OF THE 55TH ANNUAL

GENERAL MEETING

Contents

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2

NOTICE OF ANNUAL GENERAL MEETING

Agenda

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thNotice is hereby given that the 55 Annual General Meeting of the Correctional Services Co-operative Credit Union Limited will be held at the Girl Guides Association of Jamaica, 2 Waterloo Road, Kingston 10, on Saturday July 6 2013, commencing at 6:00p.m.

Registration will commences at 5:00p.m.

Signed: Joycelyn Spencer

Secretary

1. Ascertaining a quorum

2. Call to order and prayer

3. Welcome and address

4. Apologies and Introduction

5. Obituaryth6. Minutes of the 54 Annual General Meeting

a. Reading and amendments

b. Confirmation

c. Matters arising

7. REPORTS

a. Board of Directors

b. Treasurer and Auditor

c. Credit Committee

d. Supervisory Committee

8. Distribution of Net Surplus

9. Fixing of Maximum Liability

10. Resolutions

11. Savings Launch

12. Nomination Report

13. Any other business

14. Presentation of gifts and prizes

15. Closing remarks

16. Adjournment

MINUTES OF THE CORRECTIONAL SERVICES CO-THOPERATIVE CREDIT UNION LIMITED 54 ANNUAL

GENERAL MEETING

The 54th Annual General Meeting of the near banks and other societies such as building Correctional Services Credit Union Limited was societies in order to remain viable. He stated that held at the Jamaica College Auditorium, 189 Old the credit union was still struggling to survive, but Hope Road, Kingston 6, on Saturday June 2, 2012 is still showing resilience, having been through commencing at 6:15 p.m. difficult situations like this before and has

managed to pull through. Mr. Carlton Campbell, Secretary of the Society confirmed that there was a quorum and read the The credit union depends on the interest returns to Notice for the meeting. Mr. Gilbert Smith led the keep afloat and to grow, and one of the greatest meeting in prayer which was followed by the problems within the credit union is low reading of the Prayer of Saint Francis. performance of the loan portfolio, the Chairman

said. The low loan performance has resulted from several members consolidating their loans, starting to reduce shares to pay off debts within the credit union and outside of the credit union because they are experiencing economic The Chairman and President of the Credit Union, hardship.Mr. Michael Anderson, extended a warm

welcome to all who were present. Special welcome was extended to Miss Vera Lindo, Mr. Duston Morgan from the Jamaica Cooperative

The pending BOJ regulations have distracted Credit Union League, Mr. Reuben Kelly, credit unions for the entire year under review. Superintendent of the Fort Augustus Adult The chairman stated that the Management team Correctional Centre, Mr. Ken Hibbert, member has updated itself about the regulations through from New York, Miss Yvonne Bernard, advisory, meetings, advocacy groups and Stenotypist; Mr. Gilbert Thompson, Auditor from activities from the Jamaica Credit Union League Gilbert Thompson & Associates, Miss Daphnae to prepare for the BOJ regulations when it comes Johnson from the Special Constable Credit on stream.Union, Mr. Adrian Thompson from the

Department of Cooperatives, Mr. Oswald Parks from CUNA Mutual, Mr. Bruce Small, Deputy Commissioner of Corrections Ms. Joyce Stone, Mr. Cyril Knight and Mr. Gilbert Smith, life The Board's Retreat of 2011 put forward some members, the Board of Directors, Supervisory new initiatives such as REAP; Real Economic Committee and Credit Committee members. Action Plan. If it is successful it will almost run

concurrent to a pension plan. It is a strategy to promote long term products for the members, especially members who will need to supplement their salaries and earnings to complement their The Chairman said that the credit union had pension in the future, he informed.managed to survive during seasons of financial

difficulties. The financial landscape at this time is very challenging, he said, with the Debt Exchange reducing interest rates and the economy still in a state of recession. He informed the meeting that There has been a considerable reduction of the the credit union has to be competing with banks, wait time in the office because of the

CHAIRMAN'S WELCOME AND OPENING REMARKS

BOJ REGULATIONS

RETREAT

PERIOD OF ECONOMIC DIFFICULTIES

ACCESS CARDS

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implementation of the access cards. The card making a total of three loans from which the staff system is working, he said. He also congratulated can now benefit.the people who used the access cards thus enabling this undertaking to be successful.

Introduction of a loan programme for new The Chairman said that the credit union has members who have left training school and need grown through the last batch of graduates from money for settling in, for example, to buy the Correctional Services Staff College, so much furniture such as bed, stove and dressers or assist that the credit union, at the Jamaica Credit Union with purchasing a car to aid in reaching their place League's convention, won the award for the of work.second highest penetration for FIP, second behind the Jamaica Police Cooperative Credit Union for new membership.

Members want lower interest rates, but the The Chairman said that the Board was seriously operational costs, for example, utilities and considering expanding the bond. The Credit telecommunication bills are static and when there Union depends solely on the Department of is any movement it is upward and that has been a Correctional Services for new recruitment and challenge to the credit union, so the credit union members' next of kin and because of the economic needs to find new ways to reduce operational conditions not many next of kin are joining the costs.credit union, so the membership is not as robust as it should. The credit union is contemplating new Sudden reduction of interest rates make sudden ways to attract new members, and coming next reduction in interest earnings, so that has to be year the proposal is to open the bond to a next approached cautiously, but he said, if the exciting field of persons. This will be done in the economy improves considerably and the credit form of a resolution put to the general union can find a way to reduce interest rate to the membership and the hope is that they will approve lowest in the credit union circle, then it will be this venture so that the field of membership can be done for the members. widen and enable the credit union to earn more.

The Chairman stated that the credit union was thinking of restructuring the Loans Department Awarding of tertiary scholarships and the hosting and related services with such services as loan of the Credit Union Sports Day are budgeted for.applications on line.

The capacity of the Supervisory Committee has

The Chairman informed the meeting that the been strengthened by the hiring of a professional credit union is looking at possible benefits to the Internal Auditor who has been working with the staff that may come from increased membership. Supervisory Committee to strengthen the internal There is the Employee of the Year Programme, so operation of the Credit Union. They have been that staff can be better recognized. There is also doing a good job and many recommendations the introduction of a new tertiary programme, have been made.

START-UP PROGRAMME FOR NEW MEMBERS

CREDIT UNION'S GROWTH

REDUCTION OF INTEREST RATE TO BENEFIT MEMBERS AND TO MAKE RATE COMPETITIVE

EXPANSION OF BOND

TERTIARY SCHOLARSHIP FUND LOANS DEPARTMENT AND THE HOSTING OF THE CREDIT

UNION SPORTS DAY

THE SUPERVISORY COMMITTEESTAFF BENEFITS

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In concluding, the Chairman thanked the Board of Directors and all the persons including the volunteers, who have made the year 2011 a successful one.

Mr. Leslie Campbell said that he had seen in the Special appreciation for her contribution was paid Annual Report where the credit union was still to the General Manager, Mrs. Carlene Foreman- awaiting a written report for over a year from the Johnson, who he said had informed the credit court's office regarding the resolution of the union of her intended departure from the credit suspected case of fraud. He enquired if the credit union. union had requested the report. The Chairman

replied that the case was finalized in the court and the final action report was requested, but it was not received as yet. Mr. Campbell informed the

Apologies were tendered on behalf of Mr. David Chairman that if the court refused to give the Spencer, Treasurer; Mr. Louis Ferrigon, report, then the Chairman should bring the matter Chairman of the Credit Committee, Mr. Berris to the Regulator of the Court.Johnson Liaison Officer from Tower Street Adult Correctional Centre and Mr. Guyland Barrett, Liaison Officer from Horizon Adult Remand Centre. Mr. Gilbert Smith informed the meeting that

payments to the credit union via on-line services ndwas discussed at the 52 Annual General Meeting

and the Chairman had promised to consider the A minute's silence was observed for those matter. He enquired if it was possible at this time members who had passed during the year.to make payments on-line. The Chairman said that it is something that they were seriously considering but at this time they have to be cautious and await new findings as telebanking in the credit union is a very delicate matter A motion was moved by Mr. Gilbert Smith and especially now where cases of fraud and other seconded by Mr. Ken Hibbert that the Minutes of

rd scams have developed, so the credit union has to the 53 Annual General Meeting be accepted as move cautiously in that respect. He also said that read.it is a very expensive venture for which they were very severely challenged at this time. Members were asked to observe the corrections

on the Errata Sheet of the Annual Report.The motion for the adoption of the Minutes was moved by Mr. Norman Sanford and seconded by A correction was pointed out at the meeting that it Miss Dorothy Davis.should be the adoption of the Supervisory

Committee Report and not the adoption of the Supervisory Report.

The confirmation of the Minutes was moved by Mr. Norman Sanford and seconded by Mr. Leslie Campbell.

A motion was moved by Mr. Gilbert Smith and seconded by Mr. Kenneth Hibbert that the Board of Directors' Report be taken as read.

MATTERS ARISING FROM THE MINUTES SUSPECTED CASE OF FRAUD

APOLOGIES FOR ABSENCE

ON-LINE SERVICE

OBITUARY

RDMINUTES OF THE 53 ANNUAL GENERAL MEETING

STATUTORY REPORTS

REPORT OF THE BOARD OF DIRECTORS

6

The motion was carried. extended to any emergency at all, for example, a house burn down.

Mr. Gilbert Smith requested that the amount of money that is in the fund be placed in a special Mr. Leslie Campbell informed the meeting that instrument so that it can earn additional income. the membership of the credit union grew by The Chairman said that it is a good suggestion, but 1.19%, but at the same time the credit union because it is an emergency fund and it might be recorded a loss during the period under review. He needed at any time it cannot be placed into a complained that although the credit union had special instrument so that it can earn some recorded a loss the Annual Planning Retreat was additional income. held at Riu Hotel when the retreat could have been

held at a less expensive place for example, Curphy Place.

The Chairman responded that the credit union did Mr. Cyril Knight asked if it was only two not realize a loss. It was a reduction in savings and members' children who received scholarships. not a reduction in net income. He further stated, The Chairman said that two persons received that the increase in membership does not reflect scholarships of Fifty Thousand Dollars each from immediate earnings because the credit union the Ethan C. King Scholarship Fund.generates income mostly from loans that have been distributed and the interest paid and it takes quite a time for new members to take loans.

Mr. Aries asked that members of the credit union He explained that the annual retreat is budgeted who have passed away and have given yeoman for, so you cannot spontaneously respond when service to the credit union should be recognized the books are showing a loss to say that the retreat by the credit union by placing their names in the cannot take place. Furthermore, he said, the venue Annual Report. The Chairman said this was open would have already been booked, he said. for suggestion and he is sure that they can find a

special place in the Annual Report to recognize Contributing to the discussion, Mr. Kenneth those persons at the AGM because of their Hibbert said, the problem with the credit union is contributions over the years.not something that just started, it is something that goes back years, and the reason why members are There being no further discussion, the motion for withdrawing their savings from the credit union the adoption of the Board of Directors Report was and putting it to other places and seeking loans at moved by Mr. Leroy Fair-weather and seconded other places should be looked at by the credit by Mr. Anthony Aires.union. He said that the cause is that loans are easier to get at other places and the interest rates The motion was carried.are lower. In response, the Chairman said that credit unions are in a very restricted situation and cannot actively compete with banks because credit unions have limited loan portfolios, limited restrictions and banks have many investments to back up their portfolio.

The Auditor's Report was presented by Mr. Gilbert Thompson, Auditor, from Gilbert Thompson & Associates.

Mr. Hibbert said that Emergency Fund is for natural disaster but he thinks that it should be

MEMBERSHIP SAVINGS

TERTIARY SCHOLARSHIP FUND

SYMPATHIES AND CONDOLENCES

TREASURER'S AND AUDITOR'S REPORT

THE AUDITOR'S REPORT

EMERGENCY FUND

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THE TREASURER'S REPORT

DISCUSSION ON THE TREASURER'S REPORT

REDUCTION OF SURPLUS AND INCREASED OPERATING EXPENSE

CHANGES IN OPERATING ASSETS AND LIABILITIES

INVESTMENT

DISCUSSION ON THE AUDITOR'S REPORT

THE PEARL RATIO

INCREASE IN AUDITING FEES

that is used by the Credit Union League and is given to credit unions to monitor their operations.

The Treasurer's Report was taken as read on a Mr. Campbell asked where was the credit union as motion moved by Mr. Leslie Campbell and far as the PEARL ratio was concerned. Mrs. seconded by Mr. Gilbert Smith. Johnson said that is not contained in the Auditor's Report and she would not be able to give that information at the meeting without checking the books but as far as solvency is concerned they have passed the mark and they are over the ten Mr. Hibbert said just to take the Financial Report percent that is required for Institutional Capital. and say that you are going to cut the costs cannot She said, the challenge right now is that the work. He suggested that it is better to take the income is bordering with the expenses.expense account line by line and reduce what

expenses can be reduced.Mr. Campbell said that they needed to have it recorded in the AGM books so that members can read it and understand the position of the credit union and where the gaps are. He hoped that at the next AGM it will be available to the members.Deputy Commissioner Stone said she noted that

the surplus had reduced from $8M in 2009 to $1M in 2011 and at the same time the operating expenses went up from $50,000,000.00 to $54,000,000.00 in just one year and it is Mr. Gilbert Smith enquired under 'Changes in something that the Board needs to look at closely. Operating Assets and Liabilities' why it is that in The Chairman said that the credit union had 2010 External Credit for 2010 was a minus figure lowered interest rates and this has cost a drop in of $990,894.00 and in 2011 it increased to interest earnings or net surplus and at the same $1,208,315.00. The Auditor explained that the time the expenses of the credit union, especially credit union owed a JACCUL loan and in 2010, utilities, salaries and uniforms keep going up and $990,894.00 was paid and the balance of the credit union has no control over it, but they $1,208,315.00 was paid in 2011.view it with concern.

The motion for the adoption of the Treasurer's Report was moved by Mr. George Thorpe and From page 25, Mr. Leslie Campbell enquired, seconded by Mrs. Merle Hill-Reid. under Investment, why interest income had

decreased. The General Manager, Mrs. Foreman-Johnson, said that the credit union maintained the same level of investments, but the returns from those investment portfolios gradually keep on decreasing because of the lower interest rate.

Mr. Leslie Campbell, asked if the credit union use the PEARL standards. The Auditor, Mr.

From page 53, Mr. Leslie Campbell enquired why Thompson, said that the Auditor's Report says the auditing fees had increased by approximately that they used the International Reporting 110%. Mrs. Foreman-Johnson, the General Standards which is what the Institute of Chartered Manager, explained that the credit union had Accountants of Jamaica put in place to be used. employed an Internal Auditor last year, and his Mrs. Foreman- Johnson, the General Manager, salary was included in the audit and accounting said that PEARL is a ratio. It is a monetary tool fees.

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COST OF RETREAT

THE CREDIT COMMITTEE REPORT

ANNUAL GENERAL MEETINGS

DECREASE IN THE DEMAND FOR LOANS

AFFILIATION, SEMINARS AND MEETINGS

THE SUPERVISORY COMMITTEE REPORT

The Auditor's Report was moved by Mrs. Dorothy Davis and seconded by Mr. Leroy Mr. Leslie Campbell enquired why the Retreat Fairweather. The motion was carried.cost $759,000.00 last year and the year before it

cost $637,868.00, an increased of over One Hundred and Twenty Thousand Dollars. Mrs. Foreman-Johnson said that in 2010 there was no

The Credit Committee was presented by Ms. external representative invited to the Retreat, so Inderia Hutchinson. She said that the challenges there was nobody to be paid, but in 2011 there that the Credit Committee had to face were good were external representatives doing their in some respects and bad in some respects but presentations and conducting the Retreat and through it all they had learnt and grown. During those people had to be paid. Mr. Campbell said the year under review they were able to fulfill that the credit union needs to make sure that the their obligations by giving financial advice that Retreat is at a low cost hotel so that the credit were beneficial to the members.union can save money.

The vacancy created from Mr. Ian Henry was filled by Ms. Inderia Hutchinson.

Mr. Leslie Campbell also suggested that Annual The Board was commended for making the General Meetings could be kept in the day at necessary adjustments to the interest rate policy.10:00 a.m. as some members are off duty at that

time. The Chairman said that they are challenged The introduction of a start-up loan for new to get a quorum at certain times of the day and members has also created an avenue for there are various factors that they have to look at.partnership where they are given an opportunity to invest in the organization at an early stage.The Credit Committee commended the members of the Credit Union, Board of Directors, General Manager and staff, Supervisory Committee, Turning to interest rates, Mr. Campbell said that Liaison Officers for guidance, confidence and loans have decreased because the credit union's loyalty that they displayed to the Credit interest rates are too high and some members are Committee.going elsewhere for loans.

Mr. Gilbert Smith congratulated the Credit Committee. He said that the report that was presented was a very comprehensive report especially were graphs were concerned. Under Representation and Affiliation, Seminars

and Meetings, Mr. Campbell asked if it cost the The Credit Committee Report was adopted on a credit union $879,842.00 to send representatives motion moved by Mr. Gilbert Smith and to the Annual Credit Union League's meeting. seconded by Mr. Norman Sanford. The motion The Chairman replied that that figure has to do was carried.with training of new volunteers and affiliation

costs to the Credit Union League. Mrs. Foreman-Johnson explained that the cost has to do with not only seminars and meetings held at the Credit Union League but also seminars and meetings

The Supervisory Committee Report was taken as held at other institutions.read on a motion moved by Mr. Albert Brown and seconded by Mr. Herbert Thomas.

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ERRORS REPORTED TO THE BOARD PROCEEDS OF CRIME ACT

RESOLUTION

DISTRIBUTION OF NET SURPLUS

Mr. Cyril Knight addressed the question of the Mr. Thorpe informed the meeting that one Supervisory Committee pointing out some very hundred percent of the staff, the members of the serious errors in the daily operation of the credit Supervisory Committee, Credit Committee and union to the Board. He said that he noted that the the Liaison Officers have been trained in the Board has remained silent on the serious errors Proceeds of Crime Act. that the Supervisory Committee has brought to its attention. He said that he would like to know what The adoption of the Supervisory Report was action has been taken to address the errors. moved by Mr. Ken Hibbert and seconded by Mrs.

Lisa Collie-Evering. Mr. Thorpe said, in regard to the question asked by Mr. Cyril Knight, the Board as well as the The motion was carried.Supervisory Committee are cognizant of what is reported in the Supervisory Committee Report. He said that the necessary recommendations have been put in place to the Board. There was no resolution presented.

Mr. Leslie Campbell thanked the Supervisory Committee for presenting such a comprehensive report that, he said, was being presented in such a The Distribution of Net Surplus was presented by manner in the history of the credit union. the Chairman.

Dividend on Permanent Shares (15%)

$ 786,000.00

Rebate (2.50%)

1,095,140.89

Scholarship Fund (High School)

25,000.00

Scholarship Fund (Tertiary)

100,000.00

Lorrel Bruce

5,000.00

Basic School

40,000.00

Children’s Home

60,000.00

Donations 100,000.00

Honoraria

600,000.00

Emergency Fund 245.11

Share Transfer Fund 50,000.00

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The motion to accept the net surplus as presented was moved by Mr. Leslie Campbell and seconded by Mr. George Thorpe. A motion was moved by Mr. Gilbert Smith and

seconded by Mr. Leslie Campbell that the Maximum Liability be fixed at not more than ten

times the Society's capital.

The motion was carried.

Mr. Gilbert Smith asked if the $245.11 that is placed under Emergency Fund is just the change

Mr. Michael Webb from the Department of to balance the books. The Chairman replied that Cooperatives & Friendly Societies conducted the there is Two Million Dollars in the Emergency election.Fund, so there is no rush or need to put more

money in the Emergency Fund right now. Mr. It was moved and seconded respectively that the Gilbert Smith said that Two Million Dollars was Nomination Committee Report be taken as read not enough to assist members in case of an by Mr. Cyril Knight and Mr. Gilbert Smith.emergency, so there is need to continually

increasing the fund.

RETIRING RECOMMENDATIONSMr. Cyril Knight asked that the Tertiary Messrs. Elton Harris Rueben KellyScholarship Fund be named the Ethan C. King Carlton Campbell Raymond WilliamsScholarship Fund.David Knight David Knight

ELECTEDDavid Spencer Leslie CampbellEric Watkis

There was a long discussion pertaining to the adjustment of the Appropriation of the Net Surplus. Eventually Mr. Gilbert Smith moved a motion that $50,000 be taken from Donations and

RETIRING RECOMMENDATIONSbe put on Emergency Fund and that $100,000 be Ms. Novelette Reid Natalee Malcolmtaken from Honoraria and be put to dividend on

Permanent Shares. That proposal was seconded ELECTEDby Mr. Leslie Campbell.Natalee Malcolm

The Chairman moved a resolution that the Appropriation of the Net Surplus remained as it is in the book which is the Resolution from the Board.

RETIRING RECOMMENDATIONS Misses. Kisha Henry Kisha Henry

After a show of hands of vote, the members voted Tracia Chambers Tracia Chambersfor Mr. Gilbert Smith's resolution that $50,000 be Mrs. Lisa Collie-Evering Lisa Collie-Everingtaken from Donations and be put on Emergency Messrs Alfred Duncan Alfred DuncanFund and $100,000 be taken from Honoraria and George Thorpe Sheryl Reynoldsbe put to dividend on Permanent Shares.

THE PROPOSAL OF THE FIXING OF THE MAXIMUM LIABILITY

DISCUSSION ON THE DISTRIBUTION OF THE NET SURPLUS

EMERGENCY FUND

ELECTION OF OFFICERS

THE BOARD OF DIRECTOR'S REPORTETHAN C. KING SCHOLARSHIP FUND

ADJUSTMENT OF THE APPROPRIATION OF THE NET SURPLUS

THE CREDIT COMMITTEE

THE SUPERVISORY COMMITTEE

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ELECTED

CYRIL ERIC GEORGE KNIGHT TROPHY

THE HONOUR ROLL COMMITTEE

PRIZES

THJAMAICA'S 50 YEAR CELEBRATION

ANY OTHER BUSINESS

TRIBUTE TO MR. ETHAN C. KING AND MEMBERS OF STAFF AND MEMBERS WHO HAD GIVEN DISTINGUISHED SERVICE

STAFF MEMBERS HONOURED:

THE CREDIT UNION'S FACEBOOK

union for ten years. She was congratulated on the birth of her daughter. Kisha Henry

Tracia ChambersLisa Collie-EveringAlfred DuncanSheryl Reynolds

Mr. Cyril Knight presented the Cyril Eric George Knight Trophy to Ms. Sheryl Reynolds, the A motion was moved and seconded respectively Liaison Officer from Rio Cobre Juvenile by Mr. George Thorpe and Mr. Kenneth Hibbert Correctional Centre who recommended the credit giving the Board of Directors permission to elect union to most members.Delegates and Alternate Delegates to attend the

Jamaica Credit Union League Annual General Meeting.

Mr. Leroy Fairweather and Mr. Albert Brown were presented with certificates and included on the Honour Roll for serving the credit union for

The first one hundred members to register at the ten years.

meeting were given the opportunity to start their Real Economic Action Plan and they could also The President and the Assistant Secretary start their Golden Harvest with as little as Five unveiled the Honour Roll of the Correctional Hundred Dollars. Services Credit Union.

Mr. Nigel Bennett won a weekend for two. Gift vouchers from Sangsters Book Store were presented to Javaughn Williams, Jahvally Morris, Shavanney Baker and Howard Haye.

The following members were honoured for being with the credit union for fifty years or more:Mr. Cyril Eric George Knight

Mr. C. Knight thanked Mrs. Baker and her team Mr. Kenneth Hibbertfor upgrading the website. Mr. Jabex Williams (absent)

Mr. Norman Sanford was honoured for giving the credit union seven years of dedicated service as a member of the Supervisory Committee. Mr. Herbert Thomas was also honoured for giving seven years of dedicated service to the Credit Starting with Mr. Ethan C. King, the first union and also as Chairman of the Supervisory President and founder, who had passed away in Committee. Canada at age 99, Mr. C. Knight, paid tribute to a

number of members and staff who have given distinguished service to the credit union over the years.

Mr. Everton Thompson for five years dedicated service to the credit union.Mr. Bryan Richards for having served for four years and condolence was extended to him on the Mr. William Reynolds informed the gathering death of his son. that the credit union now has a Facebook. The

Facebook name is CSCCU.Miss Natalee Malcolm for serving the credit

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MR. GEORGE THORPE THANKED THE CREDIT UNION FOR TIME SERVED

THE CHAIRMAN'S CLOSING REMARKS

speculation. The message he would like to leave with the members, is that the credit union does not belong to anyone, but to all members. We are prudent, we give our best, we serve, we volunteer Retiring Supervisory Committee member, Mr. and then we move on and we ask nothing less of George Thorpe, thanked the Supervisory those who are elected, he said.Committee for the level of support that they have

given to him over the last five years.The Chairman thanked the staff, members of the credit union and all the volunteers and all other persons at the meeting for making the AGM possible.

In his closing remarks, the Chairman said, the The motion for the adjournment was moved by credit union is over fifty years old. There is always Mr. Lenroy Gassop and seconded by Mr. Gilbert a sense of renewal in the credit union and he is Smith.sure it will always continue. The credit union

does not confess to having all the answers to the Meeting adjourned at 10:30 p.m.problems, but he said, members should not panic

at this time and the worst thing that can happen, is

13

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14

BOARD OF DIRECTORS REPORTYear ended December 31, 2012

1.0 INTRODUCTIONThe Correctional Services Cooperative Credit Union Limited experienced a good year despite the economic turmoil and social hurdles during 2012. The Society certainly felt the impact of the Jamaica Debt Exchange resulting in reduced returns on investments and loan interest income and at the same time fierce competition from the commercial banks that targeted our loans and savings portfolio. The Board of Directors, however, managed to pitch new strategies to weather the storms. Of the signing of an agreement with the IMF importance was renewed member and continued global growth. confidence in the Credit Union, better strategic planning, improved corporate In particular, the economy is expected to governance and improved operational record improved foreign currency inflows efficiencies. Your Board has been working which should contribute to the gradual at reshaping the business model to one that rebuilding of the Net International is more customer service oriented, member Reserves. In addition, the economy is centric and compliant to improve our expected to record very moderate growth, relevance, sustainability and attractiveness following an estimated contraction in 2012. in the competitive and regulatory Inflation rate for 2012 was reported at 8.0 environment. per cent, relative to 6.0 per cent in 2011.

According to the Bank of Jamaica's 2012 2.0 BRIEF UPDATE OF CREDIT UNION Report, the economic condition in Jamaica MOVEMENTis anticipated to improve in 2013 within the context of reduced uncertainties, following

INDICATOR 2012 2011 Annual Growth % Membership 951,079 920,408 3.33 Savings

55.06B

51.55B

6.80

Loans

47.85B

42.17B

13.46

Assets

71.08B

66.60B

6.73

2.1 Performance of key Indicators

15

FINANCIAL GOALS KEY RESULT AREAS

1. To increase Total Asset by 8% 1. Human Resource Development 2. Increase loan portfolio by 12% 2. Savings Mobilization 3. Increase Savings by 15% 3. Membership Education and growth

4. Risk and Compliance 5. Strategic Partnerships and Membership

Bond Extension.

From the table above, we can see that the solutions to provide the highest quality Movement grew modestly in four (4) critical service to our members.areas during a difficult economic environment.

2.2 Trends for Credit Unions 3.0 MEETINGS AND The Jamaica Cooperative Credit Union ATTENDANCELeague has been encouraging Credit Regular meetings were held to manage the Unions to include in their planning the affairs of the Society as indicated on page following business strategies to ensure 21. These meetings include Board viability in light of the struggling and Meetings, Special Board Meetings unpredictable economic environment and Executive and Joint Meetings. The Board the likely effect on the sector: had meetings with the Management and

Staff of the Credit Union as well as Members as the situations dictated.

l Strategic Mergers and Bond Extension

l Shared Services 4.0 STRATEGIC RETREATl Reducing Operating Expenses The Society's Annual Planning Retreat l Improving Return on Assets Ratio was held in December 2012 at and the l Delinquency Control Mechanism following goals and key result areas were l Business Process Re-engineering established. A new vision and mission l Sales Culture statement was also developed.

Our Credit is mindful of these imperatives and continues to explore strategies and

16

INDICATOR WOCCU STANDARD

CSCCU RATIO 2012

CSCCU RATIO 2011

COMMENT

Net Institutional Capital/Total Asset

>8% 11.59% 11.25% Improvement and in line with standard

Solvency >111% 124.86% 122.41% Improvement and in line with standard

Asset Growth Inflation Rate 2.92% -1.15% Major Improvement but not in line with inflation rate

Loan to Total Asset 60%-80% 69.6% 57.46% Major Improvement and in line with standard

Delinquency <5% 1.39% 3.56% Improvement and in line with standard

Operating Expense to Total Asset

<8% 12.04% 13.59% Improvement but not in line due to low asset growth.

Liquidity Reserves/Total Savings

20-30% 17.29% 37.24% Improvement required

Total Savings to Total Asset

70-80% 70% 77.74% In line with standard

5.0 OPERATIONS

5.1 Financial Performance and PEARLS RATIOThe financial performance is covered in the Treasurers and Auditors report but in this instance the PEARLS RATIO bench mark is used to highlight the financial achievements and the gaps.

An analysis of the PERALS RATIO 6.1 Loan Portfolio and Loan Demandindicated major improvements in 2012 in Despite the competition the Society line with the bench mark standards. bounced back in the final quarter and grew However the asset growth and savings the loan portfolio by 24% closing at $296M growth need to be actively pursued as nearly and brought the loan asset ratio to 70% from all of the indicators are predicated on Total 57% in 2011. This is a notable achievement Asset. based on the challenges over the years to

grow the portfolio. The loan policy was In terms of the overall financial made flexible and several members performance, reported surplus was $2.5M borrowed for motor vehicle and debt up from $1.2M in 2011. Total asset grew by consolidation. The loan demand however approximately 3%, expenses reduced by had to be restrained as our loan sale in the 8%, earnings dipped by 5.9% and last quarter was oversubscribed and membership grew by 3.49%. highlighted the need to expand the loan

portfolio through increasing savings by members and increased resources through membership growth.

17

5.2 Savings/Deposits 5.4 MembershipThis aspect of the operations came under As a Credit Union Family we have not

exhausted our present bond even as we tremendous pressure both from the need to expand it, There are several other external competition and the strain on co-worker in the Department of income due to public sector wage freeze. Correctional Services as well as in the There could be other factors but the family members of the wider members savings portfolio was reduced by 4%. who need to join the society and this must There cannot be growth in the Credit be actively pursued. We are pleased to Union without the savings hence new report that during the year one of our target strategies will mainly be targeted towards groups was the Probation Officers and

increase in members' savings. During the your Board is pleased to report that over

year, the REAP Plan was rolled out thirty (30) Probation Officers have

however it hasn't had the impacted become members during 2012. Additional expected. As such the Board has mandate new members were recruited from the two Management to devise new strategies to intakes of Correctional Officers who e n c o u r a g e s a v i n g s a m o n g o u r graduated from the Training College and membership. We need to remain were assigned to the various institutions. committed to the cooperative spirit and Coming out of the 2012 Retreat a pool our resources, each one help one and resolution will be presented to the Annual then the other. Together each achieves General Meeting to address the issue of more and as the Jamaican saying goes membership as we are presently

constrained by limited growth potential, “one one coco full basket”. Consequently, the present wage freeze and high the “FIVE 4 LIFE” Savings Package retrenchment. We have had some (Partner Plan, Platinum Senior Plan, discussions with the Executives of the Fire Save Smart Plus, Golden Harvest, Coco Brigade as there is some commonality Basket) will be rolled out later in the with that group and they have expressed a meeting.willingness to become members of our Society. 5.3 Customer Service and Marketing

The Board of Directors along with the 5.5 Risk Management and Compliancesupport of the Management team has tried

The Board endeavoures to fulfil all the in many ways to improve the quality of statutory and regulatory requirements of

service to members. Members over the the Department of Cooperative and

years have asked that the amount for cash Friendly Societies, The Jamaica disbursement for withdrawal and loans be Cooperative Credit Union League and the increased. A resolution will be later tabled Bank of Jamaica. Reports were submitted in that regard. Service standards have been on a timely manner and the Society also improving especially the waiting time for underwent periodic audits and reviews loans and withdrawals. A customer service from our regulators. Like other entities in help desk has been instituted to manage the financial sector, the Credit Union had customer flow and senior/retired to ensure that we also comply with the members. The web site is being upgraded Proceed of Crime Act (POCA) as well as

improve our Know You Customer (KYC) where members can download forms, status. The Society is mindful of new access product information etc. Online reporting criteria such as FATCA and TPA banking will take some time as the features and the League has been providing are very costly and would put a major updates on the emerging issues. strain on our finances at this time.

18

6.0 JAMAICA CO-OPERATIVE CREDIT UNION LEAGUE (JCCUL) AGM & MEETINGS

7.0 SOCIAL RESPONSIBILITY/GOOD AND WELFARE

8.0 AWARDS AND ACHEIVEMENTS

Other briefings and consultations were held throughout the year and the Credit Union was kept informed through bulletins, advisories as well as visits from assigned Four (4) Directors namely Michael officers from the League.Anderson, Joycelyn Spencer, David Knight

and William Reynolds represented the thSociety at the 70 Annual General Meeting

and Strategic Conference of the League as delegates and alternate delegates. The

It is said that a Society is judged by how it League AGM was held at the Ritz Carlton treats it ages, its young and its vulnerable Hotel in Montego Bay over the period May members. Mindful of this adage and in 24 -27, 2012 under the theme “Renewed, keeping with the true cooperative service, repositioned, reshaping the Movement for your Credi t Union made various the Future”. The Meeting was chaired by contributions to advance the human Mr, Johnathan Brown, League President. condition and better the lives of some of our The AGM was structured in four main own and some beyond our immediate reach. components:For 2012 the Scholarship Programme

· Strategic Conference and Panel remained in effect with two beneficiaries at Discussion the tertiary level. In response to natural and

· Trade Show man-made disasters several members · Banquet and Awards Ceremony affected by the hurricane, fire and ill health · Annual General were assisted. Additional we responded to · Elections were held to replace the calls for support from Correctional

retiring directors and the supervisory Institutions for donations as they committee. implemented special projects such as Family

Days, Sports Days and other functions held Focus was given to the Pending BOJ for Wards and Inmates. During the year regulations.support was given to our regular charities;

the Best Care Foundation and the Salvation Several rule changes were proposed Army Day School.however these were withdrawn as the AGM was not in favour of the proposal. These proposals were differed to the September Consultation which was held at the Jamaica The Board of Directors wishes to commend Conference Centre. Mr .David Spencer and the following members who retired from Mr. David Knight represented the Society at active service during last year. this meeting.

1. Carlton Campbell - Secretary The League has embarked on a process of

2. Elton Harrisrestructuring and is returning to its core - Board Assistant Treasurerfunctions as a Trade associat ion

3. Novlette Reid representing Credit Unions. Several of the - Supervisory Committeefunctions carried out by the League during

4. George Thorpe2012 wi l l be de l ive red th rough - Supervisory Committeeseparate/independent business units which

The Society has benefited from their will be subsidiaries of the League.sacrifice, their commitment and their

19

stewardship. At this Annual general The need for Credit Unions to embrace fully their responsibilities for member satisfaction has Meeting it is appropriately fitting that we become more evident in the last year. The Board recognize them for their dedicated service and Management of the Correctional Services to the Society and this will be done by a Cooperative Credit Union will embrace and formal recognition and presentation of employ new strategies to make our Credit Union tokens of appreciation. We also offer our viable. All of these imperatives will have to be best wishes to these stalwart members and advanced during 2013 to protect, preserve and sincerely hope that they will continue give promote the interest of our members:themselves selflessly.

· Membership Growth and Penetration· Savings Mobilization· Online Banking· Marketing and Membership EducationDuring the year the Office Staff comprised · Improved Risk Managementon 17 fulltime and 1 volunteer. These are · Strategic Partnershipthe people on the front line every day and

we owe them a debt of gratitude. The Board of Directors records it appreciation Success in any sphere has to be envisioned, to all staff members for their efforts during planned and vigorously pursued. So too, the 2012. We wish to record a special thanks to success of our Credit Union cannot the left to our former General Manager, Mrs. Carlene chance. We have to be bold and engage our heads,

our hands and our heart. At the end of the day we Foreman- Johnson who served this Society exist to service our members and our members up to June 2012 and to Mr. Geoffrey will only remain with the Credit Union if it is Eccleston who acted as General Manager deemed to be beneficial. For the Credit Union to up to September 2012. The Board extends meet the needs of its members, all members have a warm welcome to our new General to play their part to strengthen our resolve and our Manager, Mrs. Claudia Thompson-Roache resources. We encourage members to plan and who joined us in October 2012.act long term and not be entrapped by seemingly attractive unsecured loans from the competition.

Special thanks to the team of volunteers: the We encourage members to return to basics and Board, Supervisory Committee, Credit save for the future. We appeal to our members Committee and the Laision Officers who who are looking at retirement to engage the credit served over the period. Service to humanity Union early so that we can help you prepare for is the best work of life and so we laud you those seemingly uncertain days. for efforts and the positive impact you have made. Please see page 77 - 78 for a full The Board implores every member to join hands listing of staff and volunteers. and heart as we position this noble Society in the

path of success for the coming year.

The Board of Director thanks the membership for the opportunity to serve you in 2012 and wish for our Society a stronger and brighter 2013.The way forward demands new thinking, new

attitude and renewed efforts and commitment.

9.0 STAFF AND VOULUNTEERS WHO SERVED

10.0 THE WAY FORWARD/ CONCLUSION

20

NAMES

POSSIBLE

PRESENT

ABSENT

Michael Anderson

12

11

1

David Knight

12

11

1

David Spencer

12

12

0

Joycelyn Spencer

12

6

6

William Reynolds

12

4

2

Carlton Campbell

6

6

0

Elton Harris

6

4

2

Ruben Kelly

6

4

2

Leslie Campbell

6

5

1

Regular Board Meetings

NAMES

POSSIBLE

PRESENT

ABSENT

Michael Anderson

13

13

0

David Knight

13

9

4

David Spencer

13

11

2

Joycelyn Spencer

13

8

5

William Reynolds 13 11 2 Carlton Campbell 6 6 0 Elton Harris 6 2 4 Ruben Kelly 7 4 3 Leslie Campbell 7 3 4

Special Board Meetings

NAMES

POSSIBLE

PRESENT

ABSENT

Michael Anderson

4

4

0

David Knight 4 3 1 David Spencer 4 4 0 Joycelyn Spencer 4 4 0 Elton Harris 2 2 2 Carlton Campbell 2 2 2 William Reynolds 4 3 1 Ruben Kelly 2 2 2 Leslie Campbell 2 2 2

Joint Meeting

NAMES

POSSIBLE

PRESENT

ABSENT

Michael Anderson

1

0

1

David Knight

1

1

0

David Spencer

1

1

0

Joycelyn Spencer

1

1

0

Carlton Campbell

0

0

0

Executive

.........................................MICHAEL ANDERSONPresident

21

TREASURER'S REPORTYear ended December 31, 2012

1.0 INTRODUCTION

2.0 FINANCIAL SUMMARY 2008-2012

The credit union continued to operate in a very difficult economic climate, one where there was intense hostility in the financial industry. Commercial banks aggressively targeted our members offering unsecured loans of up to two millions dollars and over. Conditions for these loans require that members pay off their credit union loans and drastically reduce their savings. Consequently financial performance of the Credit union some of the key operational indicators for the year 2012.such as savings and loans were dramatically reduced. However strategies developed towards the end of the year arrested some of the fallouts and we continued to monitor these external Table 1 summarizes the financial threats. Despite these and other performance over the last 5 years. The challenges, your Credit Union has results were mainly flat but have seen managed to achieve growth in several key some signs of improvement and growth in areas of its operation, including surplus. 2012 especially in the areas of operating These results have been encouraging and expenses, total asset and loans. Several have served to strengthen our resolve that strategies were employed to ensure that although we operate in difficult times we the Credit Union moves on a growth path can be innovative and achieve the success and maximize shareholders return. that we desire. It is against this background that I now present on the

Year

Net Earnings $M

Expenses $M

Surplus $M

Total Savings $M

Loans $M

Total Asset $M

2008 52.5 42.7 9.7 254.2 224 335

2009 54.6 50.13 3.3 284 233 375

2010 54.3 50.3 4.05 302 248 403

2011 54.1 52.9 1.2 307.4 228.6 396

2012 50.9 48.4 2.5 294 285 408

Figure 1 Summary of Financial Performance 2008-2012

22

3.0 ANALYSIS OF FINANCIAL PERFORMANCE 2012

showed a reduction of 5.9% over the previous year when net earnings was $54M. The negative effects of the JDX with lower returns on investments and 3.1 Earnings and Surplusloans also had an effect. Despite the Earnings were volatile over the period reduction in earnings, we managed to mainly due to loss of a sizeable portion of realize a net surplus of $2.5M in the loan portfolio to commercial banks comparison to the previous year of towards the second and third quarters. $1.2M.Reported net earnings was $50.9M which

Figure 2 Interest Income 2008-2012

Figure 3 Surplus 2008-2012

23

we boast this achievement, we must be Expenses were well contained for the mindful that the expense to asset ratio is period. With reduced earnings, total still not in line with the benchmark ratio of expenses dipped by an encouraging 8.1% 8% in comparison to 12.38%. This ratio closing at $48.4M in comparison to proportionally can only be improved with $54.1M over the previous year. This is a growth in Assets. Further strategies will step in the right direction as we have be employed to bring the ratio in line with always battled to reduce expenses. While the standard.

3.2 Expenses

Figure 5 Total Assets 2008-2012

Figure 4 Expenses - 2008-2012

>

24

3.3 Loan Portfolio members, while this was a remarkable achievement, there were several loan The loan portfolio showed major signs requests that had to be scheduled for of growth most of which occurred in disbursement based on available cash the last quarter. The recorded growth flows. The demand for loans continue was 24.82% or $56.4M over the to be very strong and a good indication previous year. This has reversed the of the members confidence in the flat to negative growth over the last 5 credit union but the resources to satisfy years. The growth was mainly these loan requests can only come from attributed to some strategic changes in members savings. Hence the emphasis the loans policy with respect to motor is on building savings vehicles and real estate loans. Fellow

Figure 6 Total Loans 2008-2012

Figure 7 Total Savings - 2008-2012

25

3.4 Savings 3.6 Delinquency

4.0 CONCLUSION

3.5 Total Asset

Our savings portfolio continued to be threatened The delinquency rate stood at 1.39% at the end of by the harsh economic conditions including the the period. While this rate is within the threat of other financial institutions. The wage benchmark ratio of 5%, there are several accounts freeze in the government sector coupled with that are in a chronic state of delinquency which declining disposable income were some of the we have almost exhausted all methods of realities. As a result, members' savings dipped by collections internally. We are now forced to 4% closing at $294M in comparison to the contract external collectors to assist us in previous year of $307M. This is certainly not collecting on these accounts. In the meantime, we good for the credit union and limits our capacity are encouraging those members with delinquent to lend. Several new savings options were being accounts to visit the credit union, let us discuss the developed to culture members into practicing challenges that you face and work together thrift. These savings options include a retirement towards finding mutually beneficial solution.plan and a special fixed deposit. Hence we are encouraging you to invest in your credit union today. The credit union has performed well despite the

challenging economic times and we are expecting with God's help and your fullest participation to

Total assets over the 5 years has remained flat but improve on these achievements in 2013. This will picked up favorably by 2.82% in comparison to also require our full commitment and dedication. the previous year when negative growth of 1.7% Let me thank you all for your support throughout was realized. Total Asset is a very critical the year and wish you all success in your future indicator for the measurement of growth; hence it undertakings.is imperative that we continue our efforts to increase the commitment of all our members towards building the credit unions asset. This can be done by taking advantage of the many savings options that we offer, or by simply practicing better thrift.

26

DAVID SPENCERTreasurer

27

STATEMENT

Auditors' Report 1

Statement of Financial Position II-11.1

Statement of Comprehensive Income III

Statement of Changes in Equity IV-IV.1

Statement of Cash Flows V

Notes to the Financial Statements VI-VI.23

Operating Expenses VI.24

Financial StatementsYEAR ENDED 31ST DECEMBER 2012

28

29

30

NOTES 2012 2011

ASSETS $ $

NON-CURRENT ASSETS

Earning Assets

Loans to Members 7 238,515,517 199,201,373

Allowance for loan losses 1,850,301 974,784

236,665,216 198,226,589

Financial Investments 10 11,680,072 11,221,871

248,345,288 209,448,460

NON-EARNING ASSETS

Property, Equipment and Furniture 4 15,713,835 17,266,778

Retirement Benefit Asset 10,084,000 9,550,000

Accounts Receivables 11 1,998,567 4,769,948

27,796,402 31,586,726

Total Non-Current Assets 276,141,690 241,035,186

CURRENT ASSETS

Earning Assets

Loans to Members 7 47,767,747 29,661,364

Liquid Assets 8 32,234,123 83,096,320

80,001,870 112,757,684

NON-EARNING ASSETS

Cash and Cash Equivalent 9 41,738,007 33,743,163

Accounts Receivables 11 10,778,100 9,201,736

52,516,107 42,944,899

Total Current Assets 132,517,977 155,702,583

TOTAL ASSETS 408,659,667 396,737,769

STATEMENT OF FINANCIAL POSITIONFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT II

31

NOTES 2012 2011

$ $LIABILITIES

NON-CURRENT LIABILITIES

Interest-Bearing Liabilities

Members' Shares 117,890,028 130,732,829

Members' Savings Deposits 12 21,418,501 20,798,916

JCCUL. Loan 13 25,051,950

164,360,479 151,531,745

Non-Interest-Bearing Liabilities

Payables 14 14,742,562 12,476,758

Total Non-Current Liabilities 179,103,041 164,008,503

CURRENT LIABILITIES

Interest-Bearing Liabilities

Members' Shares 78,593,352 87,155,219

Members' Savings Deposits 12 65,334,668 63,939,258

J.C.C.U.L. Loan 13 4,948,050

148,876,070 151,094,477

Non-Interest-Bearing Liabilities

Payables and Accruals 14 10,259,409 11,314,886

Total Current Liabilities 159,135,479 162,409,363

TOTAL LIABILITIES 338,238,520 326,417,866

TOTAL CAPITAL

Permanent Shares 6 5,520,000 5,242,000

Non- Institutional Capital 15 21,039,121 20,865,604

Institutional Capital 16 41,861,136 41,350,913

Undistributed Surplus 2,000,890 2,861,386

TOTAL CAPITAL 70,421,147 70,319,903

TOTAL LIABILITIES AND CAPITAL 408,659,667 396,737,769

For and on behalf of the Directors

DIRECTOR DIRECTOR

The notes on statements VI form an integral part of the financial statements.

STATEMENT OF FINANCIAL POSITIONFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT II.1

32

NOTES 2012 2011

$ $

INTEREST INCOME

Loans and Advances to members 23(.a) 43,333,913 53,564,176

Liquid assets 23(.b) 5,247,704 5,676,885

Investments 23(.c) 410,884 425,424

48,992,501 59,666,485

INTEREST EXPENSE

Savings Deposit 24 4,622,777 8,229,585

Other Financial Cost 25 2,241,289 1,127,988

6,864,066 9,357,573

NET INTEREST INCOME 42,128,435 50,308,912

NON-INTEREST INCOME

Members' Fees and Service Charges 26(a) 5,874,098 1,739,601

Miscellaneous 26(b) 2,967,293 2,097,872

8,841,391 3,837,473

NET INTEREST AND OTHER INCOME 50,969,826 54,146,385

LESS: OPERATING EXPENSES 29 48,468,712 52,931,395

NET (DEFICIT)/SURPLUS FOR THE YEAR 2,501,114 1,214,990

Honoraria 500,000 635,000

2,001,114 579,990

The notes on statements VI form an integral part of the financial statements.

STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT III

33

STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI

Non-

Permanent Institutional Institutional Accumulated

Shares Capital Capital Surplus TOTAL

Balance at 1 January 2011 5,202,000 41,106,616 19,403,873 2,459,241 68,171,730

Net Surplus - - 579,990 579,990

Transfer to statutory reserve 242,997 - (242,997) -

Entrance Fee 1,300 - - 1,300

Adjustment-

Dividend 2,723,217 2,723,217

Equipment 843,917 843,917

Salary Deduction (700,000) (700,000)

Loan Receivable (659,899) (659,899)

General Receivable (317,842) (317,842)

Appropriations - (882,310) (882,310)

Transfer to Special Reserve 271,731 (271,731)

Dividends (520,200) (520,200)

Emergency Funds Reserves - 50,000 (50,000)

Transfer to Retirement Benefit Asset Reserve - 998,000 - 998,000

Shares contributed in 2011 40,000 40,000

Shares Transfer Fund 142,000 (100,000) 42,000

Balance at 31 December 2011 5,242,000 41,350,913 20,865,604 2,861,386 70,319,903

Net Surplus -

2,001,114 2,001,114

Transfer to statutory reserve 500,223 - (500,223) -

Entrance Fee 10,000 10,000

Adjustment -

Appropriations - (1,375,142) (1,375,142)

Dividends -

(886,000) (886,000)

Emergency Funds Reserves 50,245 (50,245) -

Transfer to Retirement Benefit Asset Reserve 534,000 534,000

Shares Contributed in 2012 198,000

198,000

Nominee account 80,000 80,000

Reduction in Reserve (100,000) (100,000)

Impairment of Fixed Asset (280,728) (280,728)

Shares Transfer Fund 30,000- (50,000) (80,000)

5,520,000 41,861,136 21,039,121 2,000,890 70,421,147

The notes on statements VI form an integral part of the financial statements.

34

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35

STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT V

2012 2011

$ $

CASH FLOWS FROM OPERATING ACTIVITIES

Surplus for the year 2,001,114 579,990

Adjustment to Reconcile Surplus to

Net cash provided by operating Activities:

Depreciation 1,594,212 2,091,611

Addition in Institutional Reserve 534,000 998,000

Net Dividend written back 0 1,045,476

4,129,326 4,715,077

Changes in Operating Assets and Liabilities

Loans to members (56,545,011) 20,712,712

Accounts receivables 1,195,017 (1,609,930)

External credit 30,000,000 (1,208,315)

Retirement benefit assets (534,000) (998,000)

Members' deposit 2,014,995 12,044,349

Accounts payable and accruals 1,210,327 (11,148,561)

Net cash ( used in)/provided by operating activities (22,658,672) 17,792,255

Cash flows from investing activities:

Addition to fixed assets (321,997) (956,375)

Financial investment (458,201) (727,928)

Liquid assets 50,862,197 12,042,610

Net cash provided by investing activities 50,081,999 10,358,307

Cash flows from financing activities:

Permanent Shares 278,000 40,000

Entrance fees 10,000 1,300

Voluntary Shares (21,404,667) (8,826,194)

Appropriations (2,441,142) (1,360,510)

Net cash used in by financing activities (23,557,809) (10,145,404)

Increase in Cash 7,994,844 22,720,235

Cash at beginning of the year 33,743,163 11,022,928

Cash at end of year 41,738,007 33,743,163

The notes on statements VI form an integral part of the financial statements.

36

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI

1. IDENTIFICATION AND ACTIVITIES:

Correctional Services Co-operative Credit Union Limited is a co-operative society registered under the Co-operative Societies Act. The registered office is located at 28 Union Square, Kingston 5, Jamaica.

Membership is limited to employees of the Department of Correctional Services and their immediate families.

The main activities of the society are:

a) To promote thrift among its members by affording them an opportunity to accumulate their savings.

b) To create for them a source of credit for provident or productive purposes at a reasonable rate of interest.

2. REGULATION:

The Co-operative Societies Act requires, amongst other provision, that at least 20% of the net profit of the credit union be transferred annually to a reserve fund. The Co-operative is exempt from Income Tax under Section 59 (1) of the Co-operative Societies Act and Section 12 of the Income

Tax Act.

The liability of individual members is limited by shares. Individual membership liability may not exceed 20% of total share capital.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

a) Basis of Preparation -

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the provision of the Co-operative Societies Act and have been prepared under the historical cost convention.

b) Use of Estimates -

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may

differ from these estimates.

c) Financial Instruments -

Financial instruments carried on the statement of financial position include loans, liquid assets, financial investments, cash and bank balances, interest and other receivables, members' deposit and interest and other payables. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. The fair value of the credit union's financial instruments are discussed in Note 17.

37

NOTES TO THE FINANCIAL STATEMENTS31 DECEMBER 2012

STATEMENT VI.1

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

d) Foreign Currencies -

Transactions during the year are converted at appropriate rate of exchange ruling at transaction dates. Assets and liabilities are translated at appropriate rate of exchange ruling at statement of financial

position date. Gains and losses arising from fluctuations in exchange are included in the statement of

income and expenditure.

e) Revenue Recognition -

Interest income earned from investments, interest expense and fee are recorded on the accrual basis. Income earned from loan is recognised in the statements of income and expenditure on an accrual basis.

f) Fixed Assets and Depreciation -

Fixed assets are depreciated on the straight line method at rates designed to write off their cost over their estimated useful lives. However, depreciation is prorated on a monthly basis during the year of purchase.

Fixed assets are reviewed periodically for impairment. Where the carrying amount of an asset is

greater than the estimated recoverable amount it is written down immediately to its recoverable amount.

The rates of depreciation are as follows:-

Furniture and Fixtures 10%

Buildings 2.5%

Computers 25%

g) Loans -

Loans are stated net of any unearned income and of any allowance for delinquent loans. All loans are recognised when cash is advanced to members.

A loan is classified as delinquent when, in management's opinion, there has been a deterioration in credit quality to the extent that there is no longer reasonable assurance of timely collection of the full amount of principal and interest. If a payment on a loan is contractually sixty (60) days in arrears, the loan will be classified as delinquent, if not already classified as such.

h) Provision For Loan Losses -

The credit union maintains an allowance for loan losses, which in management's opinion, is adequate to absorb all credit related losses in its portfolio. The allowance consists of specific and general provisions for doubtful debts.

Specific provisions are established as a result of a review of the carrying value of loan in arrears and are derived based on the Jamaica Co-operative Credit Union League Limited provisioning policy of making a full provision for loans in arrears for over one (1) year. General provisions of 10% - 60% are established in respect of loans in arrears for two (2) to twelve (12) months.

38

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.2

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

i) Investments -

Investments are generally stated at cost.

On disposal of an investment, the difference between the net disposal proceeds and the carrying value

is charged or credited to the income statement.

j) Institutional Capital -

Institutional capital includes the statutory reserves fund as well as various other reserves

established from time to time which, in the opinion of the Directors, are necessary to support the

operations of the credit union and, thereby, protect the interest of the members. These reserves

are not available for distribution.

k) Employees Benefits -

(a) Retirement Benefit Asset

The credit union participates in a defined benefit pension plan which is funded by contributions paid

by the employers and the Credit Union based on the recommendations of independent actuaries.

Particulars of the scheme are shown in note 28.

(b) Leave Accrual -

The credit union's vacation policy allows the carry forward of a maximum of eight weeks accumulated

leave for managerial staff and six weeks for non-managerial staff.

All outstanding leave is recognised in the year to which it relates in accordance with IAS19.

l) Comparative Information -

Where necessary, comparative figures have been reclassified to conform with changes in presentation

in the current year.

m) League Fees and Stabilization Dues -

The Credit Union is required to pay league fees of 0.25% of total assets and stabilization dues of 0.35%

of the total saving to the Jamaica Co-operative Credit Union League each year.

39

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.3

4. FIXED ASSETS Furniture and Computer

Land Buildings Equipment Equipment Total

$ $ $ $ $

At Cost -

At January 2012 1,000,000 12,371,884 14,315,483 4,598,955 32,286,322

Additions 10,020 311,977 321,997

Impairment (2,292,171) (2,292,171)

At 31 December 2012 1,000,000 12,371,884 12,033,332 4,910,932 30,316,148

Depreciation

At January 2012 2,255,704 8,966,874 3,796,966 15,019,544

Charge for the year 309,228 881,452 403,532 1,594,212

Adjustment (2,011,443) (2,011,443)

At 31 December 2012 2,564,932 7,836,883 4,200,498 14,602,313

Net Book Values:

At 31 December 2012 1,000,000 9,806,952 4,196,449 710,434 15,713,835

At 31 December 2011 1,000,000 10,116,180 5,348,609 801,989 17,266,778

40

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.4

5. STAFF COSTS:

2012 2011

$ $

Salaries and Benefits 20,417,267 21,813,573

Staff Travel 2,052,478 2,732,792

Statutory Contributions 1,999,886 2,045,760

Pension Expenses 931,777 986,415

25,401,408 27,578,540

6. MEMBERS' SHARE CAPITAL:

2012 2011

$ $

Balance at beginning of year 5,242,000 5,202,000

Permanent Shares 278,000 40,000

Balance at end of year 5,520,000 5,242,000

Shares in the co-operative entitle each member to one vote in the conduct of the affairs of the co-operative at general meetings. Shares are classified into permanent and voluntary shares.

Voluntary shares may be withdrawn in whole or part by a member. However the Board of Directors reserves the right at any time to require a member to give notice not exceeding six (6) months, providedthat no member may withdraw any shareholdings below the amount of his liability to the co-operativewithout the approval of the Board of Directors.

41

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.6

(c') ALLOWANCES FOR LOAN LOSSES:

( a ) At December 2012 there were 49 members (2011-58) who had delinquent loans totalling $ 7,092,744 (2011-$9,150,595).

These are summarised as follows:

Total Total

Months in number of Delinquent Saving Actual Rate of

Arrears Loans Loans Held Exposure Provision Provision

$ $ $ $ $

Under 2 28 3,108,928 6,063,883 - -

2-3 6 543,157 581,905 - 54,316 10

3-6 9 894,702 664,859 229,843 268,411 30

6-12 6 2,545,957 2,311,825 234,132 1,527,574 60

12 and over - - -

49 7,092,744 9,622,472 463,975 1,850,301

Delinquent Loans

The loan loss provision shown in the table above is based on the provisioning rules of the Co-operative Credit Union League. Where the provision is in excess of the provision required under the IFRS rules, the additional amount is transferred from accumulated surplus to loan loss reserve.

(b) 2012 2011

$ $

Provision at beginning of year 974,784 666,138

Additional provision 875,517 308,646

1,850,301 974,784

Balance at year end 1,850,301 974,784

Made up as follows:

General provision required under the JCCUL rules 1,850,301 974,784

Total 1,850,301 974,784

42

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.7

8. LIQUID ASSETS:

2012 2011

$ $

Cu-Cash Deposits - JCCUL 6,175,067 9,073,006

Term Deposits - JCFCUL 10,699,970 73,768,698

Savings Account - RBTT 298,455 199,600

Savings Account - JNBS - 55,016

Fixed Deposit 15,060,631 0

32,234,123 83,096,320

9. CASH AND BANK BALANCES:

2012 2011

$ $

Cash in hand 911,540 113,846

Access Card 88,922

Current Account - BNS Cross Roads 39,210,176 26,862,302

Current Account - RBTT Cross Roads 1,079,375 1,019,315

Current Account - RBTT Spanish Town 447,994 5,747,700

41,738,007 33,743,163

10. FINANCIAL INVESTMENTS:

1 to 5 Over 5 Carrying Carrying

Years Years Value Value

2012 2011

$ $ $ $

Held - to -maturity

JCCUL -

Cu Premium 3,539,223 - 3,539,223 3,327,539

Shares 2,956,018 2,956,018 2,956,018

Mortgage Fund 4,174,017 - 4,174,017 3,912,001

NUCS Co-op. Insurance Shares 1,000,000 1,000,000 1,000,000

Jamaica Fisherman Co-op Union - Shares - 10,814 10,814 10,814

Caribbean Cement Company - Shares - 0 9,999

Caribbean Steel Company - Shares - 0 5,500

7,713,240 3,966,832 11,680,072 11,221,871

43

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.8

11. ACCOUNTS RECEIVABLE:

2012 2011

$ $

Interest Receivable 8,312,585 7,765,975

Other 4,464,082 6,205,709

12,776,667 13,971,684

Account Receivable is classified on the statement of financial position as:

2012 2011

$ $

NON-CURRENT 1,998,567 4,769,948

CURRENT 10,778,100 9,201,736

TOTAL 12,776,667 13,971,684

12. MEMBERS' SAVINGS DEPOSITS:

2012 2011

$ $

Member Ordinary Deposit

Balance at beginning of year 7,459,678 5,627,730

Add: Deposits and transfers 77,188,129 102,169,333

84,647,807 107,797,063

Less: withdrawals and transfers 75,998,051 100,337,385

Balance at end of year 8,649,756 7,459,678

Credit Unionette Deposit 7,330,949 7,294,788

Christmas Club Deposits 1,504,833 1,339,553

Education Savings Deposit 1,856,261 2,672,367

Golden Harvest Deposit 20,083,137 18,778,550

Security Deposit 1,335,365 2,020,366

Fixed Deposits 45,992,868 45,172,872

86,753,169 84,738,174

Members' Deposits are classified on the statement of financial position as:

2012 2011

$ $

NON-CURRENT 21,418,501 20,798,916

CURRENT 65,334,668 63,939,258

TOTAL 86,753,169 84,738,174

13. BORROWING:

2012 2011

$ $

J.C.C.U.L LOAN

Non-current 25,051,950 0

Current 4,948,050 0

30,000,000 0

This loan is for a period of five years at a rate of 9.25% interest charge and is secured by the Land

and Building

44

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.9

14. ACCOUNTS PAYABLE:

2012 2011

$ $

-

Payables and Accruals 25,001,971 23,791,644

25,001,971 23,791,644

Non-Interest Bearing Liabilities are classified on the statement of financial position as:

2012 2011

$ $

NON-CURRENT 14,742,562 12,476,758

CURRENT 10,259,409 11,314,886

25,001,971 23,791,644

15. NON-INSTITUTIONAL CAPITAL:

2012 2011

$ $

Capital Reserve 7,164,918 7,445,646

Special Reserve 801,025 801,025

Educational Reserve 38,000 38,000

GL Reconciliation Reserve 3,620 3,620

Loan Loss Reserve 666,138 666,138

Emergency Reserve 2,073,420 2,123,175

Shares Transfer Fund 208,000 238,000

Retirement Benefit Asset Reserve 10,084,000 9,550,000

21,039,121 20,865,604

The Emergency Funds Reserve is established to assist members in meeting emergency expenditure associated with natural disasters.

Credit Union. Movement in this reserve passes through Accumulated Surplus.

16. INSTITUTIONAL CAPITAL:

2012 2011

$ $

Statutory Reserve

Balance 1.1.12 25,284,649 25,040,352

Add 20% Net Surplus 500,223.00

242,997

Entrance Fees 10,000 1,300

25,794,872 25,284,649

Accumulated Transfers to institutional Capital 16,066,264 16,066,264

41,861,136 41,350,913

Under the Co-operative Societies Act at least 20% of net surplus must be transferred to a statutory reserve.

45

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.10

17 FINANCIAL INSTRUMENTS:

A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.

Financial instrument carried in these statements include loans, investment, liquid asset, cash and bank balances,interest and other receivables, members' deposit, mortgage loan and other payables.

Fair Value

Fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable partiesin an arms length transaction.

Market price is used to determine fair value of financial instruments where an active market exists. Where there is no available market price, as in the case for most of the financial instrument held by the credit union, fair values have been estimated by using present value and making assumptions based on market conditions at the statement offinancial position date.

Fair values are arrived at as follows:

(a) The Fair value of liquid assets, short term deposits maturing within six months, receivables, loans and payables is assumed to approximate their carrying amount.

(b) The fair value of term deposits over six months or with no specific maturity is assumed to be the value at the statement of financial position date.

(c) Unquoted equities are carried at cost as there is not sufficient information available to determine market value.

The fair values of financial instruments of the credit union are summarized as follows:

Carry Fair Carry Fair

Value Value Value Value

2012 2012 2011 2011

$ $ $ $

ASSETS

Earning Assets

Liquid Assets 32,234,123 32,234,123 83,096,320 83,096,320

Loan to Members 284,432,963 284,432,963 227,887,953 227,887,953

Financial Investments 11,680,072 11,680,072 11,221,871 11,221,871

Non-earning Assets

Cash in Hand at Bank 41,738,007 41,738,007 33,743,163 33,743,163

Accounts Receivable 12,776,667 12,776,667 13,971,684 13,971,684

Retirement Benefit Asset 10,084,000 10,084,000 9,550,000 9,550,000

LIABILITIES

Interest-Bearing Liabilities

Members' Share Capital 196,483,380 196,483,380 217,887,608 217,887,608

Members' Deposits 86,753,169 86,753,169 84,738,174 84,738,174

External Liabilities 30,000,000 30,000,000

Non interest-Bearing Liabilities

Payables and Accruals 25,001,971 25,001,971 23,791,644 23,791,644

46

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.11

18. FINANCIAL INSTRUMENTS RISK MANAGEMENT:-

(a) Introduction and Overview

The Credit Union's activities expose it to a variety of financial risk, market risk including (currency risk, fair value interest risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Credit Union's overall risk management programme focuses on the unpredictability of financial markets and seek to minimize potential adverse effects on the Credit Union financial performance.

The Board of Directors has overall responsibility for the establishment and oversight of the Credit Union's riskmanagement framework. The Board provides written principles for overall risk management as well as writtenpolicies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivativefinancial instruments and non-derivative financial instruments, and investments of excess liquidity.

The Supervisory Committee is responsible for monitoring compliance with the society's risk management policiesand procedures for reviewing the adequacy of the risk management framework in relation to the risks faced by society. The Supervisory Committee also undertakes periodic reviews of risk management control procedures the result of which are reported to the Board of Directors.

(b) Credit Risk :-

The Credit Union takes on exposure to credit risk, which is the risk that it's members, clients or counterparts will cause a financial loss for the Credit Union by failing to discharge their contractual obligations. Credit risk is the most important risk for the Credit Union's business; management therefore carefully manages it exposures to credit risk.Credit risk exposure arise principally from the loans to members, deposits with other institutions and investment securities. There is also credit risk exposure in respect of off-balance sheet financial instruments e.g. loan commitments and guarantees. The Credit Union structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to a single member or groups of related parties and to geographical and industry segments.

The Credit Union has a credit committee whose responsibility involves regular review of the ability of borrowers tomeet repayment obligations.

(i) Loans to members and guarantees:-

The Credit Union's exposure to credit risk is influenced mainly by the characteristics of each member.

The Board of Directors have established a credit policy under which each member is assessed individually for creditworthiness prior to the Credit Union offering them a credit facility. One is required to be a member for at lease three (3) months before he becomes eligible for a loan except, in the following circumstances.

(a) Where the three(3) months eligibility period is waived.

(b) Where there are Special Loan Products offering.

'(c) Where externally generated funds are used to secure loan.

(d) Where there are open period for new members to access loans.

Loans are not granted for down payment on Hire Purchase transactions.

Loans are not granted to delinquent members, or co-makers of delinquent members.

The verification of applicant's income is undertaken e.g. the last three (3) pay slips are reviewed prior to theapproval of all loans above shares. The Credit Union reserves the right to request additional information.

47

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.12

18. FINANCIAL INSTRUMENTS RISK MANAGEMENT (CONT'D)

The maximum repayment period of a loan shall not exceed three (3) years.

The following policies and exception are noted:

(a) Loans within shares, deposit and savings in the Credit Union three (3) years.

(b) Loans using funds in other approved institutions as security three (3) years.

'(c) Real estate purchased (and associated costs) for members primary residence-Where a member is offering a first(1st) mortgage on property or a pari passuarrangement with the National Housing Trust (NHT) or a Building Society, the Credit Union may extend the loan for a period not exceeding ten (10) years.

(d) Other loans for which the Credit Union will hold first mortgage on property - 10 years.

(e) Loans for purchase of new motor vehicles - 7 years

(f) Loans for purchase of used motor vehicles-maximum 7 years.

Collateral:-

The Credit Union holds collateral against loans to members in the form of mortgage over property,lien over motor vehicles, other regulated securities over assets, hypothecation of shares held in the Credit Union. Estimates of fair value are based on value of collateral assessed at the time ofborrowing and are generally not updated except when a loan is individually assessed as impaired.

(a) Co-makers are required to have unencumbered shares which will be hypothecated.

(b) All items offered as security must be fully insured and the Credit Union must be satisfied as to the arrangements in place for future payments of the insurance premium.

(c) Motor vehicles may be used as security, provided that the vehicle will continue to get comprehensive insurance coverage until the loan is fully repaid. A percentage of the value of the vehicle is used as collateral based on the age of the vehicle.

Approval Limits

Approval limits are set based on the amount of the loan and the management levels ofapproval officers.

Impaired Loans

Impaired loans are loans for which the Credit Union determines that it is probable that it willbe unable to collect all principal and interest according to the contractual terms of the loan.

Past due but not impaired loans

There are loans where the contractual interest or principal payments are past due but theCredit Union believes that impairment is not appropriate on the basis of the level of security available or the stage of collection of amounts owed to the Credit Union.

Allowances for impairment

The Credit Union established an allowance for impairment losses that represents its estimate of incurred losses in its loan portfolio.

The main components of this allowance are a specific loss component that relates to individuallysignificant exposures and a collective loan loss allowance established on a group basis in respect of losses that have not been identified on loans subject to individual assessment for impairment.

48

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.13

18. FINANCIAL INSTRUMENTS RISK MANAGEMENT (CONT'D)

Aging analysis of loans to members that are past due

Loans to members that are less than two months past due are not considered impaired.

As of December 31, 2012, loans to members of $3,108,928 were less than two months past

due but not impaired. Loans totalling $3,983,816, were in arrears for two months and over. There

are no loans which management believes is impaired. In respect of loans that are past due but

not impaired the fair value of collateral held by the Credit Union were $9,622,473.

Write-off Policy:-

The Credit Union writes off a loan (and any related allowances for impairment losses) when the

Credit Union determines that the loans are not collectible. This determination is usually made after

considering information such as changes in borrower's financial position, or that proceeds from

collateral will not be sufficient to pay back the entire exposure.

(ii) Deposits and Investments Securities:-

The Credit Union limits its exposure to credit risk by investing mainly in liquid securities, with

counterparts that have high credit quality and Government of Jamaica securities.

Accordingly, management does not expect any counter party to fail to meet its obligations.

(iii) Exposure to Credit Risk:-

The carrying amount of financial assets represents the maximum exposure to credit risk

(before collateral held) at statement of financial position date these were:

Maximum Exposure

2012 2011

$ $

Loans to members (net) 284,432,963 227,887,953

Liquid assets-earning 32,234,123 83,096,320

Financial investments 11,680,072 11,221,871

Liquid assets-non-earning 41,738,007 33,743,163

Receivables and prepayments 12,776,667 13,971,684

Retirement Benefit Asset 10,084,000 9,550,000

392,945,832 379,470,991

There has been no change to the Credit Union's exposure to credit risk or the manner in which it

manages the risk.

49

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.14

18. FINANCIAL INSTRUMENTS RISK MANAGEMENT (CONT'D)

( c ) Liquidity Risk:-

Liquidity risk is the risk that the Credit Union is unable to meet its payment obligations associated

with its financial liabilities when they fall due. Prudent liquidity risk management implies maintaining

sufficient cash and marketable securities, the availability of funding through an adequate amount of

committed credit facilities and the ability to close out market position to meet cash requirements.

The Society manages this risk by keeping a substantial portion of its financial assets in liquid form in

accordance with regulatory guidelines.

The Credit Union is subject to a liquidity limit by the Jamaica Credit Union League (JCCUL) and compliance

is regularly monitored. The key measure used by the Credit Union for managing liquidity risk is the ratio of

liquid assets to total savings deposits. For this purpose, liquid assets include cash and bank balances,

deposit held with JCCUL and highly liquid investments which are readily converted into cash within three

months.

The liquid asset ratio at the end of the year was 0.99 ( 2011: 1.55)

There has been no charge to the Credit Union's exposure to liquidity risk or the manner which it manages

and measure the risk.

Liquidity risk management policy

The Credit Union's liquid risk policy, as carried out within the Credit Union and monitored by the board of

Directors, include:

(i) Monitoring future cash flows and liquidity on a daily basis. This incorporates an assessment of expected

cash flows and the availability of high grade collateral which could be used to secure funding if required.

(ii) Maintaining committed lines of credit.

(iii) Maintaining a portfolio of highly marketable and diverse assets that can easily be liquidated as protection

against any unforeseen interruption to cash flow.

(iv) Managing the concentration and profile of debt maturities.

(v) Optimizing cash returns on investments.

The matching and controlled mismatching of the maturities and interest rate of assets and liabilities is

fundamental to the management of the Credit Union. It is unlikely for entries to be completely matched at

any time since business transacted is often of uncertain term and of different types. An unmatched position

potentially enhances profitability, but can also increase the risk of loss.

The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing

liabilities as they mature, are important factors in assessing the liquidity of the Credit Union and its exposure

to changes in interest rates and exchange rates.

50

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.15

Financial Assets and Liabilities Cash Flows

The tables below summarises the maturity profile of the Credit Union's financial assets and liabilities

as at 31st December 2012

Within 3 to 12 1 to 5 Over 5

3 months months years years Total

$' 000 $' 000 $' 000 $' 000 $

ASSETS

Earning Assets

Liquid assets 32,234,123 - - - 32,234,123

Financial investments - - 8,059,250 3,620,822 11,680,072

Loans to Members 11,941,937 35,825,810 169,653,423 67,011,793 284,432,963 Non-earning assets

Cash in hand and at bank 41,738,007 - - - 41,738,007 Accounts receivable 2,780,701 7,998,399 1,998,567 12,776,667

Pension Asset - - - 10,084,000 10,084,000

Property and Equipment - - - 15,713,835 15,713,835

Total Assets 88,694,768 43,824,209 179,711,240 96,430,450 408,659,667

CUETS Settlement FundLIABILITIES

Interest bearing liabilities

Members' Share Capital 19,648,338 58,945,014 117,890,028 196,483,380

Members' deposits 16,333,667 49,001,001 6,077,385 15,341,116 86,753,169

External liabilities 1,194,602 3,753,448 25,051,950 30,000,000

Non-interest bearing liabilities

Accounts payable 2,893,171 8,679,512 13,429,288 - 25,001,971

Total Liabilities 40,069,778 120,378,975 162,448,651 15,341,116 338,238,520

Voluntary shares can be withdrawn at the option of the members and will therefore affect the liquidity position of the Credit

Union. These have no contractual maturity. The amounts included in the analysis are based on management's estimate of

expected cash flow based on historical experiences. These may vary significantly from actual cash flow which are generally

expected to maintain a stable or increasing balances.

51

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.16

18. FINANCIAL INSTRUMENTS RISK MANAGEMENT (CONT'D)

( d ) Market Risk:-

The Credit Union takes on exposure to market risk, which is the risk that the fair value or future

cash flows of a financial instrument will fluctuate because of changes in market prices.

Market risk mainly arise from changes in foreign currency exchange rates, interest rates and

equity prices and will affect the Credit Union's income or value of its portfolio of financial instrument.

Market risk is monitored by the General Manager.

Market risk exposure is measured using sensitivity analysis.

There has been no change to the Credit Union's exposure to market risks or the manner in

which it manages and measures the risk.

(i) Currency Risk:-

Currency risk is the risk that the market value of, or the cash flows from, financial

instruments will vary because of exchange rate fluctuations. The Credit Union is

exposed to foreign currency risk due to fluctuations in exchange rates on

transactions and balances that are denominated in currencies other than the

Jamaican dollar. The Credit Union is primarily exposed to the United States Dollar (US$).

There was no significant exposure to foreign currency risk.

The only foreign asset held by the Credit Union is as follows:

2012 2011

US$ US$

Bank Savings Account 3,285 2,289

(ii) Interest Rate Risk:-

Interest rate risk is the risk that the value or the cash flows of a financial instrument will fluctuate

because of a change in market interest rates.

Floating rate instruments expose the Credit Union to cash flow interest rate risk, where as fixed

interest rate instruments expose the Credit Union to fair value interest rate risk.

Liquid assets are held for the short term and accordingly would substantially reflect prevailing

interest rates in the financial market. No interest is paid on member's capital, Savings deposits

and external credits are accepted from, and loans given to members at a fixed rate of interest

which is fairly stable. Accordingly, there is no significant exposure to interest rate risk.

52

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.17

18. FINANCIAL INSTRUMENTS RISK MANAGEMENT CONTD:-

Market Risk:-

At the reporting date the interest rate profile of the Credit Union's interest-bearing financial

instruments were:

2012 2011

$ $

Fixed rate financial assets:-

Loans to members 284,432,963 227,887,953

Liquid assets 32,234,123 83,096,320

Financial investments 11,680,072 11,221,871

328,347,158 322,206,144

Fixed rate financial liabilities:-

Saving deposits 86,753,169 84,738,174

The Credit Union does not account for any fixed financial asset and liability at fair value through profit or

loss or available for sale and therefore a change in interest rates at the statement of financial position date

would not affect profit or loss or equity. The Credit Union has no variable rate financial instrument at the

statement of financial position date.

(iii) Equity Price Risk:-

Equity price risk arises from available-for-sale equity securities held by the Credit Union as part

of its investments portfolio. Management monitors the mix of debt and equity securities in its

investment portfolio based on market expectations. The primary goal of the Credit Union's

investment strategy is to maximise return on investment. The Credit Union's equity securities

are not material and therefore it is not exposed to any significant equity price risk.

(e) Capital Management:-

The Credit Union's objectives when managing capital are to safeguard the Credit Union's ability to

continue as a going concern in order to provide returns for members and benefits for other stakeholders

and to maintain an optimal capital structure to reduce the cost of capital, which the Credit Union

defines as net operating income divided by total members' equity.

The Board of Directors also monitor the level of dividends to members.

Consistent with others in the industry, the Credit Union monitors capital on the basis of the gearing ratio.

This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings

(including current and non-current borrowings, less cash and cash equivalents).

Total capital is calculated as equity as shown in the statement of financial position plus net debt.

53

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.18

18. FINANCIAL INSTRUMENTS RISK MANAGEMENT (CONT'D)

Capital Management:-

The gearing ratios at 31 December 2012 and 2011 were as follows:

2012 2011

$ $

Total borrowings 116,753,169 84,738,174

Less: cash and cash equivalent 41,738,007 33,743,163

Net debt 75,015,162 50,995,011

Total capital 341,919,691 339,178,380

Gearing ratio 22% 15%

There was no change to the Credit Union's approach to capital management during the year.

The Credit Union complied with all externally imposed capital requirement to which they were subjected.

54

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.19

19. RELATED PARTY TRANSACTIONS AND BALANCES:

At December 2012, connecting parties of the credit union and 15 staff members had savings and

loans as shown below.

The loans are being repaid in accordance with the terms of the loans.

During the year no loans were made to Connecting Parties or staff which necessitated any waiver

of the loan policy.

2012 2011

$ $

Directors and Committee Members:

Shares and Savings 12,567,537 9,260,747

Loans including interest 18,763,010 13,088,307

Staff Members:

Shares and Savings 3,242,971 4,093,563

Loans including interest 15,976,977 10,056,084

20. COMPARISON OF LEDGER BALANCES:

PERMANENT VOLUNTARY

SHARES SHARES DEPOSITS LOANS

$ $ $ $

Balance as per General Ledger 5,520,000 196,483,380 97,986,336 285,617,126

Balance as per Members' Ledger 5,520,000 196,483,380 97,985,606 285,623,344

Difference -

-

730

(6,218)

PERMANENT VOLUNTARY

SHARES SHARES DEPOSITS LOANS

$ $ $

Balance as per General Ledger - 2011 5,242,000 217,888,048 90,435,315 248,600,665

Balance as per Members' Ledger - 2011 5,242,000 217,888,048 90,439,958 248,600,665

Difference -

-

(4,643)

-

55

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.20

21. INSURANCES

(a) LIFE SAVINGS AND LOAN PROTECTION INSURANCE:

During the year, the credit union had life savings and loan protection with Cuna Mutual Insurance

Company Limited. The total premium for the year was $1,904,972 (2011- $1,813,463)

(b) FIDELITY INSURANCE COVERAGE:

During the year, the credit union had life savings and loan protection with Cuna Mutual Insurance

Company Limited. The total premium for the year was $128,792 (2011 - $ 124,272).

(c) PREMISES AND ASSETS:

During the year, the credit union had coverage on its premises, equipment and office furniture.

The premium paid was $211,185 (2011 - $214,256).

22. TRANSFERS AND APPROPRIATION:

2012 2011

$ $

Statutory appropriation 500,223 242,997

Dividends on shares 886,000 520,200

1,095,141 552,310

Scholarship Funds-High School 25,000 25,000

Scholarship Funds-Tertiary 100,000 100,000

Lorrel Bruce Scholarship 5,000 5,000

Scholarship Fund-Basic School 40,000 40,000

Best Care Children's Home 60,000 60,000

Donation 50,000 100,000

Emergency Funds 50,245 50,000

Special Reserve 271,731

Retirement Benefit Asset Reserve 534,000 998,000

Share transfer Reserve 50,000 100,000

3,395,609 3,065,238

Interest rebate

56

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.21

23. INTEREST INCOME:

2012 2011

$ $

(a) Loans to Members 43,333,913 53,564,176

(b) Liquid Assets

Savings Account (RBTT) 532 1,209

Term Deposit (JCCUL) 4,145,111 4,196,818

Interest on Saving Account 420

Cu-cash Deposits 1,102,061 1,478,438

5,247,704 5,676,885

(c) Financial Investments

Mortgage Fund-JCCUL 162,016 207,568

Cu-Premium-JCCUL 211,683 217,856

Investment-Mayberry 37,185 0

410,884 425,424

24. INTEREST EXPENSES:

2012 2011

$ $

Security Deposit 89,027 101,204

C/Unionette Deposit 417,637 412,931

Deposit/Voluntary Share Capital 961,729 3,395,404

Fixed Deposit 1,916,614 2,233,415

Golden Harvest 1,222,564 2,065,296

League Loan 15,206 21,335

4,622,777 8,229,585

25. OTHER FINANCIAL COSTS:

2,012 2,011

$ $

Bad Debt Provision 875,301 308,862

Miscellaneous Deposit 69,965

Bank Charges 1,296,023 819,126

2,241,289 1,127,988

57

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.22

26 NON-INTEREST INCOME:

2012 2011

$ $

(a) Fees and Service Charges 5,874,098 1,739,601

(b) Miscellaneous

Copy Machine 940 515

Foreign Exchange Gain/( Loss) (4,641)

Dividend-Cuna Mutual 42,948

Family Indemnity Plan - Incentive 2,251,066 419,902

Rule and Pass Books 25,150 3,250

Other 647,189 1,678,846

2,967,293 2,097,872

27. NET SURPLUS:

2012 2011

$ $

Net surplus is shown after charging:-

Auditors remuneration 550,000 610,000

Depreciation 1,594,212 2,091,611

Repairs and maintenance 1,654,623 1,349,860

Staff cost 25,401,408 27,578,540

58

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.23

28. RETIREMENT PENSION ASSET:

The credit union participates in a multi-employer Pension plan operated by The Jamaica

Co-operative Credit Union League Limited. It is a contributory defined benefit pension plan covering

all full time permanent employees. The Scheme is valued annually by independent actuaries.

Actuarial assumptions used were as follows:

2012 2011

Discount rate 10.5% 10%

Expected return on plan assets 9% 10%

Expected average remaining working lives of employees (years) 25.50 25.70

The amounts allocated as this credit union's share are as follows:

2012 2011

$ $

Fair Value of Plan Assets 20,958,000 25,568,000

Present Value of Funded obligation (13,908,000) (18,370,000)

7,050,000

7,198,000

Unrecognised Actual Gains 3,034,000 2,352,000

Assets recognised in Statement of Financial Position 10,084,000 9,550,000

Amounts recognised in the Income Statement are as follows:

Current service cost 718,000 499,000

Interest cost 1,662,000 1,747,000

Expected return on Plan Assets (2,038,000) (2,258,000)

Net pension (income)/expense included in staff costs 381,000 (12,000)

Movement in Pension Assets in the Statement of Financial Position

Asset at beginning of year 9,550,000 8,552,000

Pension (Expense)/Income (381,000) 12,000

Contributions paid 915,000 986,000

Asset at end of year 10,084,000 9,550,000

59

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.24

29. OPERATING EXPENSES:

2012 2011

$ $

STAFF COSTS

Personnel expenses 25,401,408 27,578,540

ADMINISTRATIVE EXPENSES

Office Expenses 991,733 1,213,395

Depreciation and Amortization 1,284,984 1,782,314

Audit and Accounting 1,426,338 1,427,551

Donation 30,000 11,000

Printing, Stationery & Supplies 1,025,881 1,460,878

Travelling 1,077,825 1,404,036

General Insurance -

58,683

Professional and Consulting Fees 111,900

AGM Expenses 1,356,283 1,658,876

Meeting and seminars 873,252 1,073,055

Retreat Expenses 640,775 759,481

INS Premium-Golden Harvest 351,407 321,397

INS Premium-Furniture 88,756 99,455

INS Premium-Group Accident 62,797 92,460

INS Premium-Group Life 260,431 191,412

Board and Committee Training 152,960 14,100

Cumis Computer Feature 710,074 653,628

Management Fees 2,000

Postage 12,180 21,900

Cleaning and Sanitation 229,157 200,168

Telephone 1,266,774 1,219,429

Internet Expenses 119,442

CCCU Month Expenses 109,511 40,595

ICU Month Expenses 132,816

Insurance 823,387 908,137

Repairs and Maintenance 1,189,394 1,096,070

13,965,898 16,072,178

MARKETING & PROMOTION

Publicity 645,506 433,254

Public Relation 0 343,364

645,506 776,618

MEMBERS SECURITY

Life Savings and Loan Protection 1,904,972 1,813,463

Cuna Mutual Insurance 128,792 124,272

2,033,764 1,937,735

REPRESENTATION & AFFILIATION

Stabilization Dues 1,052,113 1,092,234

League Fees 817,193 969,327

Seminars and Meetings 582,527 879,842

Membership Dues 4,000

2,451,833 2,945,40360

NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2012

STATEMENT VI.24.1

29

REPRESENTATION & AFFILIATION

Rates and Taxes 134,299 151,205

Property Insurance 211,185 214,256

Security 874,128 643,745

Electricity 1,976,234 2,048,628

Repairs and Maintenance 465,229 253,790

Depreciation 309,228 309,297

3,970,303 3,620,921

TOTAL OPERATING EXPENSES 48,468,712 52,931,395

OPERATING EXPENSES (CONT'D)

61

Credit Committee Report Year Ended December 2012

1.0 INTRODUCTION 3.0 AREAS OF IMPROVEMENT

4.0 LOANS GROWTH2.0 MEMBERS WHO SERVED

The Correctional Services Co-operative Weekly meetings were held to approve Credit Union Limited has completed loans in line with the policies and another successful but challenging year procedures. Areas where improvement both socially and economically with the was evident were, reduction in loan public sector wage freeze, pending IMF waivers, flexibility in the loans policy, deal among other macro-economic issues loan processing and turnaround time for affecting our country. While the realities most loans. The Credit Union now has a faced us, we had to put more sustainable trained staff to do mortgage processing to strategies in place to keep afloat. The speed up the real estate loans which was a Credit Committee will now report on the major challenge over the years.portfolio activities for the financial year ended December 2012.

The loan portfolio grew by 24% over the period and reversed the flat performances The members who served during the

nd over the years. Changes that were made to period are listed. On the 2 of June 2012, the loans policy facilitated many persons the vacancy created from Ms. Novelette with motor vehicle loans, home Reid after serving 10 years was filled by improvement and debt consolidations. Miss Natalee Malcolm. The credit Some of those loans from the commercial committee takes this opportunity to banks taken by our members were also recognize and thank Ms. Novelette Reid consolidated. for her years of invaluable service that

was given.The credit committee commends the Board of Directors for making the necessary adjustments to the loans policy to make the loans more attractive at a time when financial institutions had become competitive in the market place

NAMES

POSITIONS

Mr. Louis Ferrigon Chairman Mr. Gary Byfield

Member

Mr. Winston Walters Member

Ms. Inderia Hutchinson

Secretary

Ms. Novelette Reid

Member

Ms. Natalee Malcolm

Member

Winston Walters, Inderia Hutchinson, Louis Ferrigon, Gary Byfield

62

YEAR LOAN PORTFOLIO

2008 $224M

2009 $233M

2010 $248M

2011 $228M

2012 $285M

5.0 COMPOSITION OF LOAN PORTFOLIO 2012

indicated, loans for motor vehicles and real estate granted over the period created a better loan portfolio mix rather than the cash and unsecured Special effort was made to diversify the loan loans which generally comprised the portfolio.portfolio to reduce the portfolio risks as well as to

facilitate a more sustainable portfolio. As was

LOAN TYPE

PORTFOLIO

SIZE $

Motor Vehicles

$38M

Real Estate/Home Improvement

$62M

Business

$4M

Status/Pay Day

$55M

Personal/Cash Secured Loans/Other

$106M

TOTAL $285M

Loan Porfolio Composition 2012

Motor Veheicle

Real Estate/Home ImprovementBusiness

Status/Pay Day

Personal/Cash Secured Loans/Other

63

6.0 HIGH LOAN DEMAND

7.0 ACKNOWLEDGEMENTS

Let us continue to thank the Heavenly Father who has guided our credit union The demand for loans had to be curtailed and the membership as we continue to and scheduled based on availability of grow from strength to strength. We wish funding. The demand for loans continues to thank The Board of Directors, The to be high and can only be funded from Supervisory Committee, Liaison members' deposits. We want to build on Officers, other Volunteers, the General this momentum so we are imploring our Manager, staff and the most of all, the members to bring all your financial MEMBERS who have given us the resources and invest with your Credit opportunity to serve and to achieve our union so that we can help each other.collective goal.

As we mark the end of another successful MR. LOUIS FERRIGONyear of service to our members we do so

Presidentwith tremendous satisfaction and deep sense of pride knowing that despite the many challenges we were able once again to assist so many members in realizing

INDERIA HUTCHINSONtheir dreams and personal ambitions. Secretary

64

1.0 INTRODUCTION 2.0 COMMITTEE MEMBERS AND MEETINGSThe international economic environment

came under major macro-economic and At our Annual General Meeting held on social pressures coupled with increased Saturday June 2 2012, the following regulatory requirements particularly in persons were elected to serve on the identity theft, Cyber Crimes and money Supervisory Committee for a period of one laundering. Some of these regulations have year. not yet impressed on our local financial industry but will soon take effect e.g.

As it is mandatory, in keeping with Rule # Foreign Account Compliance Act 48 article X, the Supervisory Committee (FATCA) and Terrorism Protection Act held its first meeting on Thursday July 7 (TPA). The Jamaica Debt Exchange (JDX) 2012. Miss Kisha Henry and Miss Tracia and the recent National Debt Exchange Chambers were elected as chairman and (NDX) have made our earnings very secretary respectively. Regrettably, Mr. volatile where other income streams had to Alfred Duncan could not serve for the most be perused. These issues only served to part due to personal matters and tendered inform us that we have to be more prudent his resignation effective July 31, 2012. Mr. and compliant in our operations to ensure Norman Sanford was selected to carry on in viability and sustainability. Despite these that capacity. Several meetings were held challenges, the year turned out better than and attendance was regular in most was anticipated as improvements were seen instances.in many areas of the credit union's

operations.

Supervisory Committee Report Year Ended December 2012

From L-R: Sheryl Reynolds, Lisa Collie-Evering, Norman Sanford, Kisha Henry (Tracia Chambers – Missing)

65

3.0 AUDITS CONDUCTED BY THE SUPERVISORY COMMITTEE

4.0 INTERNAL AUDITS - JCCUL

recommends that there should be consistency in the checking and approval of these Bank Reconciliation Statements. Later in the year checks 3.1 Verification of loan Securities:revealed that Bank Reconciliation Checks have revealed that all security Statements were subsequently loans were properly secured before approved.cash disbursements to members.

Documentary evidences were on file for all collateral. Loans approved 3.4 Physical checks of Non Current were in accordance with the policies Assets:and rules of the Credit Union The Committee carried out physical

checks on some noncurrent assets, and was accounted for as registered in the 3.2 Cash count and cash non-current assets log book.transportation:

Surprise checks on cashiers revealed that all cash in hand, cash receipts and 3.5 Delinquencycash payments were balance. The The reported delinquency rated for the Supervisory Committee commends period was 1.39% which is within the our cashiers. The Credit Union now benchmark ratio of 5%. Several has a contract with Atlas Armored to accounts remained dormant and transport cash outside of the bearer's inactive and management must hasten limit. to appropriately classify these

accounts based on policy and pursue other collections measures.

3.3 Examination of Payment and Journal Vouchers:Payment and Journal vouchers for the majority were in good standing except

In addition to the Supervisory Committee, for few minor exceptions of which the Jamaica Co-operative Credit Union were pointed out to the relevant League Limited conducted Internal Audit persons and were corrected forthwith.on the following areas:

3.4 Examination of Cash Books and 4.1 Standing Orders - Conducted Bank Reconciliation Statement:

February 2012Checks by the Supervisory Committee have revealed that the cash book and

The main recommendation was that a bank statement were reconciled. However for the month of January standing order policy and procedures 2012 and May 2012, the Bank be developed. Management has Reconciliation Statements were not commenced the policy and will be a p p r o v e d . T h e C o m m i t t e e approved in 2013.

NAME POSITION Miss Kisha Henry

Chairman

Miss Tracia Chambers

Secretary

Mrs Lisa Collie Everring

Member

Miss Sheryl Reynolds

Member

Mr Alfred Duncan

Resigned

Norman Stanford

Member

66

4.2 Payroll Audit - Conducted September 1. Risk and Compliance – Proceeds 2012 of Crime Act (POCA) Regulations,

Know your Customer ( KYC) and One of the Human Resource functions in the Know your Employee (KYE)credit union is payroll processing such as

payments to all employees. 2. Credit Administration

Best practices standard require a payroll 3. Internal Controls policy document to:

1. Be approved by the Board of Directors 5.2 Registrar of Co-operative and Friendly

and applicable to each employee.Societies - The audit was conducted in July

2. Include but not be limited to the 2012. The findings indicated that most areas following topics were compliant except for few operational

gaps which were subsequently addressed. · Responsibilities of the board/ The issue of loans been taken on Children's management;Account /Children's Account being used as

· Policy review; collateral was in contravention to the rules of the Society. This practice was immediately · Payroll administration/approval;discontinued.

· Adjustments made to payroll data;

· Statutory payments;

· Preparation/processing of time-sheets and or attendance register;

The Credit Union will continue on its path to · Review of the payroll process by develop its compliance framework and internal audit;build on the successes in 2013. Your Credit

· Payroll record maintenance; Union remains strong and poised for growth 3. Address segregation of duties between and nothing can challenge us when we work

together. Let us unite and build that we can the various job functions and enjoy the benefits of pooling our resources processes;together.

4. Address the service level agreement for outsourced payroll functions-where We wish to thank the Board, staff and past applicable. General Manager, Mrs Carlene Johnson-

Foreman for their support during the period. Special thanks to JCCUL, Co-operative

Findings/Recommendation Department, our Auditors and other special groups for partnering with us. Sincere Management should ensure that the policy thanks to you the members for your gaps are strengthened to fall in line with confidence in your Credit Union and for best practices.giving us the opportunity to serve you. We wish all the best for the next administration. “IF JESUS CHRIST IN THE VESSEL WE CAN SMILE AT THE STORM”.

5.1 BOJ – The BOJ conducted their usual audit on July 16-31, 2012. Findings included the need to strengthen the following areas:

………………….... .........................................

Kisha Henry Tracia ChambersChairman Secretary

6.0 ACKNOWLEDGEMENT/

CONCLUSION

5.0 SPECIAL AUDITS

67

Proposal for the Appropriation of Surplus

Your Board of Directors recommends for your approval the appropriation of the undistributed Surplus Two Million Eight Hundred Ninety Thousand Dollars ($2,000,890.00) to be apportioned as follow:

Detail Amount

Dividends on Permanent Shares (10%) $552,000.00

Special Loan Provision $662,000.00

Honoraria $600,000.00

Share Transfer Fund $50,000.00

Scholarship Fund (Ethan King) $50,000.00

Basic School $40,000.00

High School $25,000.00

Children’s’ home $60,000.00

Donation $50,000.00

TOTAL $2,000,890.00

Proposal for the Fixing of the Maximum Liability

In keeping with Rule 70, your Board of Directors proposed that the maximum liability for the loans that the Board of Directors may borrow is to be set at 10 times the Society's Capital and Reserve Funds.

Yours Co-operatively

DAVID SPENCERTreasurer

68

RESOLUTIONS

PREAMBLE

RESOLUTION (2)

RESOLUTION (1)

Whereas

“Protection & Essential Services” shall be interpreted to include:-

Correctional Services Co-operative 1. Fire Brigade Services and its affiliated Credit Union is seeking strategic ways to leverage entities.its sustainability and to improve shareholders 2. Private Security Companies working value. with the Department of Correctional

Services and other Security groups.Whereas the macro economic factors such as public sector wage freeze, slow economic growth, “Affiliated Companies” shall be high unemployment, JDX, NDX, threaten the interpreted to mean:- any company medium term sustainability of the Society. contracted to do business with the

Department of Correctional Services. Whereas the credit union is affected by retrenchment and retirement of personnel of Moved by: Correctional Services, slow growth and near optimal exhaustion of potential Correctional Services personnel becoming members. Seconded by:

Whereas the name Correctional Services Co- operative Credit Union is affiliated with the Department of Correctional Services where its bond is tied or is limited.

Whereas Article II Rule 4 reads,Whereas the trend in the Credit Union Movement Membership in the Society shall be limited to all is bond extension, strategic mergers and employees of the Department of Correctional partnerships based on the regulatory and Services and their immediate families economic environment. (Husband/Wife, Children, Father and Mother)

and employee of the said Society and their Be it resolved That the members at this 2012 immediate family (Husband/Wife, Children, AGM approve by a special majority vote the Father and Mother) who satisfy the age expansion of the bond set out below to take on requirement of the Co-operative Societies Act. new entrants. Membership may be retained on retirement,

transfer, secondment or resignation from the Correctional Services provided that such membership is subject to conditions as laid down by the Board of Directors.

Be it resolved that the Interpretations Clause be Be it resolved that Article II Rule 4 be amended amended to include the following definitions: to read:

Membership in the society shall be limited to, “Immediate family” shall be interpreted to a) All immediate family members of any mean:- mother, father, brother, sister, spouse, member of the Society; provided that they biological and adopted children. satisfy the age requirement of the

Cooperative Societies Act

INTERPRETATIONS

69

b) Present and past employees of Correctional Services Credit Union;

c) Present and past employees of the Protection and Essential Services;

d) Present and past employees of the Whereas ARTICLE 1X Rule 46 (i) readsDepartment of Correctional Services & The Credit Committee by resolution concurred Affiliated Companies. by all members of the said Committee and a

majority of the members present at a General e) Membership may be retained on Meeting may delegate to the Treasurer the power retirement, transfer, secondment or to make loans to members; provided the amount resignation; provided that such of any such loans shall not exceed Fifty Thousand membership is subject to the By-laws as Dollars ($50,000.00) and the period of repayment laid down by the Board of Directors. All shall not exceed six (6) months; provided also that membership is subjected to the approval the member is in good standing.of the Board;

Amended to read-The Credit Committee by resolution concurred in Moved by: by all members of the said Committee may delegate to the authorized staff or Board of Seconded by: Director the approval of loans to members subject to the approved loan policy; provided also that the member is in good standing.

Moved by:

Seconded by:

Whereas ARTICLE VI Rule 22 readsAll receipts and disbursements shall be supported by proper vouchers and all disbursements in excess of Ten Thousand Dollars ($10,000.00)

Be it resolved:shall be made by cheque or any other instruments (1) That the membership of this 2012 AGM approved by the Board of Directors from time to

approve by simple majority vote for the time.Board of Directors to seek strategic merger partners through the process of transfer of Amended to read- All receipts and engagement or amalgamation with Credit disbursements shall be supported by proper Unions to facilitate further growth, vouchers. The Board shall approve an viability, diversification of products and authorization schedule for l imits for services and competitive advantage in the disbursements made by cash and cheques or any financial sector.other instruments from time.

(2) That a Merger Committee be appointed by Moved by: the Board of Directors at the first sitting of its meeting post 2012 AGM to undertake the Seconded by: feasibility activities.

RESOLUTION (4)

RESOLUTION (3)

RESOLUTION (5)

ARTICLE 1XCREDIT COMMITTEE

ARTICLE V1PASSBOOKS, RECEIPTS AND

DISBURSEMENTS

MERGER DISCUSSION AND MERGER COMMITTEE

70

71

Nominating Committee Report Year Ended December 2012

In accordance with Rule XIVI, 65 (i) of the the var ious capaci t ies the fol lowing Correctional Services Credit Union Limited, the recommendations were made for the approval of Nomination Committee comprising Messrs. the Annual General Meeting.David Knight and Ivor Samuels and Mrs. Georgia Gordon-Dixon met on June 26, 2013 at The Nominations Committee wishes to extend a the Society's office. special commendation to all the members who are

retiring this year and will not be up for election. Having ascertained the status of retiring members Thank you for the valuable contribution during and the availability of new members to serve in your tenure.

RECOMMENDATIONS:

BOARD OF DIRECTORS

RETIRING

RECOMMENDATIONS

Michael Anderson

Raymond Williams

Joycelyn Roach-Spencer

Janet Davy

William Reynolds

William Reynolds

RETIRING

RECOMMENDATIONS

Louis Ferrigon

Donnovan O’Connor

Gary Byfield

Gary Byfield

Winston Walters

Winston Walters

Inderia Hutchinson

Inderia Hutchinson

Natalie Malcolm (resigned) Marie McDonald

CREDIT COMMITTEE

SUPERVISORY COMMITTEE

RETIRING

RECOMMENDATIONS

Keisha Henry

Courtney Ruddock

Lisa Collie-Evering

Lisa Collie-Evering

Sheryl Reynolds

Sheryl Reynolds

Norman Stanford

Norman Stanford

Tracia Chambers Tracia Chambers

72

and he has completed a Bachelor in Physical PROFILE OF NEW NOMINEESEducation and Sport and a Certificate in Addiction Studies. His current pursuit is Board of Directors:completing a Diploma in Paralegal Studies at the Mr. Raymond Williams has been employed to the Justice Training Institute. Mr. O'Çonnor has been Department of Correctional Services for over 38 awarded medals for Long Service and Good years and currently is a Superintendent. A past Conduct and trophies from the G. C. Foster student of Porus Secondary School, Mr. Williams College for Education and Physical Education. has completed various studies and training over Mr. O'Çonnor is happily married with two the years including Penal and Juvenile Reform children. and Practice, Principles and Practice in Social

Works and Middle Management Studies. Miss Marie McDonald has been employed to the Demonstrating his commitment to community Department of Correctional Services for twenty development and nation building, Mr. Williams years and presently is an Accounting Technician. serves as Public Relations Officer of Bamboo Miss McDonald has also worked previously as an Couples Club, Chairman of Bezer Basic School Internal Auditor. She is passionate about your and Pastor's Council Member – Bamboo New career in accounting and is pursuing a Bachelors Testament Church, St. Ann. Mr. Williams is in Business Administration (Accounting Major) committed to serving his fellowmen and has a at the University of Technology. A member of strong spirit of voluntarism.the All Saints Pentecostal Church in Spanish Town, Miss McDonald is a mother of one child. Miss Janet Davy has served the Department of Miss McDonald is not a stranger to voluntarism Correctional Services (DCS) for twenty two years having served the Credit Union as a Liaison and is currently the Director of Community Officer for over five years.Services. Prior to joining the DCS, Miss Davy

worked as Field Officer and Branch Manager with the St. Elizabeth Credit Union. A volunteer

Supervisory Committeewith the national Council for Drug Abuse, Miss Mr. Courtney Ruddock is employed to the Davy is a Past President of St. Cruz Jaycees and Department of Correctional Services for over 19 Past Executive Vice President of Jamaica Junior years and is presently an Accounting Technician. Chamber. The holder of a Masters in Social Mr. Ruddock has a Diploma in Government Work, Miss Davy is a teacher by training and has Accounting and a Professional Certificate in also completed studies in Public Administration. Industrial Relations. He is currently pursuing the Miss Davy is a member of the Assemblies of God Advance level of the Certified Accounting in Jamaica.Technicians (CAT) course. A man given to service and representation, Mr. Ruddock is a delegate of the Jamaica Civil Service Association Credit Committee:and member of the National Civil Service Week Mr. Donnovan O'Connor is employed to the Planning Committee.Department of Correctional Services for twenty

five years and is a Staff Officer. A member of the Department's Sports Committee, Mr. O'Connor is

David C. Knightno stranger to the spirit of voluntarism and Chairman- Nominations Committeeserving his colleagues. Over the years Mr. 2013 June 26O'Connor has completed various areas of studies

73

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VOLUNTEERS 2012

BOARD OF DIRECTORS

NAME

POSITION

Michael Anderson

David Knight

David Spencer

William Reynolds

Joyceln

Spencer

Leslie Campbell

Reuben Kelly

Carlton Campbell

Elton Harris

President

Vice President

Treasurer

Assistant Treasurer

Secretary

Assistant Secretary

Director

Retired June 2012

Retired June 2012

CREDIT COMMITTEE

NAME

POSITION

Louis Ferrigon

Chairman

Inderia Hutchinson

Secretary

Natalee Malcolm

Member

Winston Walters

Member

Gary Byfield Member

SUPERVISORY COMMITTEE

NAME

POSITION

Kisha Henry

Chairman

Tracia Chambers

Secretary

Norman Sanford

Member

(from August 2012)

Lisa Collie -Evering

Member

Sheryl Reynolds

Member

Afred Duncan

Member

(up to July 2012)

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STAFF 2012

NAMES OF STAFF POSITION

Carlene Foreman-Johnson General Manager (up to June 2012)

Claudia Thompson-Roache General Manager (from October 2012)

Geoffrey Eccleston

Accountant

Carol Baker

Credit Manager

Sandra Brown

Admin. Assistant

Leighton

Crump

Senior Accounting Clerk

Georgia

Gordon-Dixon

Loans Officer

Jodie-Ann Deslandes

Field Marketing Officer

Melisia Ford-Campbell

Tricia Laylor

Accounting Clerk. 1

Accounting Clerk 2

Martha Gordon

Loans Security/ Delinquency Officer

Natalie Brown

Caroline Singleton

Member Service Representative

Teller

Alicia Heathe

Byron Richards

Loans Clerk

Loans Clerk

Latoya Miller

Filing Clerk

Joy Scarlett

Office attendant

Kenroy Rhoden

Office Assist ant/ Bearer

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Deceased Members 2012The Correctional Services Co-operative Credit Union Limited regrets the passing of these members during the year 2012 and prays God's continuous blessings on their loved ones.

Maurice JonesRonald CrooksPauline Lamey

Esmine TaterLevi MerchantGladstone ReidJames Cargill

When someone we love passes away,We ache, but we go on;Our dear departed would want us to heal,After they are gone.

Grief is a normal way to mendThe anguish and pain in our hearts;We need time to remember and time to mourn,Before the recovery starts.

Let's draw together to recuperate,As we go through this period of sorrow;Let's help each other, with tender careTo find a brighter tomorrow.

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