The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

CARIBBEAN INVESTMENT HOLDINGS LIMITED ANNOUNCES FINANCIAL RESULTS FOR THE FISCAL YEAR ENDED MARCH 31, 2019

Belize City, Belize, 30 September 2019 -- Caribbean Investment Holdings Limited (London - AIM: CIHL;  Bermuda: CIHL) (the "Company" or "CIHL").

The Company reports that for the financial year ended 31 March 2019 it produced net income before tax of $14.7 million. This represented a decrease of $13.1 million when compared to fiscal 2018's net income before tax of $27.8 million.

In November 2017, the Caribbean Court of Justice ruled in favor of The Belize Bank Limited, the Group's largest subsidiary, granting permission to The Belize Bank Limited to enforce an LCIA Award in the same manner as a judgement or order of the Supreme Court.  This favorable ruling had significant positive impact on the net earnings of fiscal 2018 particularly with an $11.0 million reduction in impairment provisions recorded on the Government of Belize receivable.

If interest income and impairment provisions related to the Government of Belize receivable are excluded from the financial results for both fiscal years - 2019 and 2018, net income before taxes would be $12.9 million for fiscal 2019 and $10.7 million for fiscal 2018, respectively, accounting for a 20.6% increase in the adjusted and normalized net earnings before taxes.

The Company confirms that the annual report and accounts will be made available to view on the Company's website, www.cihltd.co and are today being posted to shareholders.

For further information contact:

Caribbean Investment Holdings Limited

UK                                           +44 (0)207 248 6700

Belize                                      +501 227 7178

Cenkos Securities plc

Nicholas Wells                        +44 (0)207 397 8920

Note: This and other press releases are available at the Company's website: http://www.cihltd.co.

Background Information

Caribbean Investment Holdings Limited ("CIHL") is a parent holding company with no independent business operations or assets other than its investments in its subsidiaries, intercompany balances and holdings of cash and cash equivalents. CIHL's businesses are conducted through its subsidiaries. The Belize Bank Limited ("BBL") is incorporated and based in Belize and focuses on the provision of financial services and lending to domestic clients. Belize Bank International Limited is incorporated and based in Belize and focuses on the provision of financial services and lending to international clients. CIHL also owns an international corporate services business based in Belize, which operates as Belize Corporate Services Limited. Within Belize, BBL is a full service commercial and retail banking operation with a head office in Belize City and eleven branches extended into each of the six districts of Belize. The principal operations of BBL are commercial lending, consumer lending, deposit taking and related banking activities. 

Consolidated statement of comprehensive income

Expressed in millions of US dollars except where otherwise stated

Consolidated statement of changes in shareholders' equity

Expressed in millions of US dollars except where otherwise stated

At 31 March 2019, The Belize Bank Limited maintained a non-distributable statutory reserve of USD 7.0 million (2018 - USD 7.0 million and 2017 - USD 2.7 million). Belize Bank International Limited did not have non-distributable statutory reserves.

Consolidated statement of financial position

Expressed in millions of US dollars except where otherwise stated

Consolidated statement of cash flows

Expressed in millions of US dollars except where otherwise stated

Extracts from the Notes to consolidated financial statements

Note 6 - Interest income

Note 7 - Interest expense

Note 8 - Non-interest income

Note 9 - Non-interest expense

Note 10 - Earnings per ordinary share

Basic and diluted earnings per ordinary share have been calculated on the net income attributable to ordinary shareholders and the weighted average number of ordinary shares in issue in each year.

During the year ended 31 March 2019 and 2018 the weighted average effect of share options has been excluded from the calculation of diluted earnings per ordinary share, since they were anti-dilutive under the treasury stock method of earnings per share calculation (Note 20).

Note 11 - Cash and cash equivalents

Currency, liquidity, and interest rates risks analyses of cash and cash equivalents are disclosed in Note 26.

Note 12 - Balances with the Central Bank of Belize

BBL is required to maintain an average minimum non-interest bearing deposit balance with CBB equal to 8.5 percent of the average deposit liabilities of BBL. At 31 March 2019, the actual amount was 10.4 percent (2018 - 13.5 percent and 2017 - 28.7 percent). In addition, BBL must maintain an average aggregate of approved liquid assets (which include the average minimum non-interest bearing deposit balance maintained with CBB) equal to 23 percent of the average deposit liabilities of BBL. At 31 March 2019, the actual amount was 36.0 percent (2018 - 28.9 percent and 2017 - 33.7 percent). The statutory reserve balances are not readily available to finance the day to day operations of the banks.

Note 13 - Due from banks (net of allowances)

The portfolio of balances held by both BBL and BBIL represents instruments of short-term placements of temporary available cash in other banks.

As at 31 March 2019, 2018 and 2017, all the interbank loans and deposits placed in other banks were current and not impaired except for balances held with Worldclear Limited, amounting to USD 0.2 million (2018 - USD 0.2 million and 2017 - USD 0.6 million), which had a related impairment allowance of USD 0.2 million (2018 - USD 0.2 million and 2017 - USD 0.3 million).

Movements in impairment allowance on due from banks were as follows:

Currency, liquidity, and interest rate risk analyses of cash and cash equivalents are disclosed in Note 26.

As at 31 March 2019, BBL has utilised USD 4.2 million (2018 - USD 4.2 million and 2017 - USD 4.2 million) of its balances held with other financial institutions to be held as collateral for certain credit lines and as required by the card brands. These particular financial assets are pledged as collateral under terms that are usual and customary for such transactions.

Note 14 - Investment securities

Under IFRS 9 effective 1 January 2018, financial assets held in a business model with intention to collect the contractual cash flows and that contain contractual terms that give rise on specified dates to cash flows that are SPPI, are measured at amortised cost.  Whilst the objective of the business model must be to hold the financial asset to collect contractual cash flows this does not mean that the Group is required to hold the financial assets until maturity.

Securities held in a business model that is achieved by both collecting contractual cash flows and selling and that contain contractual terms that give rise on specified dates to cash flows that are SPPI are measured at fair value through other comprehensive income.

For fiscal 2018, the accounting for the securities was under IAS 39. The majority of the securities were treated as available for sale financial assets and were held at fair value with gains and losses being included in other comprehensive income.

Note 15 - Loans to customers (net of allowances)

Individually impaired loans with allocated allowances were as follows:

Changes in the allowance for loan losses were as follows:

Balances presented in the tables above reflect the application of IAS 39 in determining the impairment allowances for the years ended 31 March 2018 and 2017.

The table below shows the staging of the loans to customers and the related ECL's.

The table below shows the movement in the impairment allowance by stage:

The table below reflects outstanding loans by industry classifications.

At 31 March 2019, the Group had total loans outstanding to certain officers and employees of USD 10.4 million (2018 - USD 9.7 million and 2017 - USD 8.8 million) at preferential rates of interest varying between 0.0 percent and 12.0 percent per annum, repayable over varying periods not exceeding 25 years. The transfer value loss on these loans had not been considered material and therefore had not been included in these consolidated financial statements.

Note 16 - Property, plant and equipment

Property, plant and equipment of the Group as at 31 March 2019 and 2018 comprised the following:

Property, plant and equipment of the Group as at 31 March 2018 and 2017 comprised the following:

Total capital expenditures for the year ended 31 March 2019 was USD 2.0 million (2018 - USD 3.6 million and 2017 - USD 4.3 million). Total depreciation expense for the year ended 31 March 2019 was USD 2.4 million (2018 - USD 2.0 million).

As at 31 March 2019 the Group's buildings, vehicles, ATMs and other equipment were insured for USD 22.1 million (2018 - USD 22.6 million and 2017- USD 23.9 million).

As at 31 March 2019 historical cost of fully depreciated fixed assets amounted to USD 7.2 million (2018 - USD 6.9 million and 2017 - USD 6.2 million).

Note 17 - Due from Government of Belize (net of allowance)

Movements in impairment allowance on due from GOB.

On 23 March 2007, a loan note was issued to BBL by the GOB under the terms of a settlement deed entered into by BBL and the GOB on the same date (the "2007 Loan Note"). The 2007 Loan Note had been entered into by the GOB in order to satisfy the GOB's liability under a 2004 guarantee for debts and liabilities owed to BBL by Universal Health Services.  

While BBL had initially recorded the receivable owed by the GOB under the 2007 Loan Note, the CBB directed BBL to remove this receivable from the BBL's accounts; this exclusion resulted in the auditor issuing a qualified opinion on the BBL's financial statements for the fiscal year ended 31 March 2012.

BBL also commenced arbitration proceedings (the "Arbitration") under the London Court of International Arbitration (the "LCIA") in order to recover the sums due under the 2007 Loan Note. On 15 January 2013, the arbitral tribunal made its Final Award in the Arbitration in favour of BBL. It declared that the 2007 Loan Note was valid and binding and ordered the GOB to pay BBL the sum of BZD 36,895,509 plus interest and costs.

The LCIA Final Award confirmed that the 2007 Loan Note was valid and binding on the basis of a judgement given by the Privy Council, which was at that time Belize's highest court of appeal, in The Belize Bank Limited v The Association of Concerned Belizeans and Others. In this judgement, the Privy Council rejected a challenge to the Loan Note that it did not comply with the Belize Finance and Audit (Reform) Act.       

In order to increase its enforcement options, BBL applied to the English High Court for an order that the Final Award be enforceable in the same manner as a judgement or order of an English Court to the same effect. That order was granted on 20 February 2013 and it was served on the GOB on 15 May 2013 (the "English Judgement").

Award Enforcement proceedings were also commenced against GOB in the Belize Supreme Court in 2013. On 17 February 2015, the Belize Supreme Court refused to enforce the Final Award on the grounds that enforcement would be contrary to public policy. BBL appealed this decision to the Belize Court of Appeal and on 24 March 2017, the Court of Appeal upheld the decision of the Belize Supreme Court.

BBL appealed the Court of Appeal's decision to the Caribbean Court of Justice (the "CCJ") and on 22 November 2017, the CCJ reversed the Court of Appeal's decision and found in favour of BBL. The CCJ's Order granted permission to BBL to enforce the LCIA Award in the same manner as a judgement or order of the Supreme Court to the same effect (the "Belize Judgement"). Twenty-one days after the CCJ granted permission, BBL applied to the CCJ under section 25 of the Crown Proceedings Act for a certificate certifying the amounts payable to BBL by the Government. On 3 January 2018, the CCJ issued the Certificate certifying the amount payable to BBL by the Government under the LCIA Award and the Certificate was served on the Attorney General, the Minister of Finance and the Financial Secretary on 04 January 2018. The CCJ held that the effect of the Certificate is to convert the CCJ Order into a Judgement Debt.

On 4 January 2018, BBL applied for a further order from the CCJ directing the Minister of Finance to pay the amount due under the Judgement. On 1 June 2018, the CCJ decided that BBL's application was premature but stated in its decision that if the Government failed to enact the necessary legislation to satisfy the judgement, then BBL should apply to the Belize Supreme Court for a declaration that the Minister of Finance has failed to comply with his obligations under section 25 of the Crown Proceedings Act and an order that the Minister of Finance pay the amount due under the judgement.

On 26 June 2018, BBL filed an application pursuant to Part 56 of the Supreme Court (Civil Procedure) Rules, 2005 for an order granting permission to BBL to apply for Judicial Review of: (i) the decision of the Minister of Finance not to comply with his mandatory duty within section 25(3) of the Crown Proceedings Act to pay the sum certified as payable to BBL by the Certificate of Order dated 03 January 2018 issued by the Registrar of the Caribbean Court of Justice, and (ii) the decision of the Minister of Finance not to satisfy the Judgement Debt with interest accruing at the rate of 6% per annum.

On 09 July 2018 the Chief Justice granted permission to BBL to apply for judicial review. BBL filed a fixed date claim form applying for judicial review on 23 July 2018. The first hearing took place on 17 September, 2018 and the Court granted BBL's application for the trial of certain preliminary issues namely: (i) whether the Minister of Finance failed to comply with his statutory duty imposed by section 25(3) of the Crown Proceedings Act Cap 167 of the Laws of Belize; and (ii) whether an Order ought to be made directing the Minister of Finance to pay the sum due under the Certificate Order or Judgement Debt (less amounts set-off as Business Tax) within 10 days of the Order. The trial of the preliminary issues took place on 05 and 06 December 2018 and BBL is awaiting the Belize Supreme Court's decision.

On 28 June 2018 BBL filed a claim against the Commissioner of Income and Business Tax and the Attorney General of Belize (both being representatives of the GOB) in light of the Commissioner's refusal to set-off the Business Tax owed to the Government by BBL notwithstanding being duly authorised by BBL to satisfy the taxes due by way of set-off against the Judgement Debt. The trial of BBL's claim took place on 22 January 2019 at the Supreme Court of Belize. The Court had difficulty accepting the Government's arguments and found in favour of BBL. The Court ordered: (i) a Declaration that the decision of the Commissioner; refusing to set-off BBL's tax liability against the Judgement Debt is unreasonable, disproportionate, unlawful and therefore inequitable; (ii) a Declaration that the decision of the Commissioner not to consider garnishing BBL's tax debt from the Judgement Debt is unlawful; (iii) an Order restraining the Commissioner whether by herself, her servants and her agents from seeking to enforce the tax liability against BBL, and (iv) the Government to pay BBL its cost to be agreed or assessed. The decision of the court was orally delivered on 22 January 2019 and the written judgement handed down on 08 February 2019. The decision of the Supreme Court of Belize legally endorsed BBL's right to authorise the Government to set-off all Business Tax owed to the Government by BBL against the Judgement Debt. The Government has since appealed the decision of the Supreme Court to the Belize Court of Appeal but no stay of the effect of this decision has been granted to the Government. No date has been fixed for the hearing of the appeal and no hearing date is expected prior to the first sitting of the Belize Court of Appeal in March 2020.

In order to further increase its enforcement options, BBL filed a petition to enforce the Final Award in federal court in the United States on 18 April 2014. The GOB filed a motion to dismiss and a response to the petition to confirm the Final Award on 8 August 2014. The GOB applied for a stay pending the outcome of similar litigation. However, the stay was denied on 09 January 2016. On 08 June 2016 the US District Court confirmed the Final Award and entered judgement in favour of BBL against the GOB for the monetary portion of the Award; to be converted to US dollars, applying the conversion rate as of the date the Award was issued plus interest at the annual rate of 17.0% compounded annually between 8 September 2012 and 08 June 2016. On 12 July 2016, the United States District Court ordered that judgement be entered in favour of BBL against the GOB in the amount of USD 19,086,210 plus USD 16,099,216 in pre-judgement interest, totalling USD 35,185,427 (the "US Judgement").

The GOB appealed the decision of the US District Court to the US Court of Appeals, D.C. Circuit. A hearing in the US Court of Appeals took place on 09 February 2017. On 31 March 2017, the US Court of Appeals, D.C. Circuit upheld the decision of the US District Court and rejected all of the GOB's arguments on appeal.

On 28 April 2017, the GOB filed a petition for an 'en banc' review of the US Court of Appeal's decision in essence asking the court to reconsider its decision. On 7 June 2017, the petition by the GOB for an 'en banc' rehearing was denied by the US Court of Appeal and its earlier judgement was confirmed.

The GOB then sought review by the United States Supreme Court. On 13 November 2017, the United States Supreme Court denied the GOB's petition for certiorari, rendering the US Judgement final and not subject to further judicial review.

On 16 November 2017, BBL filed a motion in the United States District Court for the District of Columbia pursuant to 28 U.S.C. §1610(c) seeking judicial authorisation to seek enforcement of the US Judgement against the GOB. On 12 March 2018, the United States District Court ordered that BBL may now seek attachment or execution of GOB property to satisfy the Court's judgement pursuant to 28 U.S.C. § 1610(a)-(b) in the jurisdictions where such attachment or execution is appropriate.

The Award underlying the English Judgement, the US Judgement, and the Belize Judgement has been recognised and declared enforceable against GOB by the highest Belize and US Courts, and by the English Courts.

Note 18 - Customer accounts

Included in term deposits at 31 March 2019 were USD 8.0 million (2018 - USD 8.7 million and 2017 - USD 12.7 million) of term deposits denominated in US dollars and nil (2018 - nil) denominated in UK pounds sterling. Included in demand deposits at 31 March 2019 were USD 16.7 million (2018 - USD 18.8 million and 2017 - USD 20.6 million) of demand deposits denominated in US dollars and USD 0.2 million (2018 - USD 0.2 million and 2017 - USD 0.2 million) denominated in UK pounds sterling.

As at 31 March 2019, USD 8.6 million of customer account balances (2018 - USD 5.7 million and 2017 - USD 2.6 million) is held as collateral for banking operations.

The twenty largest deposit customers account for 31.0% of total deposits (2018 - 29.4% and 2017 - 31.6%).

Note 20 - Share capital

Treasury Shares

During the three years ended 31 March 2019, 2018, and 2017 there has been no movement in treasury shares.

On 13 September 2018, the Board of Directors agreed to the cancellation of all existing Treasury Shares; the cancellation process should be completed by the end of March 2020.

Share Options

The Company has granted employee share options which are issued under its share option plan which reserves ordinary shares for issuance to the Company's executives, officers and key employees. The options have been granted under the Long-Term Incentive Plans (the "Incentive Plans"). The Incentive Plans are administrated by a committee of the board of directors of the Company. Options are generally granted to purchase the Company's ordinary shares at prices which equate to or are above the market price of the ordinary shares on the date the option is granted. Conditions of vesting are determined at the time of grant but options are generally vested and become exercisable for a period of between three and ten years from the date of grant and all have a maximum term of ten years.

During the year ended 31 March 2019, no outstanding options were exercised.

In August 2008, the Company granted options over 6,999,997 ordinary shares at an exercise price of USD 6.50 per share which vest and are exercisable in three equal instalments on 01 August 2012, 01 August 2013 and 01 August 2014. The term of these options extended to 01 August 2019; they have now expired.

In May 2009, the Company granted options over a further 250,000 ordinary shares at the exercise price of USD 6.50 per share which vest and are exercisable in three instalments on 01 June 2013, 01 June 2014 and 01 June 2015. The term of these options extends to 01 June 2020.

The exercise price of all options was adjusted to USD 1.95 following the demerger of Waterloo Investment Holdings Limited from the Group in 2011.

The Group measures compensation cost in connection with share option plans and schemes using a fair value based method. Using the fair value based method, the Group took a charge of nil in the consolidated statement of comprehensive income during the year ended 31 March 2019 (2018 - nil).

The fair value of each option grant in 2008 and 2009 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: