INDEPENDENT AUDITORS REPORT

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Abigayle Preston
5 years ago
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1 Tel: Fax: Mercury Court Choc Estate P.O. Box 364 Castries LC St. Lucia INDEPENDENT AUDITORS REPORT The Shareholders 1 st National Bank St. Lucia Limited Opinion We have audited the financial statements of 1 st National Bank St. Lucia Limited ( the Bank ), which comprise the statement of financial position as at December 31, 2016, the statements of income, profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Bank as at December 31, 2016, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Saint Lucia, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter The Bank s financial statements as at and for the year ended December 31, 2015 were audited by another auditor who expressed an unmodified opinion on those statements on April 22, Responsibilities of Management and Board of Directors for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Bank s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so. BDO Eastern Caribbean, a network of firms registered in Anguilla, Antigua and Barbuda, St. Lucia and St. Vincent and the Grenadines, is a member of BDO International Limited, a UK company Limited by guarantee, and forms part of the international BDO network of independent member firms.

2 The Board of Directors are responsible for overseeing the Bank s financial reporting process. Auditors Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Bank to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 2

3 We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Castries, St. Lucia April 19,

5 Statement of Income Note Interest and similar income 24 29,340,315 30,975,513 Interest expense and similar charges 24 (10,557,017) (12,373,543) Net interest income 18,783,298 18,601,970 Other operating income 25 9,481,491 9,079,287 Net interest and other operating income 28,264,789 27,681,257 Other expenses 26 (17,241,095) (17,274,346) Impairment losses 29 (9,379,683) (9,267,492) Profit before income tax 1,644,011 1,139,419 Income tax expense 30 (187,264) (111,833) Profit for the year 1,456,747 1,027,586 Earnings per share (expressed in EC per share) - basic

6 Statement of Profit or Loss and Other Comprehensive Income Profit for the year 1,456,747 1,027,586 Other comprehensive income: Items that will never be reclassified to profit or loss: Re-measurement of defined benefit asset (Note 20): 48, ,000 Items that are or may be reclassified to profit or loss Net fair value gains/(losses) on available-for-sale financial assets 279,101 (367,356) Other comprehensive income/(loss) for the year 327,101 (207,356 ) Total comprehensive income for the year 1,783, ,230 6

7 Statement of Changes in Equity Share Capital Statutory Reserve Revaluation Reserve Revaluation Reserve available for-sale investments Other Reserves Retained Earnings Total Equity Balance at January 1, ,971,454 7,971,454 3,722, ,324-55,965,120 76,005,608 Total comprehensive income Profit for the year ,456,747 1,456,747 Other comprehensive income Fair value gain on available-for- sale financial assets , ,101 Re-measurement of defined benefit asset (Note 20) ,000 48,000 Total other comprehensive income ,101-48, ,101 Total comprehensive income ,101-1,504,747 1,783,848 Transfer to retained earnings - - (6,829) - - 6,829 - Reserve for loan loss provision (Note 23) ,216,353 (1,216,353) - Reserve for interest recognised on non-performing loans (Note 23) ,382,764 (4,382,764) - Transactions with owners Dividends to shareholders (Note 32) (499,996) (499,996) Balance at December 31, ,971,454 7,971,454 3,715, ,425 5,599,117 51,377,583 77,289,460 7

8 Statement of Changes in Equity Share Capital Statutory Reserve Revaluation Reserve Revaluation Reserve available for-sale investments Other Reserves Retained Earnings Total Equity Balance at January 1, ,971,454 7,971,454 3,727, ,680-54,772,165 75,185,378 Total comprehensive income Profit for the year ,027,586 1,027,586 Other comprehensive income Fair value loss on available-for- sale financial assets (367,356) - - (367,356) Re-measurement of defined benefit asset (Note 20) , ,000 Total other comprehensive income (367,356) - 160,000 (207,356) Total comprehensive income (367,356) - 1,187, ,230 Transfer to retained earnings - - (5,369) - - 5,369 - Balance at December 31, ,971,454 7,971,454 3,722, ,324-55,965,120 76,005,608 8

9 Statement of Cash Flows Note Cash flows from operating activities Profit for the year 1,456,747 1,027,586 Adjustments for: Depreciation and amortisation 14, 15 1,365,183 1,572,373 Loss on disposal of property and equipment ,989 - Gain on disposal of investment 25 (9,972) - Impairment losses 29 9,379,683 9,267,492 Defined benefit (income)/expense 20 (15,000) 19,000 Dividend income 25 (120,772) (82,815) Income tax expense , ,833 Interest and similar income 24 (29,340,315) (30,975,513) Interest expense and similar charges 24 10,557,017 12,373,543 Cash flows before changes in operating assets and liabilities (6,212,176) (6,686,501) Increase in mandatory reserve deposits with Central Bank (11,471,870) (1,959,780) Increase in loans and advances to financial institutions (6,472,285) (338,465) Increase in loans and advances to customers (166,481) (5,710,312) Decrease/(increase) in other assets 158,671 (4,494,455) Increase in due to customers 34,128,890 36,513,714 Increase/(decrease) in other liabilities 2,580,269 (54,692) Cash from operations 12,545,018 17,269,510 Interest and similar income received 32,004,105 32,733,092 Interest expense and similar charges paid (10,559,349) (12,798,062) Defined benefit contributions paid (198,000) (150,000) Income taxes paid - (1,519,220) Net cash generated from operating activities 33,791,774 35,535,320 Cash flows from investing activities Purchase of treasury bills (10,412,007) (46,462,851) Proceeds from sale of treasury bills 7,297,232 23,761,804 Purchase of investment securities (15,495,521) (28,236,702) Proceeds from sale of investment securities 7,297,034 24,629,427 Dividends received 120,772 82,815 Proceeds from sale of property and equipment 118,834 - Purchase of property and equipment 14 (406,271) (744,159) Acquisition of intangible assets 15 - (268,893) Net cash used in investing activities (11,479,927) (27,238,558) Cash flows from financing activities Dividends paid on ordinary shares 32 (476,182) (735) Net cash used in financing activities (476,182) (735) Net increase in cash and cash equivalents 21,835,665 8,296,027 Cash and cash equivalents, beginning of year 77,929,620 69,633,593 Cash and cash equivalents, end of year 16 99,765,285 77,929,620 9

To the Shareholder and Board of Directors of Kredaqro Non-Banking Credit Organization Limited Liability Company:

To the Shareholder and Board of Directors of Kredaqro Non-Banking Credit Organization Limited Liability Company: KREDAQRO NON-BANKING CREDIT ORGANIZATION LIMITED LIABILITY COMPANY The International Financial Reporting Standards Financial Statements and Independent Auditor s Report For the Year Ended December 31,