No 22 of 1996) of the laws of Saint Kitts and Nevis. The company carries on business as a regional securities exchange and facilitates the buying and selling of financial products, including corporate and government securities for the member territories of the Eastern Caribbean Currency Union. The registered office is situated at Bird Rock, Basseterre, St Kitts. 2 SIGNIFICANT ACCOUNTING POLICIES a) Basis of Accounting: The consolidated financial statements are prepared on the historical cost basis and in accordance with International Financial Reporting Standards (IFRS). The preparation of Financial Statements in conformity with IFRS may require the use of certain critical accounting estimates and the use of management’s judgement in the process of applying the Group’s accounting policies. b) Basis of Consolidation: These accounts consolidate the financial statements of the Company and its two wholly-owned subsidiary companies which are made up to 31 March 2009. The subsidiary companies are Eastern Caribbean Central Securities Depository Limited and Eastern Caribbean Central Securities Registry Limited. c) Revenue Recognition: The Group principally derives its revenue from the rendering of services and interest income. Revenue is recognised when the amount of revenue can be measured reliably and is probable that the economic benefits associated with the transaction will flow to the Group. Interest income is recognised using the effective interest rate method. d) Taxation: The government of St Kitts and Nevis has granted the Group waivers of Corporation and other taxes for a period of ten years, which commenced 19 October 2001 the date the Group began its trading activities. e) Property, Plant and Equipment: Property, Plant and Equipment are stated at historical cost. Depreciation is provided on the straight line basis using rates estimated to write off the cost of the assets over their expected useful lives as follows: Furniture and Fixtures 25% Computer Equipment – Hardware 20% Motor Vehicles 20%
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ECSE Annual Report and Financial Statements 2009
EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009 CONT’D. (Expressed in Eastern Caribbean Dollars)
2 SIGNIFICANT ACCOUNTING POLICIES (Cont’d) f) Intangible Assets: Intangible assets are identifiable non-monetary assets without physical substance. Computer software meets this description and has been removed from Property, Plant and Equipment in order to comply with International Financial Reporting Standards (No. 38). Acquired computer software are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives at rates ranging from 15% to 20% per annum. g) Foreign Currencies All amounts are expressed in Eastern Caribbean Dollars. Foreign currency transactions are accounted for at the exchange rates prevailing at the dates of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Such balances are translated at year-end exchange rates. h) Investments Investments are recognised on a trade-date basis and are initially recorded at cost plus any related transaction costs. At subsequent reporting dates, held-to-maturity debt securities being what the Group has the expressed intention and ability to hold to maturity are measured at amortised cost less any impairment loss recognised. i) Accounts Payable and Accruals: Liabilities are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group. j) Provisions: Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
ECSE Annual Report and Financial Statements 2009
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EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009 CONT’D. (Expressed in Eastern Caribbean Dollars)
3 PROPERTY, PLANT AND EQUIPMENT Furniture and Fixtures Cost at Beginning of Year Additions during the Year Cost at End of Year Accumulated Depreciation – Beginning of Year Charge for the Year Accumulated Depreciation – End of Year Net Book Value Computer Equipment Cost at Beginning of Year Additions during the Year Cost at End of Year Accumulated Depreciation – Beginning of Year Charge for the Year Accumulated Depreciation – End of Year Net Book Value Motor Vehicles Cost Accumulated Depreciation – Beginning of Year Charge for the Year Accumulated Depreciation – End of Year Net Book Value TOTAL NET BOOK VALUE (Page 18) 122,000 73,800 24,400 98,200 23,800
$140,953
2009
2008
80,231 4,526 84,757 62,392 7,370 69,762 14,995
80,231 80,231 54,543 7,849 62,392 17,839
375,210 24,780 399,990 255,516 42,316 297,832 102,158
375,210 375,210 215,938 39,578 255,516 119,694
122,000 49,392 24,408 73,800 48,200
$185,733
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ECSE Annual Report and Financial Statements 2009
EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009 CONT’D. (Expressed in Eastern Caribbean Dollars)
4 INTANGIBLE ASSETS Computer Software Cost at Beginning of Year Additions during the Year Cost at End of Year Accumulated Amortistion – Beginning of Year Charge for the Year Accumulated Amortisation – End of the Year Net Book Value (Page 18) 5 CASH AND SHORT TERM FUNDS Certificates of Deposit Cash with Commercial Banks Cash on Hand TOTAL (Page 18) 2,366,048 2,767 2,368,815 2,135,273 100,149 2,235,422 $133,393 2009 3,800,000 2,187,621 12,747
$6,000,368
2009
2008
2,223,124 142,924 2,366,048 1,804,322 330,951 2,135,273 $230,775 2008 3,800,000 1,363,084 13,763
$5,176,847
The certificates of deposits are held with various banks in the Organisation of Eastern Caribbean States and earn interest at rates varying from 5.75% to 6.5% per annum (2008 = Same). 6 ACCOUNTS RECEIVABLE Interest Receivable Prepayments Sundry Debtors TOTAL (Page 18) 2009 23,613 98,630 138,872
$261,115
2008 27,777 63,876 44,111
$135,764
7
INVESTMENTS
Held-to-maturity Investments
2009
$174,305
2008
$167,198
The above investment represents Government of St Lucia fixed rate bonds purchased from Caribbean Money Market Brokers Limited in a sale and repurchase agreement with repurchase set at 17 April 2009. The underlying interest rate is 5% (2008 = 4.25%) and the Company intends to hold this investment to the date of maturity.
ECSE Annual Report and Financial Statements 2009
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EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009 CONT’D. (Expressed in Eastern Caribbean Dollars)
8 SHARE CAPITAL Authorised: 5,000,000 Shares of $10 each Subscribed Capital: No of Shares issued at 1 April 2008 300,000 287,500 370,081 15,000
972,581 $50,000,000
Class A B C D
Shares Issued during the Year -
No of Shares issued at 31 March 2009 300,000 287,500 370,081 15,000
972,581
Nominal Value 2009 3,000,000 2,875,000 3,700,810 150,000
$9,725,810
2008
3,000,000 2,875,000 3,700,810 150,000
$9,725,810
(Page 18)
The classes are divided as follows: Class A Class B Class C Class D Class Rights a) b) Other than the Eastern Caribbean Central Bank (Class A) no single shareholder shall hold, whether beneficially or otherwise, more than 20% of the issued share capital of the company. i Classes holding 50% or more of the issued capital are allowed to nominate 3 directors. ii Classes holding between 20% and 49% of the issued capital are allowed to nominate 2 directors. iii Classes holding less than 20% of the issued capital are allowed to nominate 1 director. Eastern Caribbean Central Bank; Social Security Schemes, National Insurance Boards, Government owned or controlled institutions other than Government owned or controlled financial intermediaries; Financial institutions; Persons or institutions not covered in classes A to C.
9
PROVISIONS
Gratuities Provision has been made for gratuities payable to employees on completion of their contract of service to the Group. The amount of $27,230 (2008 = $4,536) provided to date has been included in provisions.
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ECSE Annual Report and Financial Statements 2009
EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009 CONT’D. (Expressed in Eastern Caribbean Dollars)
10 DUE TO EASTERN CARIBBEAN CENTRAL BANK
The amount of $2,874,845 (2008 = $2,874,845) represents advances made by the Eastern Caribbean Central Bank on behalf of the Company and its wholly-owned subsidiary companies to finance establishment and compensation costs of the Group. Additional Financial Support Subsequent to 31 March 2009 the Eastern Caribbean Central Bank has given the following undertaking and guarantee in respect of the Eastern Caribbean Securities Exchange Limited and its wholly-owned subsidiary companies: An undertaking to postpone all claims in respect of present and future funds advanced to the Eastern Caribbean Securities Exchange Limited and its wholly-owned subsidiary companies by the Eastern Caribbean Central Bank up to year ending 31 March 2010 (balance at 31 March 2009, EC$2,874,845); Guarantee cover in the event of a budgeted shortfall in respect of Eastern Caribbean Securities Exchange Limited and its wholly-owned subsidiary companies for the fiscal year ending 31 March 2010, but not to exceed EC$2,000,000. The above undertaking and guarantee will be reviewed at 31 March 2010 and are irrevocable before this date. 11 ACCOUNTS PAYABLE AND ACCRUALS Unclaimed company dividends payable Payment on Account Holiday Pay Provisions Accruals TOTAL (Page 18) 2009 1,179,020 449,506 120,230 52,716
$1,801,472
2008 670,594 346,131 84,984 135,992
$1,237,701
12
EARNINGS PER SHARE
The calculation of basic earnings per share is based on the following data: Earnings Net Profit for the Year (Page 19) Number of Shares Weighted average number of Ordinary Shares Earnings Per Share
972,581 $0.23 972,581 $0.01
2009
$227,352
2008
$5,290
ECSE Annual Report and Financial Statements 2009
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EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009 CONT’D. (Expressed in Eastern Caribbean Dollars)
13 RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. A number of transactions were entered into with related parties in the normal course of business. These include loans and other transactions (see note 10). Key Management Compensation The salaries, fees and benefits paid to key management personnel of the Group during the year amounted to $432,990 (2008 = $358,428). The following is an analysis of these amounts: 2009 Salaries and other short-term employee benefits Post-employment benefits Total Key Management Compensation Eastern Caribbean Central Bank During the year under review, the Eastern Caribbean Central Bank provided certain professional and other services at no cost to the Eastern Caribbean Securities Exchange Limited and its subsidiary companies. 365,088 67,902
$432,990
2008 303,869 54,559
$358,428
14
CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
At the end of the year, there were no Contingent Liabilities or Capital Commitments (2008 = Same).
15
FINANCIAL INSTRUMENTS
Financial instruments consist of cash at bank and on hand, short term investments, accounts receivable and accounts payable. The Company and its subsidiaries do not engage in any significant transactions which ar speculative in nature. Interest rate risk exposure: The Group does not have any significant exposure to interest rate risk.
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ECSE Annual Report and Financial Statements 2009
EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009 CONT’D. (Expressed in Eastern Caribbean Dollars)
15 FINANCIAL INSTRUMENTS (Cont’d)
Credit risk exposure: (Cont’d) Concentration of credit risk exists if a number of clients are engaged in similar activities or are located in the same industry sector or have similar economic characteristics such that their ability to meet contractual obligations would be similarly affected in economic, political or other conditions. Concentration of credit risk indicates the relative sensitivity of the Group’s performance to developments affecting a particular industry or geographical location. Management does not believe that the concentration is unusual or provides undue risks. Fair Value: Fair value amounts represent the approximate values at which financial instruments could be exchanged in current transactions between willing parties. However, many of the financial instruments lack an available trading market and therefore, it is not possible to determine independently the estimated fair values. The fair values of financial instruments are considered to approximate their book values. All non-financial instruments are excluded from fair value disclosure and accordingly, the total fair value amounts cannot be aggregated to determine the underlying value of the Group. Liquidity Risk: In order to manage liquidity risks, management seeks to maintain sufficient levels of cash and cash equivalents to meet reasonable expectations of its short term obligations. The table below analyses the group’s financial assets into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date: Due within 1 Year Over 5 Years Total
Financial Assets Year ended 31 March 2009 Cash and Short Term Funds Accounts Receivable Held to Maturity Investments
6,000,368 261,115 174,305
$6,435,788
-
6,000,368 261,115 174,305
$6,435,788
Year ended 31 March 2008 Cash and Short Term Funds Accounts Receivable Held to Maturity Investments 5,176,847 135,764 167,198
$5,479,809
-
5,176,847 135,764 167,198
$5,479,809
ECSE Annual Report and Financial Statements 2009
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EASTERN CARIBBEAN SECURITIES EXCHANGE LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009 CONT’D. (Expressed in Eastern Caribbean Dollars)
15 FINANCIAL INSTRUMENTS (Cont’d)
Liquidity Risk: (Cont’d) The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are contractual undiscounted cash flows. Due within 1 Year Over 5 Years
Financial Liabilities Year ended 31 March 2009 Due to Eastern Caribbean Central Bank Provisions Accounts Payable and Accruals
Total
1,801,472
$1,801,472
2,874,845 27,230 $2,902,075
2,874,845 27,230 1,801,472
$4,703,547
Year ended 31 March 2008 Due to Eastern Caribbean Central Bank Provisions Accounts Payable and Accruals 1,237,701
$1,237,701
2,874,845 4,536 $2,879,381
2,874,845 4,536 1,237,701
$4,117,082
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RECLASSIFICATIONS
Certain items in the Income Statement have been reclassified during the current financial year to improve the financial statements presentation. The previous year’s figures have been reclassified to be consistent with this year’s presentation. The reclassification has no impact on the results reported for the current or prior year.
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ECSE Annual Report and Financial Statements 2009
LISTED SECURITIES AT 31 MARCH 2009
ECSE Annual Report and Financial Statements 2009
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ECSE Annual Report and Financial Statements 2009
MEMBER INTERMEDIARIES AT 31 MARCH 2009
ECSE Annual Report and Financial Statements 2009
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NOTES
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ECSE Annual Report and Financial Statements 2009
P.O. Box 94, Bird Rock Basseterre, St. Kitts Tel: (869) 466-7192 Fax: (869) 465-3798 Email: info@ecseonline.com Website: www.ecseonlilne.com