Download - GFC Annual Report 2015-VER10_080316.indd

Annual Report 2015

CONTENTS

Mission, Vision and Our History 1

Financial Highlights 2

Board of Directors 3

Senior Management Team 4

Chairman’s Report 5

Management’s Discussion and Analysis 6

Corporate Governance 8

Corporate Information 9

Statement of Management’s Responsibility 10

Independent Auditor’s Report 11

Financial Statements 12

PG 1 - MASSY FINANCE GFC | ANNUAL REPORT 2015

MISSION, VISION & OUR HISTORY

MISSIONTo provide quality financial products with high levels of customer service and employee commitment, whilst increasing shareholder value and building a reputation for integrity and excellence.

VISIONTo be the premier financial institution within our market segment, with a well-recognised brand and a reputation for excellence and integrity.

OUR HISTORYMassy Finance GFC Ltd was formed in 1974 as a subsidiary of the Massy Group of Companies to provide loan and deposit taking services in support of the rapidly expanding new vehicle division of Massy Motors Ltd.

The company has grown since then to accumulate assets of well over $500 million with a staff complement of over 65.

Massy Finance GFC Ltd operates through its Head Office in Port of Spain with four other offices throughout Trinidad in San Fernando, Chaguanas, Morvant and Richmond Street, as well as an office in Scarborough, Tobago. Massy Finance GFC Ltd enjoys a reputation as one of the leading finance companies in the country in terms of its size and longevity.

Massy Finance GFC Ltd continues to meet the business needs of Corporate, Commercial and Individual clients with over 5,000 loan customers on record.

COVER DESIGNUnited by the Group’s values, all companies including Massy Finance GFC Ltd now aspire to “Uncomplicate” customers’ interactions with the Group, through a unified and seamless interface. The interlocking pieces symbolize the Group coming together with many individual companies woven together under the umbrella of Massy. One key component of this new identity is the inclusion of a comprehensive loyalty system which rewards customers for their use of the Group’s goods and services in its customer facing units. This interface of customer and company, united by values and glued together through loyalty, are powerfully represented in our premier Annual Report cover design.

MASSY FINANCE GFC | ANNUAL REPORT 2015 - PG 2

FINANCIAL HIGHLIGHTS (Expressed in Trinidad and Tobago Dollars)

2015 2014 $‘000s $‘000s

Interest income 42,112 36,131

Interest expense (10,004) (8,075)

Net interest income 32,108 28,056

Other income 3,822 3,320

Loan loss expense, net of recoveries (347) (1,037)

Operating expenses (21,707) (18,142)

Profit before taxation 13,876 12,197

Taxation (3,637) (3,519)

Profit after taxation 10,239 8,678

Loans to customers 468,406 396,251

Cash 17,588 12,722

Statutory deposit with Central Bank 32,503 24,490

Other assets included as part of total assets 8,849 7,335

Total assets 527,346 440,798

Customers’ deposits 349,065 273,372

Borrowings 80,000 80,000

Other liabilities 3,511 2,895

Shareholder’s equity 94,770 84,531

Total equity and liabilities 527,346 440,798


BOARD OF DIRECTORS

DIRECTOR Mr. John Tang NianChairman of Credit Committee Member of Audit Committee

DIRECTOR Mr. Keith De FreitasChairman of Audit Committee Member of Credit Committee

CHAIRMAN Mr. Richard P Young

DIRECTOR Mrs. Paula RajkumarsinghMember of Audit Committee Member of Asset & Liability Committee

DIRECTOR Ms. Patricia Kong TingChairperson of Asset & Liability Committee

DIRECTOR Mr. David Jardim


SENIOR MANAGEMENT TEAM

HEAD OF RISK Ms. Joelle [email protected]

GENERAL MANAGER Mr Ramesh [email protected]

CEO Mr. Curtis [email protected]

HEAD OF FINANCE AND ADMINISTRATION Ms Heather [email protected]


CHAIRMAN’S REPORT

Massy Finance GFC Ltd achieved a significant improvement in the year under review. Profits attributable to shareholders was $10.23M an increase of 18% from prior year, a good performance given the highly competitive and challenging economic climate in which we operate. This was driven mainly by growth in interest and other income.

Over the past year we saw increased momentum at Massy Finance GFC Ltd, with greater synergies between Massy Motors and the Consumer Finance Line of Business (LOB) which resulted in an increased market share of vehicles financed. We continued to execute joint promotions with Massy Motors and Massy United Insurance, which also improved our performance in the vehicle financing business, and enabled us to offer a more complete package to automotive consumers.

The launch of a new corporate identity for the Group, “Massy”, enabled us to also successfully roll out our loyalty programme in the company. The loyalty programme, embodied in the Massy Card, now rewards customers by allowing them to earn and redeem points at a number of Massy locations across Trinidad & Tobago.

We continue to face a robust regulatory and compliance environment with major emphasis on Anti-Money Laundering and Know Your Customer requirements. We are dedicated to maintaining full compliance in all spheres and have been working diligently to improve on our processes to meet the increasing demands.

We seek to consistently identify and implement initiatives to add value to the customer experience, in consumer finance. We have a presence in the Massy Motors showrooms and plan to expand our presence by adding an additional standalone location in 2016.

Over the past year we also promoted and recruited talented professionals to strengthen the leadership team. As we continue to deliver on our strategy, we will be recruiting and expanding our human capital to deliver on our goals for the coming year.

Finally, under our Good For Community thrust, we also continued to partner with Non-Governmental Organizations and other charitable institutions to help to support projects to improve the quality of life for individuals and to facilitate improved service delivery by these important bodies.

Outlook

We are proactively implementing initiatives to deliver ongoing strong performance in 2016 in the context of a difficult economic climate.

CHAIRMAN | Mr. Richard P Young


MANAGEMENT’S DISCUSSION & ANALYSIS

2011 2012 2013 2014 2015

Net Interest margin 10.0% 8.6% 8.2% 7.7% 7.4%Effi ciency Ratio 50.5% 43.8% 54.4% 48.6% 48.0%Return on Equity 12.9% 10.7% 7.6% 10.8% 11.4%Return on Assets 2.7% 2.5% 1.5% 2.0% 1.9%Capital Adequacy 23.9% 28.0% 22.7% 21.1% 19.9%

Net Interest margin for 2015 decreased by 0.3%, however our interest expenses continue to be lower in relation to our strong top line growth. This is also refl ected in our effi ciency ratio, which improved from 48.6% to 48.0%.

From a top line perspective, the company saw a strong increase in core interest income, which is linked to growth in the underlying loan portfolio. Added to this is an improvement in foreign currency trading income.

Our net interest income increased over the period by $6M mainly driven by the increase in loans to customers, despite the low interest rate environment and competition we face with the bigger companies in the industry.

Non-interest expenses for the year increased by $2.9M, primarily due to higher staff costs in our effort to improve our talent base and better serve our customers.

Return on equity is strong at 11.4% coupled with our capital adequacy ratio, which remains well in excess of regulatory requirements’ at 19.9%.

Net interest income and profi ts attributable to shareholders achieved a cumulative growth per year of 5.37% and 6.83% respectively over the period 2011 to 2015, whilst the cumulative growth in operating expenses over the same period was 8.60%, which underscores our focus on long term growth and sustainability.


MANAGEMENT’S DISCUSSION & ANALYSIS (CONTINUED)

Loans to customers increased by 14.1% (or $33M) from the prior year driven mainly by our core hire purchase portfolio. The consumer sector continues to account for a signifi cant element of our portfolio as shown in the pie chart.

Our strong underwriting and collection procedures continue to contribute positively to our loan loss provision being within industry guidelines and to remain within company’s targets.

Our customer deposits saw an increase of 27.7% mainly driven by our commitment to offer competitive interest rates while at the same time ensuring that we maintain

an acceptable level of capital for future growth. The increase on repo rate over the fi nancial year of 4.50% by the Central Bank of Trinidad and Tobago, coupled with the reduction in oil prices, is likely to impact the banking sector and the economy as a whole in 2016. We have embarked on an ongoing campaign to retain and attract new deposits.

Cash and cash equivalents continue to remain strong at 3.3% of total assets. We continue to leverage on our strategic relationships within the Massy Group to allow us an optimal funding mix which reduces our sensitivity to short term funding, and thereby enabling us to better manage our liquidity positions.


CORPORATE GOVERNANCE

Corporate Governance is the system by which companies are directed and controlled. The Company’s Board of Directors (BOD) ensures that an appropriate governance structure is in place and maintains overall responsibility for Corporate Governance.

We achieve Corporate Governance by having the following pillars in place.

Board of Directors (BOD)

Audit Committee Asset/Liability Committee

Credit Committee

Purpose and design

Responsibilities of the BOD include setting the Company’s strategic objectives, providing the leadership to put them into effect, providing management oversight and reporting to the shareholder on their stewardship.

Sub-committee of the BOD responsible for the oversight of audit and compliance related matters, as well as promoting integrity in financial reporting

Sub-committee of the BOD with responsibilities for management of financial risk, in particular market risk and liquidity risk.

Sub-committee of the BOD with responsibility of management of credit risk, including the review and approval of credits within a certain threshold.

Number of members as of 30 September 2015

7 3 2 2

Number of Independent members as of 30 September 2015

4 2 1 2

Number of meetings held during the financial year ended 30 September 2015

6 4 5 5

The Massy Group Internal Audit Department with their wide spectrum of expertise, independence and resources carries out Internal Audit Reviews on all of the Core Company processes. Their reports are tabled at meetings of the Board of Directors and Audit Committee.


CORPORATE INFORMATION

REGISTERED OFFICE / HEAD OFFICE 61-63 Edward Street, Port of Spain Tel: 625-3683 to 6 Fax: 625-6217

OTHER OFFICES 94-98 Cipero Street, San Fernando Tel: 657-7397 Fax: 657-9754

Chaguanas Main Road, Chaguanas Tel: 625-3683-6 Ext 1184, 1185

North Side, Scarborough, Tobago Tel: 639-2496

Massy Motors Compound, Morvant Tel: 389-5171 Tel: 479-3302

Massy Motors Compound, Richmond Street Tel: 352-1375

BANKERS RBC Royal Bank of Trinidad & Tobago Limited 19-21 Park Street Port of Spain

Scotiabank Trinidad & Tobago Limited 56-58 Richmond Street Port of Spain

First Citizens Bank Limited 50 St. Vincent Street Port of Spain

AUDITORS PricewaterhouseCoopers 11-13 Victoria Avenue Port of Spain


STATEMENT OF MANAGEMENT’S RESPONSIBILITY

The Financial Institutions Act, 2008 (The Act) requires that management prepare and acknowledge responsibility for preparation of the fi nancial statements annually, establish and maintain an adequate internal control structure and procedures for fi nancial reporting, safeguarding the assets of the company as well as ensuring compliance with the Act.

It is management’s responsibility to apply the appropriate accounting policies and make accounting estimates that are reasonable. Management is responsible for ensuring that the statements presented are a fair and true presentation of the state of affairs of the company which includes ensuring that the information from which the statements are derived are designed and properly monitored in a manner which would allow accurate information to be provided. In addition, management is responsible for ensuring that the information presented is free from material misstatement whether due to fraud or error.

Management accepts responsibility for the annual fi nancial statements as well as the responsibility for the maintenance of the accounting records and internal controls which form the basis of the fi nancial statements. The fi nancial statements of Massy Finance GFC Ltd (the Company) are prepared in accordance with International Financial Reporting Standards and the appropriate accounting policies have been established and applied in a manner which gives a true and fair view of the Company’s fi nancial affairs and operating results.

In addition, it is noteworthy to mention that nothing has come to the attention of management to indicate that the Company will not remain a going concern for the next twelve months from the date of this statement.

____________________________________ ____________________________________Chief Executive Offi cer Director3 December 2015 3 December 2015

____________________________________ ____________________________________Chief Executive Offi cer Director


INDEPENDENT AUDITOR’S REPORT

To the shareholders ofMassy Finance GFC Ltd

Reportonthefinancialstatements

We have audited the accompanying fi nancial statements of Massy Finance GFC Ltd, which comprise the statement of fi nancial position as at 30 September 2015, and the statements of comprehensive income, changes in equity and cash fl ows for the year then ended, and notes, comprising a summary of signifi cant accounting policies and other explanatory information.

Management’sresponsibilityforthefinancialstatements

Management is responsible for the preparation and fair presentation of these fi nancial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error.

Auditor’sresponsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the fi nancial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basisfor our audit opinion.

Opinion

In our opinion, the fi nancial statements present fairly, in all material respects, the fi nancial position of Massy Finance GFC Ltd as at 30 September 2015, and its fi nancial performance and its cash fl ows for the year then ended in accordance with International Financial Reporting Standards.

3 December 2015Port of Spain,Trinidad, West Indies

3 December 2015


STATEMENT OF FINANCIAL POSITION(Expressed in Trinidad and Tobago Dollars)

Yearended30September Notes 2015 2014 ($’000) ($’000) AssetsCash on hand and due from banks 4 17,588 12,722Statutory deposit with Central Bank 5 32,503 24,490Investment available-for-sale 34 34Loans to customers 6 468,406 396,251Property and equipment 7 2,125 1,956Deferred tax asset 8 894 1,353Taxation recoverable 797 886Other assets 9 4,999 3,106

Total assets 527,346 440,798

Shareholders’ equityShare capital 10 15,000 15,000Statutory reserve 11 15,000 15,000General banking reserve 12 2,000 2,000Retained earnings 62,770 52,531

Totalshareholders’equity 94,770 84,531

Liabilities Customers’ deposits 13 349,065 273,372Borrowings 14 80,000 80,000Other liabilities 15 3,511 2,895

Total liabilities 432,576 356,267

Totalshareholders’equityandliabilities 527,346 440,798

The notes on pages 16 to 43 are an integral part of these fi nancial statements.

On 3 December 2015, the Board of Directors of Massy Finance GFC Ltd authorised these fi nancial statements for issue.

Director _________________________________ Director ___________________________________Director _________________________________ Director ___________________________________Director _________________________________ Director ___________________________________


STATEMENT OF COMPREHENSIVE INCOME (Expressed in Trinidad and Tobago Dollars)

Yearended30September Notes 2015 2014 ($’000) ($’000)

Interest income 16 42,112 36,131Interest expense 17 (10,004) (8,075)

Netinterestincome 32,108 28,056

Other income 18 3,822 3,320

Totalnetincome 35,930 31,376

Impairment losses on loans, net of recoveries 6.c (347) (1,037)

Operating expenses 19 (21,707) (18,142)

Total non-interest expenses (22,054) (19,179)

Profitbeforetaxation 13,876 12,197

Taxation 20 (3,637) (3,519)

Profitaftertaxation 10,239 8,678

Othercomprehensiveincome -- --

Totalcomprehensiveincomefortheyear 10,239 8,678

The notes on pages 16 to 43 are an integral part of these financial statements.


STATEMENT OF CHANGES IN EQUITY (Expressed in Trinidad and Tobago Dollars)

General Total Share Statutory banking Retained shareholders’ capital reserve reserve earnings equity ($’000) ($’000) ($’000) ($’000) ($’000)

Yearended30September2015

Balance at beginning of year 15,000 15,000 2,000 52,531 84,531

Total comprehensive income for the year -- -- -- 10,239 10,239

Balanceatendofyear 15,000 15,000 2,000 62,770 94,770

Yearended30September2014

Balance at beginning of year 15,000 15,000 2,000 43,853 75,853

Total comprehensive income for the year -- -- -- 8,678 8,678

Balanceatendofyear 15,000 15,000 2,000 52,531 84,531



STATEMENT OF CASH FLOWS (Expressed in Trinidad and Tobago Dollars)

Yearended30September 2015 2014 ($’000) ($’000) Cashflowsfromoperatingactivities

Profit before taxation 13,876 12,197Adjustments for:Impairment losses on loans 347 1,037Depreciation 640 499Profit on disposal of property and equipment and assetsunder operating leases (5) (209)

Profit before changes in operating assets and liabilities 14,858 13,524

Decrease/(increase) in operating assets:Statutory deposit with Central Bank (8,013) (4,802)Loans to customers (68,505) (66,870)Due from related parties (5,426) 486Other assets (464) (776)

Increase/(decrease) in operating liabilitiesCustomers’ deposits 74,252 51,464Due to related parties 970 11,659Other liabilities 1,087 (94)

Cash generated from operating activities 8,759 4,592Taxation payments (3,089) (3,198)

Netcashgeneratedfromoperatingactivities 5,670 1,394

InvestingactivitiesPurchase of equipment and assets under operating leases (1,167) (1,193)Proceeds from sale of equipment and assets under operating leases 363 360

Netcashusedininvestingactivities (804) (833)

Increaseincashandcashequivalents 4,866 561

Cashandcashequivalentsatbeginningofyear 12,722 12,161

Cashandcashequivalentsatendofyear 17,588 12,722

Representedby: Cash on hand and due from banks 17,588 12,722



NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 SEPTEMBER 2015 (Expressed in Trinidad and Tobago Dollars)

1 IncorporationandprincipalactivitiesThe Company is incorporated in the Republic of Trinidad and Tobago and is licensed under the Financial Institutions Act, 2008. It is a wholly owned subsidiary of Massy Holdings Limited, a company also incorporated in the Republic of Trinidad and Tobago.The address of its registered office is 61-63 Edward Street, Port of Spain.The principal activities of the Company are the acceptance of deposits for fixed terms and the granting of instalment credit secured on specific equipment and goods, demand loans and mortgage loans. It also undertakes insurance premium financing and leasing. The Company operates through its Head Office in Port of Spain with 4 other offices throughout Trinidad and 1 office in Tobago.

On the 1 July 2014 the Registrar General of Trinidad and Tobago under Section 217 of the companies Act 1995 approved the Articles of Amendment for change of name from General Finance Corporation Limited to Massy Finance GFC Ltd.

2 Significantaccountingpolicies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

a. Basis of preparationThe financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale investments.The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.(i) New standards, amendments and interpretations adopted by the Company

• IAS 32, Offsetting Financial Assets and Financial liabilities — Amendments to IAS 32 (effective 1 January 2014). This requires that “a financial asset and a financial liability shall be offset ... when, and only when, an entity currently has a legally enforceable right to set off the recognised amounts …” The amendments clarify that rights of set-off must not only be legally enforceable in the normal course of business, but must also be enforceable in the event of default and the event of bankruptcy or insolvency of all of the counterparties to the contract, including the reporting entity itself. • IAS 36, Recoverable Amount Disclosures for Non-Financial Assets (Amendments -

effective 1 January 2014). This amendment is to reduce the circumstances in which the recoverable amount of assets or cash-generating units is required to be disclosed, clarify the disclosures required, and to introduce an explicit requirement to disclose the discount rate used in determining impairment (or reversals) where recoverable amount (based on fair value less costs of disposal) is determined using a present value technique.

These amendments did not have a significant effect on the Company’s financial statements.


NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 SEPTEMBER 2015 (CONTINUED) (Expressed in Trinidad and Tobago Dollars)

2 Significantaccountingpolicies(continued)

a. Basis of preparation (continued)(ii) New standards, amendments and interpretations not yet adopted by the Company The following standards and amendments to existing standards have been published and are

mandatory for the Company’s accounting periods beginning on or after 1 October 2015, but the Company has not yet early adopted them: • IFRS 9, ‘Financial instruments’, addresses the classification, measurement and

recognition of financial assets and financial liabilities. (effective 1 January 2018). The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in AS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit and loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss.

• IAS 16, Property, Plant and Equipment and IAS 38 Intangible Assets (amendment effective 1 January 2016) This amendment is to: - clarify that a depreciation method that is based on revenue that is generated by an

activity that includes the use of an asset is not appropriate for property, plant and equipment.

- introduce a rebuttable presumption that an amortisation method that is based on the revenue generated by an activity that includes the use of an intangible asset is inappropriate, which can only be overcome in limited circumstances where the intangible asset is expressed as a measure of revenue, or when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated.

- add guidance that expected future reductions in the selling price of an item that was produced using an asset could indicate the expectation of technological or commercial obsolescence of the asset, which, in turn, might reflect a reduction of the future economic benefits embodied in the asset.

• IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017). This standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The Company is assessing the impact of IFRS 15.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.



b. Foreign currency translation(i) Functional and presentation currency Items included in the financial statements are measured using the currency of the

primary economic environment in which the Company operates (‘the functional currency’). The financial statements are presented in Trinidad and Tobago dollars which is the Company’s functional and presentation currency.

(ii) Transactions and balances Foreign currency transactions are translated into the reporting currency at the exchange

rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

c. Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents comprise cash

in hand, amounts due from other financial institutions, short term bank deposits, short term borrowings and bank overdrafts. Bank overdrafts are reported in the statement of financial position as “due to banks”.

d. Financial assets The Company classifies its financial assets as “loans to customers” and “investments

available-for-sale”. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.(i) Loans to customers Loans to customers are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. These are stated net of any unearned interest and any allowance for impairment losses. Loans to customers are initially recognised at fair value – which is the cash consideration to originate or purchase the loan including any transaction costs – and measured subsequently at amortised cost using the effective interest method. Interest on loans to customers are included in the statement of comprehensive income and is reported as “interest income.” In the case of impairment, the impairment loss is reported as a deduction from the carrying value of the loan, and recognised in the statement of comprehensive income as “impairment losses on loans, net of recoveries.”




d. Financial assets (continued)(ii) Investments available-for-sale The Company classifies its equity investments as available for sale. Management determines the

classification of its financial assets at initial recognition. Investments available-for-sale are those intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or changes in interest rates.

All purchases and sales of investments available-for-sale are recognised on the trade date, which is the date on which the Company commits to purchase or sell the investment. Investments available-for-sale are derecognised when the rights to receive cash flows from the investment have expired or the Company has transferred substantially all risks and rewards of ownership.

Investments available-for-sale are initially recognised at fair value plus transaction costs. Subsequent to initial recognition, investments available-for-sale are carried at fair value. Gains and losses arising from changes in the fair value of investments available-for-sale are recognised directly in equity, until the investment is derecognised or impaired. At this time, the cumulative gain or loss previously recognised in other comprehensive income is recognised in profit or loss.

The fair values of quoted investments in active markets are based on current bid prices. If there is no active market for an investment, the Company establishes fair value using valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.

e. Impairment of financial assets(i) Financial assets carried at amortised cost The Company assesses at each statement of financial position date whether there is objective

evidence that a financial asset or a group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the Company about the following loss events:• significant financial difficulty of the issuer or debtor;• a breach of contract, such as default or delinquency in payments;• it becoming probable that the issuer or debtor will enter bankruptcy or other financial

reorganisation;• the disappearance of an active market for that financial asset because of financial difficulties;• observable data indicating that there is a measurable decrease in the estimated future cash

flows from a group of individual assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group, including:- adverse changes in the payment status of issuers or debtors in the group; or- national or local economic conditions that correlate with defaults on assets

in the group.



e. Impairment of financial assets (continued)(i) Financial assets carried at amortised cost (continued) The Company first assesses whether objective evidence of impairment exists individually

for financial assets that are individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on loans to customers has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

When a loan is uncollectible, it is written off against the related allowance for impairment losses. Such loans are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

If in the subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improved credit rating), the previously recognised impairment loss is reversed by adjusting the allowance account. The amount of the reversal is recognised in profit or loss.

(ii) Financial assets carried at fair value The Company assesses at each statement of financial position date whether there is

objective evidence that a financial asset or a group of financial assets is impaired. If there is objective evidence that an impairment loss has been incurred on an unquoted instrument that is not carried at fair value because its fair value cannot be reliably measured, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of future cash flows discounted at the current market rate of return for a similar financial asset. The loss is recognised in profit or loss.

f. Assets leased to customers under finance leases When assets are held subject to a finance lease, the present value of the lease payments is

recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method (before tax), which reflects a constant periodic rate of return.

Assets leased to customers under finance leases are included within “loans to customers” in the statement of financial position. Finance lease income is included within “interest income” in the statement of financial position.




g. Property and equipment Property and equipment is stated at historical cost less accumulated depreciation. Historical

cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or are recognised as a

separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation on assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Leasehold improvements - 20% Furniture, fittings and equipment - 10% to 33 1/3% Motor vehicles - 25%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date.

Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in profit or loss.

h. Assets leased to customers under operating leases Assets leased to customers under operating leases are stated at historical cost less

accumulated depreciation. Depreciation is provided on a straight line basis and is calculated by reference to the primary

lease period and the estimated residual value of the asset. Lease income is recognised as it accrues on a straight-line basis over the primary lease period. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in profit or loss.

i. Provisions Provisions are recognised when the Company has a present legal or constructive obligation

as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.



j. Taxation(i) Current tax Income tax payable (receivable) is calculated on the basis of the applicable tax law in

Trinidad and Tobago and is recognised as an expense (income) for the period except to the extent that current tax related to items that are charged or credited in other comprehensive income or directly to equity. In these circumstances, current tax is charged or credited to other comprehensive income or to equity (for example, current tax on available-for-sale investment).

(ii) Deferred tax Deferred tax is provided, using the liability method, for all temporary differences arising

between the tax bases of the assets and liabilities and their carrying values for financial reporting purposes. Tax rates enacted or substantially enacted at the statement of financial position date are used to determine deferred tax.

The principal temporary difference arises from the difference between the accounting and tax treatment of depreciation on property and equipment and assets under finance and operating leases.

k. Interest income and expense Interest income and expense for all interest-bearing financial instruments are recognised

within ‘interest income’ and ‘interest expense’ in the Statement of Comprehensive Income using the effective interest method.

This method defers, as part of interest income or expense, all fees paid or received between the parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Fees integral to the effective interest rate include origination fees received or paid by the entity relating to the creation or acquisition of a financial asset or issuance of a financial liability, for example fees for evaluating creditworthiness, evaluating and recording guarantees or collateral, negotiating the terms of the instrument and for processing transaction documents.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Company estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses.

l. Other income Other income is generally recognised on an accrual basis when the service has been

provided.




m. Employee benefits(i) Pension obligations A defined contribution plan is a pension plan under which the Company pays fixed

contributions into a separate entity (a fund) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior periods.

The majority of the Company’s employees are members of the Neal and Massy Holdings Limited Group Pension Fund Plan and of the Retirement Income Security Plan.

The Neal and Massy Holdings Limited Group Pension Fund Plan, contributions to which were frozen on 31 January 1990, is a defined contribution plan whose assets are held separately from those of the Company in an independently administered fund. The most recent actuarial valuation, at 31 March 2014, revealed that the plan is adequately funded. There are certain benefits payable by the Neal and Massy Holdings Limited Group Pension Fund Plan which fall within the scope of IAS 19 (revised) Employee Benefits. The administrators of the pension plan are unable to provide information on the Company’s proportionate share of the defined obligations and plan assets. The Company therefore recognises a cost equal to their contribution payable for the period in accordance with IAS 19.

The Retirement Income Security Plan is funded by contributions made by the employer and the employees. Contributions to the Plan are accounted for on the accrual basis and the assets are held separately from those of the Company in independently administered funds.

(ii) Termination benefits Termination benefits are payable when employment is terminated by the Company

before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the statement of financial position date are discounted to present value.

(iii) Bonus plans A liability for employee benefits in the form of bonus plans is recognised in other

provisions when there is no realistic alternative but to settle the liability and at least one of the following conditions is met:• There is a formal plan and the amounts to be paid are determined before the time of

issuing the financial statements; or• Past practice has created a valid expectation by employees that they will receive a

bonus/profit sharing and the amount can be determined before the time of issuing the financial statements.

Liabilities for bonus plans are expected to be settled within 12 months and are measured at the amounts expected to be paid when they are settled.



n. Share capital Shares are classified as equity when there is no obligation to transfer cash or other assets.

Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction from the proceeds.

Dividends on ordinary shares are recognised in equity in the period in which they are approved by the Company’s shareholder. Dividends for the year that are declared after the date of the statement of financial position are dealt with in the subsequent events note.

o. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings

are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

p. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of

financial position where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.



3 Criticalaccountingestimatesandjudgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.a. Impairment losses on loans The Company reviews its underlying portfolios to assess impairment on a regular basis. In

determining whether an impairment loss should be recorded in profit or loss, the Company makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from the underlying portfolios. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on financial assets in the group. Management uses estimates based on historical loss experience for financial assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience. The two critical assumptions inherent in the impairment calculation relate to the bad debts loss ratio and management’s estimate of collateral values for the individually significant impaired facilities. The following is an analysis of the sensitivity to each of these factors assuming all other factors remain constant:(i) An increase in bad debts loss ratio by 25 basis points would result in an increase in the

portfolio allowance for impairment losses by $1,181,402 (2014: $992,373).(ii) A decrease in the collateral values of the two largest impaired facilities by 10% would

result in an increase in the specific allowance for impairment losses by $245,016 (2014: $277,675).

b. Income taxes Estimates are required in determining the provision for income taxes. There are some

transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

4 Cashonhandandduefrombanks

2015 2014 ($’000) ($’000)

Cash at bank and in hand 17,575 12,709 Short-term bank deposits 13 13 17,588 12,722

Short-term bank deposits were neither past due nor impaired as of the statement of financial position dates. These are held with local financial institutions which have not defaulted in the past and are considered to be credit worthy.


5 Statutorydepositwithcentralbank

The Financial Institutions Act, 2008 requires that every non-banking financial institution licensed under the Act in the Republic of Trinidad and Tobago hold and maintain a non-interest bearing deposit account with the Central Bank of Trinidad and Tobago equivalent to 9% of the total deposit liabilities of that institution. As at 30 September 2015 and 2014, the Company complied with the above requirement.

6 Loanstocustomers 2015 2014 ($’000) ($’000)

Gross instalment credit loans- Hire purchase loans 515,445 435,913- Finance leases 24,364 17,313- Insurance premium financing 4,681 5,000 544,490 458,226Unearned finance income (76,094) (62,024)Net instalment credit loans 468,396 396,202Demand loans 7,238 6,718Mortgage loans 96 137 475,730 403,057Allowance for impairment losses (7,324) (6,806) 468,406 396,251

Current portion 169,630 148,440Non-current portion 306,100 254,617 475,730 403,057

a. Analysis of loans to customers Neither past due nor impaired 427,189 370,098

Past due but not impaired 41,518 25,188 Impaired 7,023 7,771

(Note 22a) 475,730 403,057 b. Allowance for impairment losses Balance at beginning of year 6,806 7,944

Amounts written off (952) (1,567) Charge for the year 1,470 429

Balance at end of year 7,324 6,806

Specific provision 3,822 3,935 Portfolio provision 3,502 2,871

7,324 6,806



6 Loanstocustomer(continued) 2015 2014 ($’000) ($’000

c. Impairment losses on loans, net of recoveries Charge for the year 1,470 429

Amounts directly written off net of recoveries (1,123) 608 347 1,037

d. Finance leases Not later than 1 year 8,816 6,494

Later than 1 year and not later than 5 years 15,548 10,819 24,364 17,313

Unearned finance charges on finance leases (3,070) (2,127) Net investment in finance leases 21,294 15,186

Not later than 1 year 7,147 5,334 Later than 1 year and not later than 5 years 14,147 9,852 21,294 15,186


7 Propertyandequipment

Furniture, Capital Leasehold Fittings & Motor Work In Improvements Equipment Vehicles Progress Total ($’000) ($’000) ($’000) ($’000) ($’000)Yearended30September2015 Opening net book value 62 679 1,107 108 1,956 Additions -- 815 -- 352 1,167 Disposals -- (9) (334) (15) (358)Depreciation charge (32) (376) (232) -- (640)Closing net book value 30 1,109 541 445 2,125

At30September2015 Cost 615 3,435 1,140 445 5,635 Accumulated depreciation (585) (2,326) (599) -- (3,510)Net book value 30 1,109 541 445 2,125

Yearended30September2014 Opening net book value 117 258 952 47 1,374 Additions -- 577 555 61 1,193 Disposals -- -- (151) -- (151)Depreciation charge (55) (156) (249) -- (460)Closing net book value 62 679 1,107 108 1,956 At30September2014 Cost 616 2,927 1,561 108 5,212 Accumulated depreciation (554) (2,248) (454) -- (3,256)Net book value 62 679 1,107 108 1,956

At30September2013 Cost 616 2,459 1,241 47 4,363 Accumulated depreciation (499) (2,201) (289) -- (2,989)Net book value 117 258 952 47 1,374



8 Deferredtaxasset 2015 2014 ($’000) ($’000)

The movement on the deferred tax account is as follows:At beginning of year 1,353 1,921 Charge to statement of comprehensive income (see Note 20) - Current year (458) (480) - Adjustment to prior year’s estimates (1) (88)At end of year 894 1,353

At end of year, the deferred tax asset is attributable to:Accelerated tax depreciation on property and equipment and assets under finance leases 894 1,353

9 Other assets

Due from affiliated companies (Note 23c) 2,522 1,093 Repossession losses recoverable 267 188 VAT recoverable 1,864 1,733 Miscellaneous assets 346 92 4,999 3,106Other assets are due within one year.

10 Sharecapital

Authorised An unlimited number of shares at no par value issued

and fully paid 15,000,000 ordinary shares of no par value 15,000 15,000

11 Statutoryreserve

The Financial Institutions Act, 2008 requires a financial institution to transfer annually a minimum of 10% of its profit after taxation to a reserve fund until the balance on this reserve is equal to the paid up capital of the institution.

12 General banking reserve

In keeping with the Financial Institutions (Prudential Criteria) Regulations, 1994, the Company has set aside a reserve out of retained earnings to provide against unforeseen losses on the loan portfolio.


13 Customers’deposits 2015 2014 ($’000) ($’000)

Deposit balances 345,365 271,621 Accrued interest 3,700 1,751 349,065 273,372

Current portion 304,363 208,895 Non-current portion 41,002 62,726 345,365 271,621Sectoral analysis Corporations 89,879 50,793 Individuals 255,486 220,828 345,365 271,621 All deposits have fixed interest rates.

14 Borrowings

The Company entered into two unsecured loan agreements dated 20 May 2013 and 22 August 2013 with Massy Holdings Ltd (the parent company). Each loan agreement allows a maximum drawdown of $50,000,000. As at 30 September 2015, the Company utilised $50,000,000 of the first agreement and $30,000,000 of the second agreement. The fair value of these borrowings as at 30 September 2015 is $72,009,830.The facilities are due to mature on 20 November 2018 and 22 February 2019 respectively at which time the principal amounts will be settled in full. Interest is accrued daily on the amount outstanding and is paid monthly. The lender has the right to vary the interest rate informing the Company within 3 business days after the varied rate has been determined. The interest rate was reset at 3.75% per annum effective 1 October 2015.

15 Other liabilities 2015 2014 ($’000) ($’000)

Due to affiliated companies (Note 23c) 139 610 Other payables and accruals 3,372 2,285

3,511 2,895 Other liabilities are due within one year.

16 Other liabilities

Loans to customers 42,102 36,124 Short term bank deposits 10 7 42,112 36,131

17 Interest expense

Customers’ deposits 7,404 5,983 Borrowings 2,600 2,092 10,004 8,075



18 OtherIncome 2015 2014 ($’000) ($’000)

Operating lease income -- 832 Profit on disposal of property and equipment and assets under operating leases 5 209 Fee and commission income 123 656 Foreign exchange earnings 3,528 1,488 Sundry income 166 135 3,822 3,320

19 Operating expenses

Staff costs (Note 19 a.) 11,198 8,614 Administrative and other expenses 6,442 6,000 Depreciation - Assets under operating leases -- 38 - Property and equipment 640 460 Rental charges – affiliated company (Note 23) 1,150 966 Legal and management charges – parent company (Note 23) 1,680 1,551 Bank interest and charges 90 76 Deposit insurance premium (Note 19 b.) 507 437 21,707 18,142a. Staff costs include Salaries 9,948 7,465

Pension costs – defined contribution plans 274 269 Other benefits 633 558 Directors’ fees 343 322

11,198 8,614

Average number of employees employed during the year 66 59

b. Regulations governing the operations of banks and other financial institutions in the Republic of Trinidad and Tobago stipulate that an annual premium be paid to the Deposit Insurance Corporation amounting to 0.2% of average deposit liabilities outstanding at the end of each quarter of the preceding year.

20 Taxation 2015 2014 ($’000) ($’000)

Current tax - Current year 3,247 2,710 - Adjustment to prior year’s estimates (69) 241Deferred tax (see Note 8) - Current year 458 480 - Adjustment to prior year’s estimates 1 88 3,637 3,519


20 Taxation(continued)

The tax on the operating profit differs from the theoretical amount that would arise using the statutory rate of 25% as follows: 2015 2014 ($’000) ($’000)Profit before taxation 13,876 12,197Corporation tax calculated at a tax rate of 25% 3,469 3,049 Expenses not deductible for tax purposes 199 91 Green fund levy 36 33 Adjustments to prior year’s estimates (67) 346 3,637 3,519

21 Contingentliabilitiesandcommitments

a. Contingent liabilities There were no contingent liabilities at the statement of financial position date (2014: Nil).b. Loan commitments At the statement of financial position date, there were loan commitments amounting to

$13,316,365 (2014: $16,149,385) related to approved facilities not yet disbursed.c. Capital commitments There was capital expenditure contracted for at the statement of financial position date of

$2,259,674 but not recognised in the financial statements (2014: Nil).

22 Financialriskmanagement

a. Financial risk factors Financial risk is inherent in the Company’s activities and includes credit risk, liquidity risk

and market risk with the latter being subdivided into interest rate risk, currency risk and other price risk. The Company has varying levels of exposures to these risks.(i) Risk management policy The Company has an approved Enterprise Risk Management (ERM) Policy. ERM

is a process designed to identify potential risks that may affect the Company and manage these risks to provide reasonable assurance regarding the achievement of the Company’s objectives.

The ERM policy provides an overall framework for the appropriate, effective and prudent management of risks on a company-wide basis. Policies and practices are regularly reviewed to ensure that they remain appropriate in light of changing circumstances.




a. Financial risk factors (continued)(i) Risk management policy (continued) Ultimate responsibility for implementing and providing oversight on the effectiveness of

the overall ERM framework and policy resides with the Board of Directors (BOD). Some of this responsibility is delegated to sub-committees of the BOD, senior management and the internal audit department of the parent company, Massy Holdings Ltd.

A description of the individual financial risks as well as the key policies for managing them are included in notes 22 a., 22 b. and 22 c. of the financial statements.

(ii) Credit risk(a) Overview The Company takes on exposure to credit risk, which is the risk that a counterparty

will cause a financial loss for the Company by failing to discharge an obligation. Credit risk is the most important risk for the Company and management therefore carefully manages this exposure. Credit exposures arise principally in lending activities.

(b) Management of risk The Company’s credit risk management process includes the following:

• Performance of detailed evaluations and risk analyses on customers before granting new credit facilities. Each customer is subject to a credit scoring process which ranges from a high score of excellent to a low score of unacceptable and involves the use of certain assumptions to measure the level of stability and credit-worthiness;

• Ongoing review and monitoring of existing customers based on performance;• Adherence to strict requirements regarding collateral and guarantees in assets

financed;• Adherence to strict procedures over collections, repossessions and

foreclosures;• Diversification of customer base;• Monitoring of large credit exposures;• Ongoing review of the allowance for impairment losses. The accounting

policy for impairment of financial assets is outlined in Note 2.e of the financial statements.



a. Financial risk factors (continued)(ii) Credit risk (continued)

(c) Maximum exposure to credit risk before collateral held or other credit enhancements

2015 2014 ($’000) ($’000) Loans to customers: - Hire purchase loans 442,526 376,138

- Finance leases 21,294 15,186 - Insurance premium financing 4,576 4,878 - Demand loans 7,238 6,718 - Mortgage loans 96 137

475,730 403,057 - Less: allowance for impairment losses (7,324) (6,806) 468,406 396,251 Cash on hand and due from banks 17,588 12,722

Statutory deposit with Central Bank 32,503 24,490 Due from related parties 2,522 1,093

521,019 434,556

Loan commitments 13,316 16,149

(d) Analysis of loans to customers

Past due but notimpaired Current 1–30days 31-90days >90days Impaired Total $’000 $’000 $’000 $’000 $’000 $’000

At30September2015 Hire purchase loans 398,836 24,758 13,098 787 5,047 442,256 Finance leases 19,235 1,694 365 -- -- 21,294 Insurance premium financing 4,326 239 -- -- 11 4,576 Demand loans 4,793 -- -- 480 1,965 7,238 Mortgage loans -- 33 -- 63 -- 96 427,190 26,724 13,463 1,330 7,023 475,730 At30September2014 Hire purchase loans 348,335 16,644 5,310 610 5,240 376,138 Finance leases 14,593 593 -- -- -- 15,186 Insurance premium financing 4,732 43 45 15 43 4,878 Demand loans 2,439 -- -- 1,791 2,488 6,718 Mortgage loans -- -- -- 137 -- 137 370,099 17,280 5,355 2,553 7,771 403,057



22 Financialriskmanagement(continued)


(e) Loans to customers past due but not impaired – credit quality These relate to loans which have exceeded the contractual payment period. Loans

within this category are continuously monitored by the Company’s management to ensure all collection options are exercised to bring these accounts up to date.

(f) Loans to customers past due and/or impaired – description of collateral held Collateral on these loans comprise mortgages over real estate, hire purchase

agreements and chattel mortgages over equipment and vehicles.(g) Repossessed collateral Repossessed properties are sold as soon as practicable, with the proceeds used to

reduce the outstanding indebtedness. Repossessed properties are included in other assets. At 30 September 2015, repossessed properties, comprising automobiles amounted to $266,597 (2014: $187,710).




(h) Concentration of risks of loans to customers

Instalment Insurance credit Finance premium Demand Mortgage debtors leases financing loans loans Total ($’000) ($’000) ($’000) ($’000) ($’000) ($’000) At30September2015 Agriculture 2,858 -- -- -- -- 2,858 Communications 274 1,693 -- -- -- 1,967 Construction 37,038 1,043 -- 157 -- 38,238 Consumer 268,271 172 427 5,204 -- 274,074 Distribution 27,985 7,923 46 -- -- 35,954 Electricity and water 2,105 344 -- 1,215 -- 3,664 Hotel and restaurant 4,151 -- -- -- -- 4,151 Manufacturing 8,013 893 84 -- -- 8,990 Petroleum 3,281 -- -- 214 -- 3,495 Real estate 3,838 -- -- -- -- 3,838 Rental -- -- -- 111 -- 111 Residential mortgages -- -- -- -- 96 96 Transport 40,105 402 -- -- -- 40,507 Other 44,607 8,824 4,019 337 -- 57,787 442,526 21,294 4,576 7,238 96 475,730 At30September2014 Agriculture 4,391 -- -- -- -- 4,391 Communications 521 245 -- -- -- 766 Construction 28,370 -- -- 1,586 -- 29,956 Consumer 214,347 487 230 2,182 -- 217,246 Distribution 26,801 6,524 -- -- -- 33,325 Electricity and water 2,520 492 -- 1,845 -- 4,857 Hotel and restaurant 3,750 -- -- -- -- 3,750 Manufacturing 8,169 984 13 -- -- 9,166 Petroleum 2,037 -- -- -- -- 2,037 Real estate 1,542 -- -- -- -- 1,542 Rental -- -- -- 768 -- 768 Residential mortgages -- -- -- -- 137 137 Transport 41,450 547 -- 12 -- 42,009 Other 42,240 5,907 4,635 325 -- 53,107 376,138 15,186 4,878 6,718 137 403,057




a. Financial risk factors (continued)(iii) Liquidity risk

(a) Overview Liquidity risk is the risk that the Company is unable to meet its payment obligation

associated with its financial liabilities when they fall due and to replace funds when they are withdrawn. The consequence may be the failure to meet obligations to repay depositors and the inability to fulfil commitments to lend.

(b) Management of risk The Company’s liquidity risk management process includes the following:

• Monitoring and forecasting of deposit maturities for potential non-renewals to ensure adequate funding is available to meet commitments;

• Ensuring alternative sources of funding are in place to meet any unforeseen shortfall in funding. As at 30 September 2015, these comprised an overdraft facility of $5,000,000, a bankers’ acceptance facility of $10,000,000 and two unsecured loan agreements with Massy Holdings Ltd (the parent company) where the Company has unutilised $20,000,000 of the second agreement.

• Planning of lending operations to ensure smooth disbursement of funds without significantly impairing potential for business growth.

(c) Maturity analysis of financial instruments The table below presents the cash flows payable under non-derivative financial

liabilities and assets held for managing liquidity risk by remaining contractual maturities at the date of the statement of financial position. The amounts disclosed in the table are the contractual undiscounted cash flows.

Undiscountedcashflows Carrying Within Oneto Overfive Amount oneyear fiveyears years Total ($’000) ($’000) ($’000) ($’000) ($’000)Asat30September2015 Financialassets Cash on hand and due from banks 17,588 17,588 -- -- 17,588 Statutory deposit with Central Bank 32,503 32,503 -- -- 32,503 Loans to customers 468,406 202,622 337,891 11,792 552,305 Other assets 2,522 2,522 -- -- 2,522 521,019 255,235 337.891 11,792 604,918Financialliabilities Customers’ deposits 349,065 311,835 43,014 -- 354,849 Borrowings 80,000 3,000 86,717 -- 89,717 Other liabilities 3,511 3,511 -- -- 3,511 432,576 318,346 129,731 -- 448,077

Netliquiditygap 88,443 (63,111) 208,160 11,792 156,841

Loan commitments 13,316 13,316 -- -- 13,316



a. Financial risk factors (continued)(iii) Liquidity risk

(c) Maturity analysis of financial instruments (continued)

Undiscountedcashflows Carrying Within Oneto Overfive Amount oneyear fiveyears years Total ($’000) ($’000) ($’000) ($’000) ($’000)Asat30September2014 Financialassets Cash on hand and due from banks 12,722 12,722 -- -- 12,722 Statutory deposit with Central Bank 24,490 24,490 -- -- 24,490 Loans to customers 396,251 175,878 282,211 7,309 465,398 Other assets 1,093 1,093 -- -- 1,093 434,556 214,183 282,211 7,309 503,703Financialliabilities Customers’ deposits 273,372 212,696 66,032 -- 278,728 Borrowings 80,000 2,600 88,422 -- 91,022 Other liabilities 2,895 2,895 -- -- 2,895 356,267 218,191 154,454 -- 372,645Netliquiditygap 78,289 (4,008) 127,757 7,309 131,058Loan commitments 16,149 16,149 -- -- 16,149

(iv) Market risk The Company is inherently exposed to market risk, which is the risk that the fair value of

future cash flows of a financial instrument will fluctuate because of changes in market factors. Market risk can be subdivided into three categories namely interest rate risk, currency risk and other price risk.(a) Interest rate risk

• Overview Interest rate risk can be further subdivided into two types: cash flow interest

rate risk and fair value interest rate risk. Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates.

The Company carries all of its monetary assets at amortised cost and as such is only exposed to cash flow interest rate risk. Financial liabilities, because of their short term nature, tend to reprice at a faster rate than the longer term financial assets thereby creating a short term interest rate mismatch.




a. Financial risk factors (continued)(iv) Market risk (continued)

(a) Interest rate risk (continued)• Management of risk The Company’s interest rate risk management process includes the following:

- Monitoring of current and anticipated movements in lending and deposit rates in the market utilising market intelligence, Central Bank data, emerging trends and other relevant data sources;

- Monitoring of competitors’ rates;- Ensuring an appropriate balance between risk and return is achieved

during the pricing process;- Ensuring adherence to policies over approval of interest rates;- Ensuring that stand by facilities at the lowest short term interest rates are

available to meet short term demands for funds;- Monitoring volatility in the market to achieve optimal balance between bank

borrowings and fixed deposits.

• Sensitivity analysis

For the purposes of illustrating its exposure to interest rate risk, the Company has prepared a sensitivity analysis showing what the profit before tax would have been had interest rates been 50 basis points higher or lower. In preparing this calculation, the Company assumed that the change in interest rate would have affected its new lending, variable rate short term investments and renewals of deposits and borrowings in the respective financial year. Similar assumptions were used for both reporting periods.

As at 30 September 2015, had interest rates been 50 basis points higher/lower, profit before taxation would have been lower/higher by $863,779 (2014: $407,221). This has no impact on other components of equity.

(b) Currency risk The Company is a licensed foreign exchange trader and conducts foreign exchange

transactions. All foreign currency balances arising are normally settled within 7 days. As at 30 September 2015, if the Trinidad and Tobago dollar had weakened/strengthened by 1% against the United States dollar with all other variables held constant, profit before taxation would have been $21,335 (2014: $9,000) higher/lower, mainly as a result of foreign exchange gains/losses on translation of United States dollar denominated cash on hand and due from banks.

(c) Other price risk

The Company has very limited exposure to other price risk as it does not hold any significant investments in equities or commodities.



b. Capital management The Company’s capital management objectives are as follows:

(i) to comply with the capital requirements set by the Central Bank of Trinidad and Tobago (CBTT);

(ii) to safeguard the Company’s ability to continue as a going concern;(iii) to provide returns for its shareholder and benefits for other stakeholders; and(iv) to maintain a strong capital base to support the development of its business.

Capital adequacy and the use of regulatory capital are monitored weekly by management based on the guidelines developed by the Basel Committee, as implemented by the CBTT, the country’s authority for supervisory purposes. The required information is filed with the CBTT on a quarterly basis.

The CBTT requires each financial institution to:- hold the minimum level of share capital of $15,000,000 and;- maintain a ratio of qualifying capital to risk-weighted assets at or above 8%.- In addition to the above, there are specific requirements governing lending, customers’

deposits and other activities in relation to the Company’s capital. The table below summarises the composition of regulatory capital and the capital adequacy

ratios of the Company. 2015 2014

($’000) ($’000) Total risk adjusted assets 475,485 401,247 Core capital 92,770 82,531

Allowable supplementary capital 2,000 2,000 Qualifying capital 94,770 84,531 Capital ratios

- Core capital to total risk adjusted assets 19.51% 20.57% - Qualifying capital to total risk adjusted assets 19.93% 21.07%

The increase of the regulatory capital in the current year was due to the contribution of the current year’s profit.

As at the years ended 2014 and 2015, the Company complied with the externally imposed capital requirements to which they are subjected.

c. Fair value estimation The Company has an available-for-sale investment valued at $34,000. This is the initial

capital contribution on inception of The Trinidad and Tobago Unit Trust Corporation (UTC) in accordance with Section 17 of the Unit Trust Corporation of Trinidad and Tobago Act, 1981.The contribution certificates can only be transferred to a fellow financial institution under the Act. Management has elected to carry this investment at cost as it is considered immaterial to the financial statements.



23 Relatedpartytransactions

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.A number of transactions are entered into with related parties in the normal course of business. The following are details of related party transactions: 2015 2014

($’000) ($’000)a. Income/(expenses) Operating lease income (affiliated companies) -- 832

Loans to customers: - interest income (affiliated companies) 1,142 790 - interest income (directors and key management) 5 33 Fee income (affiliated companies) 116 647 1,263 2,302

Customers’ deposits: - interest expense (affiliated company) (101) (45) - interest expense (directors and key management) (29) (19) Legal and management charges (parent company) (1,680) (1,551) Rental charges (affiliated company) (1,150) (966) (2,960) (2,581)

Borrowings: Interest expense (parent company) (2,600) (2,092)

b. Key management compensation Salaries and other short term benefits 2,846 2,337c. Year-end balances – assets/(liabilities) Due from related parties:

- loans to customers (affiliated companies) 13,532 9,239 - loans to customers (directors and key management) 45 341 - other assets (affiliated companies) 2,522 1,093 16,099 10,673

Due to related parties: - customers’ deposits (affiliated company) (8,721) (5,705) - customers’ deposits (directors and key management) (4,300) (5,875) - borrowings (parent company) (80,000) (80,000) - other liabilities (affiliated companies) (139) (610) (93,160) (92,190)

Loans to directors and key management: Balance at beginning of year 341 384 Additions 58 15 Repayments (354) (58)

Balance at end of year 45 341

There were no loans to directors and key management that were impaired.


24 Fairvaluesoffinancialassetsandliabilities

The Company adopted the amendment to IFRS 7 for financial instruments that are measured in the statement of financial position at fair value, this requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:(a) Quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1)(b) Inputs other than quoted prices included within level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2)(c) Inputs for the asset or liability that are not based on observable market data (that is,

observable inputs) (level 3).The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of financial position date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by Massy Finance GFC Ltd is the current bid price. Instruments included in level 1 relates to investment held with The Trinidad and Tobago Unit Trust Corporation where the fund is made publicly available on a daily basis.The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Instruments included in level 2 relates to non-current loans and receivables and non-current deposits fair valued based on the cashflows discounted by the relevant interest rates for each customer loan and deposit.If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.Specific valuation techniques used to value financial instruments include:• Quoted market prices or dealer quotes for similar instruments.• Other techniques, such as discounted cashflow analysis, are used to determine fair value for

the remaining financial instruments.



24 Fairvaluesoffinancialassetsandliabilities(continued)

The following table presents the Company’s assets and liabilities that are measured at fair value as at 30 September 2015. Level 1 Level 2 Level 3 Total ($’000) ($’000) ($’000) ($’000)Asat30September2015 Financialassets Investments 34 -- -- 34 34 -- -- 34Asat30September2014 Financialassets Investments 34 -- -- 34 34 -- -- 34

25 Subsequentevents

There were no events after the reporting period which were material to the financial statements and should have resulted in adjustments to the financial statements or disclosures when the financial statements were authorised for issue.

61-63 Edward Street, Port of Spain Tel: 625-3683 to 6 Fax: 625-6217

massyfinance.com

Download - GFC Annual Report 2015-VER10_080316.indd

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