OUR VISION
To be an effective, financially viable and environmentally responsible housing solutions facilitator and provider by 2013
OUR MISSION
Our Mission is to contribute to the improved quality of life of all Jamaicans through social transformation by facilitating and providing quality, affordable shelter solutions with security of tenure . This will be accomplished by: A committed, caring, dedicated and competent team with excellence, innovation, the use of appropriate technology and through strategic partnerships with communities and other stakeholders.
CONTENTS CORPORATE PROFILE ............................................................................................................................................. 3 BOARD OF DIRECTOR’S REPORT ............................................................................................................................. 4 OUR BOARD OF DIRECTORS ................................................................................................................................... 7 CORPORATE GOVERANCE ...................................................................................................................................... 8 REVIEW OF OPERATIONS ..................................................................................................................................... 12 BUILDING JAMAICA…. ONE COMMUNITY AT A TIME ........................................................................................... 22 OUR MANAGEMENT TEAM .................................................................................................................................. 23 CORPORATE STRATEGY ........................................................................................................................................ 24 STRATEGIC OBJECTIVES, TARGETS & ACHIEVEMENTS .......................................................................................... 25 FIVE YEAR FINANCIAL HIGHLIGHTS ...................................................................................................................... 26 PROJECTIONS OF KEY FINANCIAL & OPERATIONS MEASURES FOR 2011/2012..................................................... 27 PICTORIAL HIGHLIGHTS ........................................................................................................................................ 29 EXECUTIVE COMPENSATION ................................................................................................................................ 31 FINANCIAL STATEMENTS ..................................................................................................................................... 32
HAJ ANNUAL REPORT 2010 - 2011
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CORPORATE PROFILE Housing Agency of Jamaica Limited (HAJL) which was incorporated on April 30, 1998, as the National Housing Development Corporation Limited (NHDC), was formed through the merger of Caribbean Housing Finance Corporation Limited, the National Housing Corporation Limited and Operation PRIDE. The entity changed its name from the National Housing Development Corporation Limited to Housing Agency of Jamaica Limited in September 2008. HAJ is a wholly owned government entity and falls under the portfolio of the Ministry of Water and Housing and is governed by a Board of Directors and headed by a Managing Director. HAJ s main activities are those of property development and the management, development and construction of low cost housing and infrastructure. HAJ manages a substantial mortgage portfolio consisting primarily of Greater Portmore mortgages. HAJ s fu tio s are discharged within two (2) broad divisions, namely Technical Services and Corporate Services. The Technical Services Division contains the core functional areas of Engineering and Design, Project Development & Procurement and Project Implementation Departments. The Corporate Services Division comprises the Finance and Information, Legal and Company Secretarial, Mortgage Administration and Public Relations and Community Development departments The Human Resources and Administration Department reports directly to the Managing Director. The Internal Audit Department reports directly to the Chairman of the Board. The Agency currently operates from four (4) locations within Jamaica, with its head office located in Kingston at 13 Caledonia Avenue.
HAJ ANNUAL REPORT 2010 - 2011
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BOARD OF DIRECTOR’S REPORT Although a challenging year nationally, fiscal year 2010/2011 could be said to be the year in which Housing Agency of Jamaica Limited came of age. It is arguable that by year-end, the Company had become the largest real estate developer in the country.
Financial Overview After years of losses, for the second straight year the Company returned an operational profit. In 2009/2010, this profit amounted to $177.832M1 and in 2010/2011, this increased (by some 88%) to $334.452M. Although due, in large part, to the write back of provisions that had been made (out of income in previous years) for the USAID loan portfolio ($494.42M), there was a substantial gain of $377.023M from the sale of houses and serviced lots ($92.029M in 2009/2011). Chairman of the Board of Directors, David Chung
The profitable outcome for the year occurred despite: The deferral to the next fiscal year of the Mona Project which had been budgeted to yield some $212M in profit; The increase in administration and other expenses from $472.917M (2009/2010) to $510.878M in the current year. This was primarily as a result of the accrual for the 7% wage increase agreed to as of April 01, 2009, although no payment of the same has yet been made. The increase in the impairment loss for Operation PRIDE advances from $160.584M in 2009/2010 to $230.104M in the current year. The Board and Management review the quality of this portfolio, on an ongoing basis and adjust provisions as appropriate. As at fis al ear e d, the Co pa s et assets totalled $ . Billio , as o pared to $ . M at the previous year end. This substantial increase was primarily due to the booking of the value of Greenfield lands contributed by the Government of Jamaica for real estate development ($1.671 Billion) and also to the transfer of profits to the Reserve Fund, which amounted to $629.159M (as against $181.178M for the previous year).
Project Starts and Deliveries: 2010/2011 During the year, the Company delivered 2,186 (Brownfield and Greenfield) housing solutions, as compared to 1,130 in the previous year. 1
Restated
HAJ ANNUAL REPORT 2010 - 2011
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As at year end, housing solutions in the course of construction numbered 6,036, with a total contract value of $7.425B.
Low Income Housing Perhaps the singularly most important strategic objective of the Agency is to dominate the low income housing market. In 2010/2011, we delivered expandable starter housing units at Portmore Villas in Saint Catherine and Luana in Saint Elizabeth at prices ranging between $2.5M - $3M, prices unequalled elsewhere in the market. This effort will be redoubled in fiscal year 2011/2012 when construction of the Exim Bank of China funded project at Runaway Bay in Saint Ann will get underway and other large low income housing schemes will be commenced at Retirement, Green Pond and Grange Pen in Saint James and Bernard Lodge in Saint Catherine. Other similar projects are now being planned and lands acquired, Island-wide.
Upgrading of Informal Communities With grants from the Tourism Enhancement Fund (TEF), large scale infrastructure works were started at informal settlements at Shaw Park Heights in Saint Ann and Lilliput, Flanker and Norwood in Saint James. Whilst Shaw Park Heights has been completed, construction at the other sites will continue in the new year and new works will be commenced at the settlements at Belle Air, in Saint Ann and Grange Pen and Barrett Hall, in Saint James. During the fiscal year, works were begun at Hague in Trelawny, to which the former residents of Dump (Falmouth) were relocated to make way for the new cruise ship terminal at Falmouth. These works are being funded by the Urban Development Corporation, through financing provided by the Venezuelan, Petro Caribe Fund. The Agency has also commenced infrastructure works at the large informal settlement at Bucks Common, on the outskirts of May Pen, Clarendon and at Boscobel in the Parish of Saint Mary.
Public Sector Partnerships In order to realize its strategic objectives, the Agency has forged critical relationships with a number of state agencies, in particular, the National Housing Trust (NHT) and the Tourism Enhancement Fund (TEF). In specific instances, the Agency has also partnered with the Urban Development Corporation (Dump/Hague, Trelawny) and Jamaica Mortgage Bank (Lilford Mews, St. Andrew). In 2010/2011:Interim construction finance to the tune of $883.6M, was provided by the NHT and used to finance the construction of a number of new projects including Stadium Gardens in Saint Andrew, Portmore Villas, Palms of Portmore, Westmeade and Country Club (Phase 2) in Saint Catherine. Grants from the TEF totalled $290.6M, which were applied to construct infrastructure at a number of informal settlements in North Coast resort areas. In 2011/2012, projections are for:Further Interim construction finance from the NHT totalling $3.877B.
HAJ ANNUAL REPORT 2010 - 2011
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Further Grants from the TEF totalling $471M Interim construction finance from JMB in the sum of $149M
Joint Ventures with Private Developers The Agency recognizes that in order to meet its mandate, to provide large numbers of housing solutions, it will be necessary to enter into joint venture arrangements with private sector developers. Already, Cabinet has authorized the Agency to enter into one such arrangement and it is the intention of the Directors to pursue as many similar arrangements as possible in the ensuing fiscal year.
Mortgage Portfolio With the aging of the current portfolio and consequent repayment of loans, during the year:Mortgage income declined from $250.76M in 2009/2010 to $228.181M in 2010/2011 The number of mortgage accounts decreased from 9,880 at the beginning of the year to 9,060 at year end, resulting in a principal balance reduction of $222.85M. There are, at present, no plans for the Agency to commence any new mortgage origination. It is, therefore, expected that the current portfolio will be substantially repaid in a few years and that the income earned from the portfolio in prior years will be replaced by income arising from the development and sale of housing solutions.
Forecast & Projections for Fiscal Year 2011/2012 The Directors are of the view that the new fiscal year will be another profitable and productive year for the Company. It is projected that a net profit of $291.394M will be realized and that housing solutions starts and deliveries will total 4,202 and 4,094 respectively. While construction costs are expected to increase, the Agency will strive to ensure that these costs are controlled and that the average infrastructure cost per lot delivered does not exceed the following:(1) For lots in informal communities = $367,832 per lot (2) For lots in new schemes (excluding the special project at Mona) = $1,233,000 per lot. The Dire tors take pride i the Age s a hie e e ts o er the past ear a d are opti isti regardi g the achievement of its objectives for the ensuing and subsequent years. The overarching goal of the Agency is to provide Jamaicans (especially in the low-middle income groups) with quality housing at an affordable price. In order to meet the large unsatisfied housing demand that exists, the Agency will be required to deliver a large number of houses and lots, on an annual basis. The Board is satisfied that the Agency is now well positioned to begin a sustained assault on this unsatisfied demand and firmly commits the Agency to the achievement of this overarching goal.
DAVID O. CHUNG PE. CHAIRMAN
HAJ ANNUAL REPORT 2010 - 2011
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OUR BOARD OF DIRECTORS
Front row (L-R): Sonia McFarlene, Joseph Shoucair (Managing Director), David Chung (Chairman), Simone Morris-Rattray (Company Secretary) Back row (L-R): Christopher Whyms-Stone, Lincoln Eatmon, Norman Brown, Rev. Conrad Pitkin, Sylvester Tulloch, Marvalyn Mitchell-Campbell, Kemel Allen, Vincent Haldene, Faye Hutchinson, Robert Lawrence Not pictured: Michelle Bhoorasingh and Mark Kerr-Jarrett
HAJ ANNUAL REPORT 2010 - 2011
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Audit Committee
CORPORATE GOVERANCE By Cabinet Decision No. 45/10 dated December 6, 2010, the tenure of the Board of Directors of Housing Agency of Jamaica was extended for a period of three months to March 5, 2011. The appointment of the new board was renewed for a period of two (2) years with effect from March 7, 2011.
Board Responsibility The Board met twelve (12) times during the year. In addition to its regularly scheduled monthly meetings, the Board met in June to approve the Audited Financial Statements as prepared by the external auditors. The Corporate Governance Policy sets out principles relevant to the operation of the Board and delineates the functions of the Board and those of the management. During the year the Board fulfilled several of its key functions, including: Approval of the three (3) year Corporate Strategic Plan Approval of the 2011/2012 budget Evaluation of Managing Director and senior a age e t s perfor a e Monitoring of executive management performance in the implementation and achievement of strategic objectives and financial performance
Board Composition As at March 31, 2011, the Board comprised fifteen (15) executive directors and two (2) nonexecutive directors (the Managing Director and Company Secretary).
Committees of the Board Each Committee has its own charter, which has been approved by the Board and defines the respe ti e o ittee s roles a d responsibilities.
This Committee is comprised of five (5) Directors: Sonia McFarlane (Chair), Collin Innis, Robert Lawrence, Vincent Haldane and Emery Woodstock. The Audit Committee met seven (7) times during the year with a strong attendance record of its members at each meeting. The Audit Committee undertook the following during the financial year under review: ‘e ie ed the Age s draft Fi a ial Statements for year ended 31 March 2010 with management and Finance Committee prior to presentation to the Board. Recommended to the Board of Directors that the Audited Financial Statements be included in the Age s A ual ‘eport a d KPMG be appointed independent auditors for 2010/2011. Monitored the Implementation Status of Outstanding Audit Recommendation (ISOAR) Reviewed and approved the Internal Audit Depart e t s Work Pla a d Perfor a e targets for financial year ending 31 March 2011 Examined and reviewed the internal audit findings and recommendations Reviewed internal audit reports and in some instances required implementation of the recommended policies and procedures, or changes there to.
Finance Committee Members of the Committee are: Wayne Ebanks (Chair), Michelle Bhoorasingh, Mark KerrJarrett, Lincoln Eatmon. The Finance Committee met nine (9) times during the year. The Committee undertook the following during the 2010/2011 financial year: Formulated and adopted a Capital Structure/Debt Policy Led the initiative to obtain approval from the Ministry of Finance to remove USAID HG 12 &
HAJ ANNUAL REPORT 2010 - 2011
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HG loa s fro the Age s ooks. Recovery of tax refund from the Government of Jamaica Ensured that all annual budgets are presented to both the Ministry of Finance and the Ministry of Water and Housing on a timely basis Ensured that the financial statements for 2010 are submitted to the Ministry of Water and Housing on a timely basis in keeping with the Public Bodies Management and Accountability Act.
Strategic Planning Structure Committee
&
Organizational
During the 2010-2011 financial year, the Committee met twenty-two (22) times to review matters relating to the strategic plans of the Agency, its management structure and perfor a e of the o pa s e e uti es to ensure that all objectives are met as well as matters relating to corporate governance. The committee undertook the following during the financial year: The sale of lands at Oxford and Lady Musgrave Roads to National Insurance Fund for $270M, which funds were, used to bridge-finance new Greenfield projects The preparation of a draft policy on the allocation of housing solutions Execution of a Memorandum of Understanding with COMPLANT regarding the provision of interim funding for the construction of 20,000 housing solutions over a 3 year period The annual assessment of the performance of each Board Director and the Managing Director Members of the Committee are David Chung (Chair) and Rev. Conrad Pitkin.
Planning & Projects Committee This Committee is comprised of seven (7) Directors: Christopher Whyms-Stone (Chair), Norman Brown, Collin Innis, Heather Pinnock, Sylvester Tulloch and Emery Woodstock. The Planning and Projects Committee met eight (8) times during the year and supported and guided the Agency in all matters of project development from concept to close-out including associated matters of product mix and pricing and promotion. During financial year 2010-2011, the committee undertook the following: E dorsed a age e t s re o e datio for the award of seven (7) new contracts with a yield of 2,404 solutions and aggregate contract sums of $2.1B. These projects are listed below: PROJECT
DESCRIPTION
BOSCOBEL (BROWNFIELD) BOSCOBEL (GREENFIELD)
INFRASTRUCTURE
LILLIPUT 3, ST. JAMES FLANKER 2B, ST. JAMES STADIUM 3, ST. ANDREW SHAW PARK 2, ST. ANN WHITEHALL 3, WESTMORELAND
INFRASTRUCTURE
TOTAL
HOUSING & INFRASTRUCTURE
INFRASTRUCTURE HOUSING & INFRASTUCTURE INFRASTRUCTURE INFRASTRUCTURE
TYPE OF SOLUTIONS 278 serviced lots 159 serviced lots & 99 – 2Br units 732 serviced lots 405 serviced lots 50 – 2Br Townhouses 197 serviced lots 376 serviced lots 2,404
CONTRACT VALUE $20,421,650.00 $802,522,476.00
$229,506,259.89 $157,616,771.45 $349,854,520.00 $16,937,374.00 $502,015,769.76 $2,039,465,191.21
Of the eleven (11) projects endorsed in FY 2009/2010 with contract sum of $2.55B, all with the exception of Mona and Mineral Heights received the requisite NCC/Cabinet approvals for contract award. The Committee by holding management responsible and accountable for on-time completions ensured that these projects were implemented in keeping with contractual and acceptable technical and project management standards.
HAJ ANNUAL REPORT 2010 - 2011
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Ensured full compliance by management of regulatory requirements whereby projects are not pursued without receipt of Environmental Permits and Licenses. Endorsed and supported the innovative funding approach utilized in the Boscobel Brownfield project, whereby the contractor undertook to fund and construct agreed infrastructure works in exchange for vacant lots in the settlement. This new concept was approved by Cabinet and the contract negotiated and awarded. E dorsed the Age s su issio to Ca i et to e ter i to negotiation with a private developer to design, fund and construct its Green Pond project. It is expected that these negotiations will be concluded and contract awarded in the first quarter of 2011/2012. The Agency also intends to replicate this approach for other projects. Reviewed and approved the development concepts proposed by the Agency for Greater Retirement Phase 1, Whitehall 4, Grange Pen and Bernard Lodge projects. The Committee also examined proposals for inner city/urban infill as well as an innovative farmstead greenhouse for lands at Holland, St. Elizabeth. The Agency is proceeding apace with the Grange Pen, Bernard Lodge and Retirement projects.
New Appointments to the Board Ms. Faye Hutchinson, Mrs. Marvalyn Mitchell-Campbell and Mr. Kemel Allen were appointed to the Board of Directors with effect 7th March 2011.
Remuneration of Directors Dire tors are paid o a per
eeti g atte ded asis.
The following table shows the total remuneration paid for the period under review: Position of Director
Fees ($)
Motor Vehicle Upkeep/Travelling or Value of Assignment of Motor Vehicle ($)
Honoraria ($)
Chairman – Board of Directors Chairman – Finance Committee Chairman – Audit Committee
368,455.00 91,500.00 110,000.00
47,040.00 5,400.00 6,630.00
Chairman – Projects & Planning Committee Director Director Director
117,000.00 116,500.00 101,000.00 132,000.00
Director Director Director Director Director Director Director
151,800.00 138,300.00 116,500.00 147,500.00 114,500.00 92,000.00 83,500.00
Director TOTAL
2
-
All Other Compensation including NonCash Benefits as applicable2 ($) -
415,495.00 96,900.00 116,630.00
9,600.00 17,550.00 16,200.00 15,960.00
-
-
126,600.00 134,050.00 117,200.00 147,960.00
79,200.00 86,400.00 15,525.00 9,300.00 11,520.00 6,240.00 39,000.00
-
48,583.68 259,153.77 62,828.25
279,583.68 483,853.77 132,025.00 156,800.00 126,020.00 98,240.00 185,328.25
88,500.00
3,300.00
-
1,969,055.00
368,865.00
-
91,800.00
370,565.70
2,708,485.70
Accommodation
HAJ ANNUAL REPORT 2010 - 2011
Total ($)
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Attendance at Board and Committee Meetings There were eleven (11) scheduled meetings and one (1) special sitting of the Board, making a total of twelve (12) meetings for the financial year ending March 31, 2011. Details of attendance of directors at meetings of the Board and its committees during the year are set out below:
BOARD
AUDIT COMMITTEE
FINANCE COMMITTEE
Number of meetings for the year
12
7
9
Michelle Bhoorasingh Norman Brown David Chung ▀ Lincoln Eatmon Wayne Ebanks ▀ Vincent Haldane Collin Innis Mark Kerr-Jarrett Robert Lawrence Sonia McFarlane ▀ Heather Pinnock Conrad Pitkin Christopher Whyms-Stone ▀ Sylvester Tulloch Emery Woodstock
10 10 12 10 5 10 11 8 10 8 11 12 8 9 11
STRATEGIC PLANNING & ORGANIZATIONAL STRUCTURE 22
PLANNING & PROJECTS COMMITTEE 8
22
7 2
9 3 2 7 1 7
6 3
7 7 5 2
6
7 7 5
▀ - Board of Directors Chairman ▀ - Finance Committee Chairman ▀ - Audit Committee Chairman ▀ - Planning & Projects Committee Chairman
HAJ ANNUAL REPORT 2010 - 2011
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REVIEW OF OPERATIONS Financial Status For the second straight year, the Agency returned an operational profit. The financial results for Fiscal year 2010/2011 show a Net Profit of $334.452, up 88% from J$177.832M in 2010. The increase in profit was mainly due to the write back of provisions that had been made (out of income in previous years) for the USAID loan portfolio ($494.42M) as well as development proceeds from the completion of projects and sales.
Mortgage Portfolio Housi g Age of Ja ai a Li ited s ortgage portfolio o prised , ortgages ith a asset alue of $2.2B as at April 1, 2010. Included in the portfolio are Ministry of Water and Housing loans managed by HAJL. PORTFOLIO
# OF MORTGAGES
HAJL USAID Greater Portmore Refinance Ministry of Finance Ministry of Water & Housing Operation PRIDE Kingston Portworkers/JMB
PRINCIPAL BALANCE $
MONTHLY INSTALLMENT $
324 1,768 5,520 39 492 1,330
55,000,614 237,367,442 1,625,642,400 40,447,724 32,604,671 30,468,605
1,369,333 3,083,462 31,620,983 726,590 283,520 453,713
359 48
207,028,178 920,742
2,013,904 16,143
9,880
2,229,480,376
39,567,648
TABLE 1
Summary of Mortgage Portfolio as at March 31, 2011 PORTFOLIO
HAJL USAID Greater Portmore Refinance Ministry of Finance Ministry of Water & Housing Operation PRIDE Kingston Portworkers/JMB
# OF MORTGAGES 245 1,739 4,922 37 492 1,272
PRINCIPAL BALANCE $ 48,995,247 234,775,383 1,437,358,053 33,372,128 32,446,798 27,009,919
MONTHLY INSTALLMENT $ 1,129,377 3,018,376 28,674,869 653,010 284,371 475,304
319 34
191,923,501 748,547
1,950,363 11,401
9,060
2,006,629,576
36,197,071
TABLE 2
HAJ ANNUAL REPORT 2010 - 2011
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The number of mortgage accounts decreased by 820, moving from 9,880 at April 1, 2010 to 9,060 as at March 31, 2011 as indicated in Tables 1 & 2. There was reduction in the principal balance of $222,850,800 for the same period. Summary of Mortgage Arrears for the period April 1, 2010 and March 31, 2011 There was an overall increase in arrears of $54,566,106 due largely to the increased arrears in the USAID schemes. The table below indicates decreasing arrears balances for three (3) schemes namely, Greater Portmore, Operation PRIDE and Kingston Portworkers/JMB. PORTFOLIO
HAJL USAID Greater Portmore Refinance Ministry of Finance Ministry of Water & Housing Operation PRIDE Kingston Portworkers/JMB
Arrears as at 01.04.10 $
Arrears as at 01.04.11 $
Variance $
1,446,213 346,569,317 22,603,081 24,841,350 49,604,951 58,885,687
1,851,485 392,981,354 22,526,467 26,842,370 52,902,021 61,412,215
(405,272) (46,412,037) 42,850 (2,001,020) (3,297,070) (2,526,528)
59,487,062 1,416,823
59,484,253 1,386,661
2,809 30,162
564,854,484
619,386,826
(54,566,106)
TABLE 3
New Customer Service Model The Agency has embraced the need to raise its customer service standards to ensure consistent excellence in service delivery. Consequently, a new Customer Service Model has been adopted in line with the thrust for a more efficient and effective public sector. This model is expected to reinforce our brand identity and ultimately improve competitiveness. Notably, a recent Don Anderson Customer Satisfaction Survey of the Agency concluded that: Fo the ost pa t, usto e s’ e pe tatio s e e et 47% a d i deed exceeded on some occasions (18%), but in 35% of the cases, their experience fell short of their expectations. Strong positives were e p essed i te s of the ualit of se i e the e ei ed a d the le el of p ofessio alis displa ed. Against this background of current customer perceptions, the new model, led by senior management, will have the following elements: Adhere e to a e Citize s Charter of ser i e sta dards ith i ter atio al e h arks. Service Excellence Ambassadors drawn from the staff will transmit the culture of excellence to their peers, reinforced by company-wide customer service training. A customer complaint management system, to record and resolve all instances of customer disappointment and transform dissatisfied customers into loyal ones. Monitoring and auditing of activities and standards
HAJ ANNUAL REPORT 2010 - 2011
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Recognition and reward of exceptional employee performance. Biennial Customer Satisfaction Surveys testing the extent to which our customers are impacted by these service delivery improvements. We are confident that in utilizing this new customer service approach, gaps identified will be closed and superior results achieved in serving our valued customers.
Sales Portfolio SUMMARY OF SALES COLLECTIONS AS AT 31 MARCH 2011 PROJECTS TOTAL COLLECTED ($) PALMS OF PORTMORE 376,846,665 PORTMORE VILLAS 2B 313,867,286 STADIUM GARDENS 2 426,299,300 LUANA 3 112,938,829 WHITEHALL 2 116,796,206 WESTMEADE WILLOWS 44,169,886 COUNTRY CLUB 2 28,472,091 LILFORD 21,600,000 EDEN PARK 16,526,515 FLANKERS 6,125,996 MINERAL HEIGHTS 18,585,000 BARRETT HALL 8,626,163 BUSHY PARK 2,039,700 FRONTIER 2 5,327,531 LUANA 1 15,892,365 MELROSE PH3 30,571,265 PORTMORE VILLAS 2A 11,835,683 WHITEHALL 1 7,883,678 MT. EDGECOMBE 16,628,570 OTHER SCHEMES 68,768,340 TOTAL
2 Bedrooms 2 ½ Bathrooms Townhouse at Stadium Gardens 2, St. Andrew
1 Bedroom Starter units at Portmore Villas 2B, St. Catherine
1,649,801,069
Sales Collections up 61.6% from $632,224,027 to $1,049,801,069 in 2011
2 Bedrooms1 Bathroom detached house at Westmeade Willows, St. Catherine
HAJ ANNUAL REPORT 2010 - 2011
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SPLINTER TITLES OBTAINED FOR PERIOD 1 APRIL 2010 – 31 MARCH 2011
SCHEMES
# OF TITLES
LOCATION
STADIUM GARDENS 2
59
ST. ANDREW
LILFORD MEWS LILLIPUT
18 326
ST. ANDREW ST. JAMES
PALMS OF PORTMORE
66
ST. CATHERINE
BOURKESFIELD LLANDILO
208 110
ST. CATHERINE WESTMORELAND
NORWICH RAGSVILLE MANDELLA TERRACE NASEBERRY VILLAS FISHERMAN’S VILLAGE
15 18 8 375 3
PORTLAND ST. CATHERINE ST. ANDREW ST. CATHERINE HANOVER
TOTAL
1,206
A total of 1,206 titles were obtained in the period under review, increasing the number of titles obtained by the Agency as at 31 March 2011 to 21,155.
Ground Breakings 1. On July 29, 2010, the Agency broke ground for the construction of 125 detached 2 bedroom units in a new development called Westmeade Willows in Portmore, St. Catherine.
Minister of Water and Housing, Hon. Dr. Horace Chang (centre), breaks ground for the new housing development in Westmeade Willows, Portmore, St. Catherine. Others (from left) are: Member of Parliament for St. Catherine South Eastern, Colin Fagan; Chairman of the Board of Directors (HAJ), David Chung and Mayor of Portmore, Keith Hinds
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2. The Agency broke ground on December 15, 2010 for the proje t du ed the E o o i al Housi g Proje t of Ja ai a , fu ded a U“$ . M loa from the Chinese Government. This project will be completing over 3,500 housing solutions in total in the parishes of St. Elizabeth and St. Ann.
L-R David Chung, Board Chairman, Mr. Othneil Lawrence M.P. St. Ann North Western (centre), Hon. Dr. Horace Chang, Minister of Water and Housing, Hon. Bruce Golding, Prime Minister of Jamaica, Jinghua Chen, A assador of the People s ‘epu li of Chi a to Ja ai a, Ji he Zha g, General Manager – COMPLANT International Engineering & Development Company
3. The Agency broke ground on January 20, 2011 in Lilliput Ph 3, St. James for the construction of infrastructure works totaling 732 serviced lots.
Minister of Water and Housing, Hon. Dr. Horace Chang (second left) and Minister of Tourism and Member of Parliament East Central St. James, Hon. Edmund Bartlett (right) break ground for the construction of 732 serviced lots in Lilliput, St. James
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Ceremonial Presentations of keys to Homeowners Just over a year after work began on the construction of 56 Townhouses in Stadium Gardens 2, St. Andrew, proud home owners were handed the keys to their brand new two-bedroom homes on Wednesday, August 25, 2010.
Minister of Water and Housing, Hon. Dr. Horace Chang (left), presents home owner, Camisha Turner (right), with the keys to her brand new 2 bedroom Townhouse in Stadium Gardens 2. Looking on is Member of Parliament for South East St. Andrew, Maxine Henry-Wilson
Managing Director of HAJ, Joseph Shoucair (right), congratulates home owner, Jennifer Marfo (left) on acquiring one of the new 2 bedroom Townhouses in Stadium Gardens 2, St. Andrew. Looking on is Minister of Water and Housing, Hon. Dr. Horace Chang
During a tour of projects located in Portmore, St. Catherine on Friday, November 26, 2011, Prime Minister Bruce Golding presented keys to new homeowners in housing developments, Palms of Portmore and Portmore Villas 2B respectively.
Prime Minister Bruce Golding (left), presents homeowner Stefanie Beckford (right), with the keys to her brand new 2 bedroom house in Palms of Portmore, St. Catherine. Looking on are: Mayor of Portmore, Keith Hinds, Minister of Water and Housing, Hon. Dr. Horace Chang and Snr Manager Public Relations & Community Development (HAJ), Richard Jones
Prime Minister Bruce Golding (right), presents homeowner Andre Griffiths (second left), with the keys to his brand new 2 bedroom house in Palms of Portmore, St. Catherine. Looking on are: Mayor of Portmore, Keith Hinds (left) and Minister of Water and Housing, Hon. Dr. Horace Chang (second right)
HAJ ANNUAL REPORT 2010 - 2011
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Prime Minister Bruce Golding (right), presents homeowner Paula Forrester (left) with the keys to her brand new 1 bedroom house in Portmore Villas 2B, St. Catherine
Minister of Water and Housing, Hon. Dr. Horace Chang (right), presents homeowner Deron Dunn (left) with the keys to his brand new 1 bedroom house in Portmore Villas 2B, St. Catherine
On Saturday, February 19, 2011, keys were presented to homeowners of Luana 3, St. Elizabeth where 49 starter units and 8 serviced lots were constructed.
Minister of Water and Housing, Hon. Dr. Horace Chang (left), makes presentation to new homeowner Nikesia Rowe (right) with keys to her brand new starter unit in Luana 3, St. Elizabeth
Minister of Agriculture and Fisheries and Member of Parliament South West St. Elizabeth, Hon. Dr. Christopher Tufton (left), presents to new homeowner Chevron Cooke (right) keys to his brand new starter unit in Luana 3, St. Elizabeth
HAJ ANNUAL REPORT 2010 - 2011
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Projects Portfolio During Financial Year 2010-2011, the following properties were acquired either by way of transfer from state entity or purchased. Name of Property
Parish
Grange Pen Greater Retirement Bernard Lodge Shooters/Roaring River
St. James St. James St. Catherine St. Ann
Size of Parcel (Hectares) 142.79 587.8 80 62.8
Purchase Price $150M Transferred Transferred Transferred
HOUSING SOLUTIONS DELIVERED AS AT 31 MARCH 2011 PROJECT
LILLIPUT 2 SHAW PARK HEIGHTS 2 LUANA 3 STADIUM GARDENS 2 EDEN PARK WHITEHALL 2 PORTMORE VILLAS 2B PALMS OF PORTMORE BUSHY PARK 2 COUNTRY CLUB 2 NORWOOD H MAMMEE BAY LILFORD TOTAL
# OF SOLUTIONS LOTS/UNITS 326 197 57 22 126 450 100 65 35 16 750 24 18
LOCATION
ST. JAMES ST. ANN ST. ELIZABETH ST. ANDREW ST. MARY WESTMORELAND ST. CATHERINE ST. CATHERINE CLARENDON ST. CATHERINE ST. JAMES ST. ANN ST. ANDREW
2 Bedrooms detached house, Palms of Portmore, St. Catherine
Luana 3, St. Elizabeth – Studio Starter unit
2,186
Super-Studio apartments at Lilford Mews, St. Andrew
HAJ ANNUAL REPORT 2010 - 2011
Page 19 Page 19H A J
HOUSING SOLUTIONS IN DEVELOPMENT AS AT 31 MARCH 2011 PROJECT
GRANGE PEN NEW GALLOWAY NASEBERRY VILLAS WHITEHALL 4 GREATER RETIREMENT TOTAL
# OF SOLUTIONS LOTS/UNITS 535 100 825 1,400 2,134
LOCATION
ST. JAMES WESTMORELAND ST. CATHERINE WESTMORELAND ST. JAMES
4,994
HOUSING SOLUTIONS IN PLANNING/DESIGN/PROCUREMENT AS AT 31 MARCH 2011 PROJECT
ROARING RIVER/SHOOTERS GREEN POND MONA LUANA 2 LUANA GARDENS SHOOTERS HILL WHITEHALL 3 REDDINGTON RHYNE PARK BERNARD LODGE HAUGHTON ACRES (RETIREMENT) VERNON DRIVE GRANGE PEN TOTAL
# OF SOLUTIONS LOTS/UNITS 525 324 54 270 829 2,000 576 100 459 1,800 366
LOCATION
51 1,622 8,976
ST. JAMES ST. JAMES
ST. ANN ST. JAMES ST. ANDREW ST. ELIZABETH ST. ELIZABETH ST. CATHERINE WESTMORELAND ST. MARY ST. JAMES ST. CATHERINE ST. JAMES
HAJ ANNUAL REPORT 2010 - 2011
Page 20 Page 20H A J
HOUSING SOLUTIONS IN CONSTRUCTION AS AT 31 MARCH 2011 PROJECT
BUCKSHAVEN BELLE AIR 1 BELLE AIR 2 BELLE AIR 3 MT. EDGECOMBE 4 MT. EDGECOMBE 5 LILLIPUT 3 HILLS OF BOSCOBEL BOSCOBEL (BROWNFIELD) FLANKER 2B WESTMEADE WILLOWS COUNTRY CLUB 2 STADIUM GARDENS 3 TOTAL
# OF SOLUTIONS LOTS/UNITS 900 580 415 764 325 542 732 258 278 405 125 92 50
LOCATION
CLARENDON ST. ANN ST. ANN ST. ANN ST. ANN ST. ANN ST. JAMES ST. MARY ST. MARY ST. JAMES ST. CATHERINE ST. CATHERINE ST. ANDREW
5,466
Road works being done at Flankers, St. James
Construction works being done at Country Club 2, St. Catherine
HAJ ANNUAL REPORT 2010 - 2011
Page 21 Page 21H A J
BUILDING JAMAICA‌. ONE COMMUNITY AT A TIME Over the year, efforts were focussed on successfully relocating 114 informal households at Dump in Falmouth, Trelawny to Hague. The Dump property was then handed over to the Port Authority of Jamaica. This exercise was of national importance as it formed a part of the Redevelopment Plan for Falmouth and contributed to the opening of the Falmouth Cruise Ship Pier.
Foundation constructed for relocated house
Road works at Hague, Trelawny
Relocated house form Dump to Hague
The Agency continued to facilitate those communities which had been re-engaged in the previous period, to complete the registration of their Community Based Organisations as legal Benevolent Societies. This would provide these Brownfield communities with their own trained, local representatives to independently handle their community development issues in a structured way, monitored and assisted by the Department of Friendly and Cooperative Societies. This work continues as communities across the island will gradually benefit from legal representative odies, ith their for atio fa ilitated the Age s Co u it De elop e t U it
HAJ ANNUAL REPORT 2010 - 2011
Page 22 Page 22H A J
OUR MANAGEMENT TEAM
Front row (L-R): Rosemarie Brown (Snr. Manager – Project Development & Procurement), Desmond Young (Director - Technical Services), Thelma Cooke Wallace (Snr. Manager – Finance & Information, Joan Sicard (Snr. Manager – Internal Audit), Claudette Gordon-McFarlane (Snr. Manager – Human Resources & Administration). Back row (L-R): Gary Howell (Acting Manager – Sales), Marcia Black (Acting Manager – Mortgage Administration), Dave Hylton (Snr. Manager – Project Implementation), Richard Jones (Snr. Manager – Public Relations & Community Development), Jorge deArmas (Snr. Manager – Engineering & Design) Not pictured: Joseph Shoucair (Managing Director) and Simone Morris-Rattray (Snr. Manager – Legal Services & Company Secretariat)
HAJ ANNUAL REPORT 2010 - 2011
Page 23 Page 23H A J
CORPORATE STRATEGY Despite declining and uncertain economic conditions, there is a huge and growing unmet demand for low-income housing solutions. Market response to our housing solutions indicates that the Agency is competitive in price and quality. As a result, the Agency has a great opportunity to pursue its core strategy, which is to Dominate the market for low income
housing at prices that meet market demand while enhancing corporate viability through other profitable projects . As part of its strategy, the Agency has also set three overarching strategic objectives:
Ensure and sustain organizational viability and growth in profitability
Provide excellent customer service
Improve and maintain a team of highly skilled, committed and motivated staff
HAJ ANNUAL REPORT 2010 - 2011
Page 24 Page 24H A J
STRATEGIC OBJECTIVES, TARGETS & ACHIEVEMENTS The following table represents the Strategic Objectives, Targets & Achievements for the period:
OBJECTIVES
2008/2009
2009/2010
2010/2011
Financial Surplus3
TARGETS $165,766,733
ACHIEVEMENTS $136,573,000
TARGETS $591,602,477
ACHIEVEMENTS $198,341,928
TARGETS $242,616,565
ACHIEVEMENTS $465,169,477
Operating Profit
N/A
N/A
N/A
N/A
$173,419,482
$334,452,000
Cost Containment Ratio
1.48
0.94
1.19
1.09
1.3
1.5
Avg. Construction Cost per delivered solution: (Brownfield/Urban Renewal Lots)
$457,421
$542,734
$760,000
$537,402
$790,000
$165,092
Avg. Construction Cost per delivered solution: (Greenfield)
$622,086
$482,902
$950,000
$567,598
$950,000
$746,684
Housing Solutions – Starts
N/A
N/A
N/A
N/A
5,742
6,036
Housing Solutions – Delivered
1085
1076
1,417
1,130
4,075
2,186
Staff Complement
117
115
123
111
N/A
N/A
Complete action matters arising from community tours
N/A
N/A
85%
40%
N/A
N/A
3
This figure represents a Cash Balance
HAJ ANNUAL REPORT 2010 - 2011
Page 25 Page 25
FIVE YEAR FINANCIAL HIGHLIGHTS 2007
2008
2009
2010
2011
Net Assets $’000
1,886,647
142,214
136,958
314,865
2,320,725
Net Profit $’000
(646,463)
(1,752,090)
(4,998)
177,832
334,452
500000
2500000 2000000
2007
0
1500000
2008
-500000
0
Net Profit
2009
1000000 500000
2007
2011 2009 2007
2010 2011
2008 2009
-1000000 -1500000
2010 2011
-2000000
Net Assets Net Assets up 637% from 314,865 to 2,320,725 in 2011
Net Profit up 88% from 177,832 to 334,452 in 2011
HAJ ANNUAL REPORT 2010 - 2011
Page 26 Page 26
PROJECTIONS OF KEY FINANCIAL & OPERATIONS MEASURES FOR 2011/2012 During Fiscal 2011/2012, it is projected that the Agency will deliver 4,094 completed housing solutions from eighteen (18) schemes. These solutions include infrastructure works to some Brownfield projects being financed by the Tourism Enhancement Fund (TEF) and the China Ex-IM Bank. Eighty-five percent (85%) of these projects will be funded by external sources with the remaining fifteen percent (15%) from cash flows from purchasers. Financing will be as follows: Construction loans from the National Housing Trust (NHT) - $3,876,975,088.35 Grants from the Tourism Enhancement Fund (TEF) - $471,454,131.36 Construction loan from Jamaica Mortgage Bank (JMB) - $149,321,517.05 Loan from the Chinese Government - $2,100,000,000 Grant from MOWH - $150,430,143.76 JV Partnership - $910,000,000 Completed sales and deposits - $4,122,960,000 From the completed solutions, it is projected that sales will be finalized on 1,012 solutions and deposits collected on 1, 945 houses and lots. It is assumed that: Inflation will be 6.5% p.a. The Jamaica dollar will exchange at a rate of $86:1 to the US dollar The Jamaican dollar will exchange at a rate of $131:1 to the Pound sterling With the reduction in interest income from the mortgage portfolio, the Agency continues to focus on its product mix by increasing the output of Greenfield lots and housing solutions. It is therefore believed that this project mix will ensure growth in profitability while supporting the strategic plan.
Dividends No dividend payments were made this year.
HAJ ANNUAL REPORT 2010 - 2011
Page 27 Page 27H A J
PICTORIAL HIGHLIGHTS
Managing Director HAJ, Joseph Shoucair and other staff members arriving at venue for ground breaking of Chinese Funded Projects, Belle Air, St. Ann
Chinese Lion Dance being performed by Wing Lung Kung Fu & Tai Chi Association at the ground breaking ceremony at Belle Air, St. Ann
Team members Pauline Samuels and Michelle MorrisKeeten being ushers at ground-breaking ceremony for Chinese Funded Projects, Belle Air, St. Ann
Discovery Bay Basic School Experimental Speaking E se le perfor i g Tri k a Dupp at the grou d breaking ceremony for Chinese Funded projects
HAJ ANNUAL REPORT 2010 - 2011
Page 28 Page 28H A J
PICTORIAL HIGHLIGHTS CONT’D
A section of the crowd at the ground breaking ceremony at Belle Air, St. Ann. Seated in front are Board Members Heather Pinnock and Vincent Haldene
Managing Director HAJ, Joseph Shoucair (left), introducing Prime Minister Bruce Golding to members of the Senior Management team during his official visit to the Housing Agency of Jamaica Head Office. Looking on are: Minister of Water and Housing, Hon. Dr. Horace Chang (right) and Richard Jones, Senior Manager Public Relations & Community Development
Managing Director HAJ, Joseph Director addressing gathering at the ground breaking ceremony held at Belle Air, St. Ann. Seated at head table are (L-R): David Chung, Board Chairman, Hon. Dr. Horace Chang, Minister of Water and Housing, Hon. Bruce Golding, Prime Minister of Jamaica, Jinghua Chen, Ambassador of the People's Republic of China to Jamaica, Mr. Othneil Lawrence, MP St. Ann Western, Jinchen Zhang, General Manager of Complant International Engineering & Development Co.
Prime Minister Bruce Golding addressing members of staff during his official visit to the head offices of the Housing Agency of Jamaica on Friday, February 11, 2011
HAJ ANNUAL REPORT 2010 - 2011
Page 29 Page 29H A J
PICTORIAL HIGHLIGHTS CONT’D
Board Members Messrs Robert Lawrence, Norman Brown and Rev. Conrad Pitkin (front row) and members of staff liste i te tl to Pri e Mi ister Bru e Goldi g s address during his official visit to the head offices of HAJ on Friday, February 11, 2011
Minister of Water and Housing, Hon. Dr. Horace Chang addressing members of staff at the head offices of the Housing Agency of Jamaica on Friday, February 11, 2011
Members of the HAJ choir providing entertainment during the official visit of the Prime Minister on Friday, February 11, 2011
HAJ ANNUAL REPORT 2010 - 2011
Page 30 Page 30H A J
EXECUTIVE COMPENSATION
Position of Senior Executive
Managing Director Director, Technical Services Senior Manager , Finance & Information Senior Manager, Internal Audit Senior Manager, Mortgage Administration Senior Manager, Human Resources & Administration Senior Manager, Project Implementation Senior Manager, Project Development & Procurement Senior Manager, Legal Services & Company Secretariat Senior Manager, Engineering & Design Senior Manager, Public Relations & Community Development
Salary ($)
Performance 4 Incentive ($)
Travelling Allowance or Value of Assignment of Motor Vehicle ($)
Pension or Other retirement 5 Benefits ($)
Other 6 Allowances ($)
Non-Cash Benefits ($)
Total ($)
7,611,723.00 5,175,000.00 3,836,075.00 3,836,075.00 3,836,075.00
837,289.53 1,200,600.00 767,920.27 924,877.69 404,706.26
M. V. Provided 796,500.00 796,500.00 796,500.00 796,500.00
2,112,253.13 1,593,900.00 1,150,998.82 1,190,238.17 1,060,195.32
46,000.00 46,000.00 46,000.00 46,000.00 46,000.00
None None None None None
10,607,265.66 8,812,000.00 6,597,494.09 6,793,690.86 6,143,476.58
3,836,075.00
1,070,648.54
796,500.00
1,226,680.89
46,000.00
None
6,975,904.43
3,836,075.00
827,083.60
796,500.00
1,165,789.65
46,000.00
None
6,671,448.25
3,836,075.00
789,255.73
796,500.00
1,156,332.68
46,000.00
None
6,624,163.41
3,836,075.00
901,974.75
796,500.00
1,184,512.44
46,000.00
None
6,765,062.19
3,836,075.00
845,944.31
796,500.00
1,170,504.83
46,000.00
None
6,695,024.14
3,836,075.00
990,717.04
796,500.00
1,206,698.01
46,000.00
None
6,875,990.05
4
Maximum 15% of annual basic salary for Managing Director whereas Director & Senior managers – maximum 35% of basic salary as applicable to all other employees Ma agi g Di e to , Di e to a d “e io Ma age s ei g o t a t offi e s hose positio s do ot fall u de the o pa ’s pe sion scheme receives a gratuity of 25% on their compensation package 6 Clothing Allowance
5
HAJ ANNUAL REPORT 2010 - 2011
Page 31 Page 31
FINANCIAL STATEMENTS I depe de t Audito s’ Repo t Statement of Financial Position Statement of Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements
HAJ ANNUAL REPORT 2010 - 2011
1 3 4 5 6 8 - 43
Page 32 Page 32
KPMG The Victoria Mutual Building 6 Duke Street Kingston Jamaica, W.I.
P.O. Box 76 Kingston Jamaica W.I. Telephone Fax e-Mail
+1 (876) 922-6640 +1 (876) 922-7198 +1 (876) 922-4500 firmmail@kpmg.com.jm
INDEPENDENT AUDITORS‟ REPORT To the Members of HOUSING AGENCY OF JAMAICA LIMITED Report on the Financial Statements We have audited the financial statements of Housing Agency Jamaica Limited (“the company”), set out on pages 3 to 43 which comprise the statement of financial position as at March 31, 2011, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory notes. Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the Jamaican Companies Act, and for such internal controls as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether or not the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity's preparation and fair presentation of the financial 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
KPMG, a Jamaican partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Elizabeth A. Jones Caryl A. Fenton R. Tarun Handa Patrick A. Chin Patricia O. Dailey-Smith
Linroy J. Marshall Cynthia L. Lawrence Rajan Trehan Norman O. Rainford Nigel R. Chambers
2
To the Members of HOUSING AGENCY OF JAMAICA LIMITED Report on the Financial Statements, continued Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the company as at March 31, 2011, and of its financial performance, changes in equity and cash flows for the year then ended in accordance with International Financial Reporting and the Jamaican Companies Act. Without qualifying our opinion, we draw attention to note 1 which states that the financial statements have been prepared on the basis of the merged operations of the entities mentioned in that note, although the formalities of the transfer to the company of ownership of loans receivable (note 8) and loans payable (note 16) are still in process. Report on additional matters as required by the Jamaican Companies Act We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. In our opinion, proper accounting records have been maintained and the financial statements, which are in agreement therewith, give the information required by the Jamaican Companies Act in the manner required.
Chartered Accountants Kingston, Jamaica
June 21, 2011
3
HOUSING AGENCY OF JAMAICA LIMITED Statement of Financial Position March 31, 2011
4 HOUSING AGENCY OF JAMAICA LIMITED Statement of Comprehensive Income Year ended March 31, 2011
2011 $'000
Notes OPERATING REVENUE Lending and borrowing: Interest income from mortgages Interest income from other loans Fees and interest expense on loans
(
Net income from lending and borrowing Sale of houses and lots Cost of sales
2010 $'000
228,181 2,200
250,764 2,131
230,381 87,146)
252,895 ( 94,765)
143,235
158,130
2,015,785 (1,638,762)
321,337 (229,308)
377,023
92,029
Net gain on sale of properties
-
400,531
Management fees for servicing loans
6,024
Net gain on sale of houses and lots
Project management fees
22,120
Other income: Interest income from resale agreements Gain on disposal of property, plant and equipment Foreign currency (losses)/gains USAID loans written-off Stabilization fund realised Sundry
(
Total other income Net operating revenue OPERATING EXPENSES Administration and other expenses Maintenance of closed projects Impairment loss on mortgage loans and other receivables Impairment loss – Operation PRIDE development projects Profit for the year
22 23
OTHER COMPREHENSIVE INCOME Change in fair value of investments Total comprehensive income for the year
* Restated (note 30) The accompanying notes form an integral part of the financial statements.
(
916 -
11,732
21,138
1,642 122) 494,420 88,633 21,432
183 400 22,125 31,491
617,737
75,337
1,166,139
726,943
510,878 14,744 75,961 230,104
472,917* 5,646 ( 90,036) 160,584
831,687
549,111
334,452
177,832
54) 334,398
75 177,907
5 HOUSING AGENCY OF JAMAICA LIMITED Statement of Changes in Equity Year ended March 31, 2011
Balance at March 31, 2009
Share capital $'000 (Note 17)
Reserve fund $'000 (Note 18)
Capital reserve $'000 (Note 19)
-
181,178
1,286,429
-
-
-
-
-
-
Accumulated deficit $'000
Fair value reserve $â€&#x;000
Contributed capital $'000 (Note 20)
Total $'000
(1,330,649)
-
-
136,958
196,950 19,118)
-
-
177,832
-
-
177,832
75
-
75
75
-
177,907
75
-
314,865
-
334,452
Total comprehensive income for the year Profit for the year, as previously stated Prior year adjustment (note 30) As restated
(
(
196,950 19,118)
Other comprehensive income Change in fair value of investments, being total other comprehensive income Total comprehensive income for the year
-
-
-
-
-
-
Restated balance at March 31, 2010
-
181,178
1,286,429
-
-
-
-
-
-
-
-
-
Transfer to reserve fund Properties for development received from Government of Jamaica as contributed capital
-
447,981
-
( 447,981)
-
-
-
-
Balance at March 31, 2011
-
629,159
1,286,429
(1,266,346)
177,832 (1,152,817)
Total comprehensive income for the year Profit for the year
334,452
-
Other comprehensive income Change in fair value of investments, being total other comprehensive income Total comprehensive income for the year
334,452
(
54)
-
(
54)
(
54)
-
334,398
-
-
-
-
1,671,462
1,671,462
1,671,462
2,320,725
Other equity transactions
The accompanying notes form an integral part of the financial statements.
21
6 HOUSING AGENCY OF JAMAICA LIMITED Statement of Cash Flows Year ended March 31, 2011
Notes Cash Flows From Operating Activities Profit for the year Adjustments: Interest income Interest expense Depreciation Amortisation Gain on sale of properties USAID loans written off Gain on sale of property, plant and equipment Net adjustments to property, plant and equipment and intangible assets Provision for losses - Operation PRIDE development projects - trade and other receivables - mortgage loans
14 13
2010 $'000
334,452
177,832*
( 242,113) 87,146 7,867 5,270 ( 494,420) ( 1,642) 10 230,104 14,527 61,434
Operating profit/(loss) before changes in other assets and other liabilities
2,635
Trade and other receivables Due from Ministry of Finance &the Public Service Loans receivable Operation PRIDE development projects Other development projects Taxation recoverable Trade and other payables Interest received Interest paid
72,349 82,687 411,542 23,820 ( 112,655) 28,204 5,533 220,467 ( 64,873)
Net cash provided/(used) by operating activities Cash Flows From Investing Activities Resale agreements Acquisition of land held for development Acquisition of intangible assets Acquisition of property, plant and equipment Proceeds from sale of properties, plant and equipment
2011 $'000
669,709
13 14
Net cash used by investing activities (page 7)
* Restated (note 30) The accompanying notes form an integral part of the financial statements.
(274,033) 94,765 7,036 4,635 (400,531) ( 183) (
37)
160,584 ( 9,999) ( 80,037) (319,968)* (264,957) 102,865 230,243 477,043 (555,709) 14,388 130,656* 237,883 ( 98,344) ( 45,900)
( 91,413) ( 144,737) ( 1,784) ( 4,360) 1,724
( 67,864) ( 496) ( 1,401) ( 6,205) 3,311
( 240,570)
( 72,655)
7 HOUSING AGENCY OF JAMAICA LIMITED Statement of Cash Flows (Continued) Year ended March 31, 2011
2011 $'000
2010 $'000
Cash Flows From Investing Activities (page 6)
( 240,570)
( 72,655)
Cash Flows From Financing Activities Loans payable Deferred income Operation PRIDE deposits
( 205,892) 290,593 ( 338,425)
( 11,367) 123,827 -
( 253,724)
112,460
Net cash (used)/provided by financing activities Net increase/(decrease) in cash and cash-equivalents Cash and cash-equivalents at beginning of the year Cash and cash-equivalents at end of the year
The accompanying notes form an integral part of the financial statements.
175,415
(
6,095)
65,877
71,972
241,292
65,877
8 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2011 1.
The company Housing Agency of Jamaica Limited, formerly, The National Housing Development Corporation Limited (“company” or “NHDC”) is incorporated and domiciled in Jamaica. The company is wholly-owned by the Government of Jamaica through the Minister of Housing. Its registered office is located at 13 Caledonia Avenue, Kingston, Jamaica. Consequent upon a Cabinet decision, dated April 20, 1998, the operations of Caribbean Housing Finance Corporation Limited (CHFC), The National Housing Corporation Limited (NHC) and Operation PRIDE (Programme for Resettlement and Integrated Development Enterprises) were transferred to the company and merged on May 1, 1998, on which date the assets and liabilities of those entities were also taken over by the company (see note 19). The formal transfer of ownership to the company of loans receivable (note 8) and loans payable (note 16) is in process and the financial statements have been presented on the basis of the merged operations of the entities. The main activities of the company comprise development, construction and sale of houses, lots and infrastructure and administering loans secured by first mortgages on freehold properties, performing administrative services on behalf of other mortgagees and property developers.
2.
Basis of preparation (a)
Statement of compliance: The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations issued by the International Accounting Standards Board (IASB), and comply with the provisions of the Jamaican Companies Act. Certain new standards, interpretations of, and amendments to, existing standards which were in issue came into effect for the current financial year. The adoption of these standards and interpretations had no effect on the financial statements. New standards, and interpretations of and amendments to existing standards that are not yet effective: There were certain standards and interpretations which were in issue but were not yet effective and which the company has not early-adopted. Management has considered these standards and have concluded that the following are relevant to its operations. IAS 1 Presentation of Financial Statements – IAS 1 is amended to state that for each component of equity a reconciliation from opening to closing balances is required to be presented in the statement of changes in equity, showing separately changes arising from items recognized in profit or loss, in other comprehensive income and from transactions with owners acting in their capacity as owners. The amendment is effective for accounting periods beginning on or after January 1, 2011. The company is assessing the impact that the amendment would have on the 2012 financial statements.
9 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 2.
Basis of preparation (continued) (a)
Statement of compliance (continued): New standards, and interpretations of and amendments to existing standards that are not yet effective (continued): IAS 24, Related Party Disclosure, revised (effective January 1, 2011) introduces changes to the related party disclosure requirements for government-related entities and amends the definition of a related party. The standard also expands the list of transactions that require disclosure. The company is assessing the impact the amendment will have on the 2012 financial statements. IFRS 7 Financial Instruments: Disclosures – The standard is amended to add an explicit statement that the interaction between qualitative and quantitative disclosures better enables users to evaluate an entity‟s exposure to risks arising from financial statements. Existing disclosures relating to maximum exposure to credit risk, financial effect of collateral held as security and other enhancements in respect of a financial instrument have been amended. Certain disclosures relating to carrying amount of financial assets that are not past due or are not impaired as a result of their terms having been renegotiated and description of collateral held as security for financial assets that are past due have been removed. The amendment is effective for accounting periods beginning on or after January 1, 2011. The company is assessing the impact that the amendment would have on the 2012 financial statements. Disclosures – Transfer of Financial Assets (Amendments to IFRS 7) is effective for accounting periods beginning on or after July 1, 2011. The amendment requires disclosure of information that enables users of financial statements to understand the relationship between transferred financial assets that are not derecognized in their entirety and the associated liabilities and to evaluate the nature of and risks associated with the entity‟s continuing involvement in these derecognized assets. The company is assessing the impact the amendment will have on the 2013 financial statements. IFRS 9, Financial Instruments, is effective for annual reporting periods beginning on or after January 1, 2013. The standard retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortised cost and fair value. It eliminates the existing IAS 39 categories of held to maturity, availablefor-sale and loans and receivables. For an investment in an equity instrument which is not held for trading, the standard permits an irrevocable election, on initial recognition, to present all fair value changes from the investment in other comprehensive income. The standard includes guidance on classification and measurement of financial liabilities designated as fair value through profit or loss and incorporates certain existing requirements of IAS 39 Financial Instruments: Recognition and Measurement on the recognition and de-recognition of financial assets and financial liabilities. The company is assessing the impact that the standard will have on the 2014 financial statements.
10 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 2.
Basis of preparation (continued) (a)
Statement of compliance (continued): New standards, and interpretations of and amendments to existing standards that are not yet effective (continued): IFRS 11, Joint Arrangements carves out from IAS 31, jointly controlled entities, those cases in which although there is a separate vehicle, that separation is ineffective in certain ways. These arrangements are treated similarly to jointly controlled assets/operations under IAS 31 and are now called joint operations. The remaining arrangements in IAS 31 Jointly Controlled Entities, now called Joint Ventures, are stripped of the free choice of using the equity method or proportionate consolidation; they are now required to use the equity method. The application of the equity method is subject to two exemptions carried forward from IAS 28 (2008) and IAS 31. IFRS 11 is applicable for accounting periods beginning on or after January 1, 2013. The company is assessing the impact the standard will have on the 2014 financial statements. IFRS 13 Fair Value Measurement defines fair value, establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements. It explains how to measure fair value and is applicable to assets, liabilities and an entityâ€&#x;s own equity instruments that, under other IFRSs, are required or permitted to be measured at fair value or when disclosure of fair values is provided. It does not introduce new fair value measurements, nor does it eliminate the practicability exceptions to fair value measurements that currently exist in certain standards. The standard is effective for annual periods beginning on or after January 1, 2013. The company is assessing the impact that this standard will have in its 2014 financial statements.
(b)
Basis of measurement: The financial statements are prepared on the historical cost basis, except for available-for-sale investments which are carried at fair value.
(c)
Functional and presentation currency: The financial statements are presented in Jamaica dollars which is the functional currency of the company.
(d)
Use of estimates and judgements: Judgements made by management in the application of IFRS that may have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next financial year relate to the estimates of residual value and expected useful life of property, plant & equipment, impairment losses on loans and Operation Pride development projects, as well as recognition of revenue on doubtful loans. The residual values and the useful life of each asset are reviewed at each financial year-end, and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate. The useful life of an asset is defined in terms of the assetâ€&#x;s expected utility to the company.
11 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011
2.
Basis of preparation (continued) (d)
Use of estimates and judgements (continued): In determining amounts recorded for impairment of loan losses in the financial statements, management makes judgements regarding indicators of impairment, that is, whether there are indicators that suggest there may be a measurable decrease in the estimated future cash flows from loans, for example, repayment default and adverse economic conditions. Management also makes estimates of the likely estimated future cash flows from impaired loans, as well as the timing of such cash flows. Historical loss experience is applied where indicators of impairment are not observable on individual significant loans and loans portfolio with similar characteristics, such as credit risks. The recoverability of project costs is determined principally on the basis of expected recovery from sale of lots. An estimate is made of expected sales price based on the location of projects and current market prices. Where management expects that a project will not be completed, the cost is fully written off. Judgement is exercised in estimating the likelihood of completion of projects and the expected sale proceeds is subjective, which may change from one financial period to the next. It is reasonably possible, based on existing knowledge, that outcomes within the next financial year that are different from these assumptions could require a material adjustment to the carrying amounts reflected in the financial statements.
(e)
Going concern: The preparation of the financial statements in accordance with IFRS assumes that the company will continue operations for the foreseeable future. This means, in part, that the statements of comprehensive income and financial position assume no intention or necessity to liquidate or curtail the scale of operations. This is commonly referred to as the going concern basis. Although the company made a profit for the year, it has an accumulated deficit of $965,339,000 as at March 31, 2011 (2010: $1,152,817,000 restated). Nevertheless, having regard to Governmentâ€&#x;s commitment to the delivery of housing solutions and its implied guarantee to ensure the continuation of the company, as well as anticipated future funding, management believes that the going concern basis continues to be appropriate in the preparation of the financial statements.
3.
Significant accounting policies (a)
Cash and cash-equivalents: Cash and cash-equivalents comprise cash and bank balances (including interest-bearing deposits), collections held in trust for mortgagees and property developers, and other monetary investments with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the companyâ€&#x;s cash management are included as a component of cash and cash equivalents for the purpose of the cash flows.
12 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 3.
Significant accounting policies (b)
Resale agreements: Resale agreements (reverse repos), which are classified as loans and receivables, represent purchase of securities by the company under agreements to resell them on specified dates at specified prices. The company, on paying cash to the counterparty, sometimes takes possession of the underlying securities, although title is not formally transferred, unless that counterparty fails to repurchase the securities on the date specified, or to honour other conditions. Under collaterialised resale agreements, the company obtains securities on terms which permit it to repledge or resell them to others. Resale agreements, are accounted for as short-term collateralised lending, are classified as loans and receivables and carried in the statement of financial position at amortised cost. The difference between the purchase and resale consideration is recognised on the accrual basis over the period of the transaction using the effective interest method and is included in interest income.
(c)
Trade and other receivables: Trade and other receivables are stated at amortised cost, less impairment losses [note 3(m)].
(d)
Trade and other payables: Trade and other payables are stated at amortised cost.
(e)
Property, plant and equipment: Items of property, plant and equipment are stated at cost, or valuation, less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item, if it is probable that the future economic benefits embodied in the part will flow to the company and its cost can be reliably measured.
(f)
Depreciation and amortisation: Depreciation and amortisation are charged on the straight-line method at annual rates estimated to write down each part of an item of property, plant and equipment to its estimated residual value at the end of its expected useful lives. The estimated useful life are as follows:Freehold buildings Computers Office furniture and fixtures Motor vehicles Equipment
40 years 3 - 5 years 5 - 10 years 3 - 4 years 5 - 10 years
The depreciation method, useful lives and residual values are reassessed at each reporting date.
13 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 3.
Significant accounting policies (continued) (g)
Intangible assets: Intangible assets, comprising software, is stated at cost less accumulated amortisation and impairment losses. The expected useful life of software is three (3) years.
(h)
Revenue recognition: Income from the sale of properties is recognised when full sale consideration has been received or reasonably expected to be received and on execution of transfer or, on receipt of a firm undertaking by a financial institution on behalf of the purchasers, whichever is earlier. The sale of a housing unit is recorded when significant risks and rewards of ownership have been transferred to the buyer. Cost of sales, including land is computed on a first in, first out basis. Interest income is recognised in profit or loss for all interest bearing instruments on the accrual basis, using the effective yield method. Where collection of interest is considered doubtful, or payment is outstanding for more than 90 days, interest is taken into account on the cash basis. IFRS requires that when collection of loans becomes doubtful, such loans should be written down to their recoverable amounts after which interest income is to be recognised based on the rate of interest that was used to discount the future cash flows for the purpose of measuring the recoverable amount. However, such amounts as would have been determined under IFRS are not considered significant. Income from joint ventures is recognised upon completion of the projects.
(i)
Operation PRIDE development projects: Operation PRIDE development projects consist principally of expenditure related to infrastructure development, involving land provided by the Government of Jamaica for Operation Pride projects. Before the take-over of the projects by the company, monies were advanced to the Industrial and Provident Societies for expenditure on the projects. Project costs are recovered from the sale of lots at prices determined by the company. Project costs are kept under review by the company, and, should it become reasonably certain that a project will not come to fruition, or project costs will be in excess of amounts considered recoverable from subsequent sale of serviced lots to customers, a provision for loss is made and transferred, together with administration, interest and other costs relating to loans specifically acquired to fund Operation PRIDE projects, against the Operation PRIDE Fund to the extent available.
14 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 3.
Significant accounting policies (continued) (j)
Foreign currencies: Foreign currency balances at the reporting date are translated at the rates of exchange ruling on that date. Transactions in foreign currencies are converted at the rates of exchange ruling at the dates of those transactions. In respect of United States Agency for International Development (USAID) and Commonwealth Development Corporation (CDC) loans, the company is indemnified by the Ministry of Finance & the Public Service against losses due to fluctuations in the rates of exchange. Any such losses, net of gains, are shown as receivable [see note 7(i)]. Other gains and losses arising from fluctuations in exchange rates are included in profit or loss.
(k)
Loans and allowances for impairment losses: Loans are stated net of allowances for credit losses. Loans are initially recognised at cost, which is the cash given to originate the loan including any transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method. An allowance for loan impairment is established, if there is objective evidence that the company will not be able to collect all amounts due according to the original contractual terms of the loan. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of expected future cash flows, discounted at the original effective interest rate of the loan. A loan is classified as impaired when, in managementâ€&#x;s opinion, taking into account all relevant factors, including prevailing and anticipated business and economic conditions and collateral held, there has been deterioration in credit quality to the extent that there is no longer reasonable assurance of timely collection of the full amount of the principal and interest. The impairment assessment is done on a group basis based on the location of schemes. No provision is made on certain loans which are funded by USAID as the Government of Jamaica has provided a guarantee to the company in respect of the collection of these loans.
(l)
Investments: Investments are classified as available-for-sale and are stated at fair value, with any resultant gain or loss being recognised in other comprehensive income, except for impairment losses. When these investments are derecognised, the cumulative gain or loss previously recognised in other comprehensive income is recognised in profit or loss. Where these investments are interest bearing, interest calculated using the effective interest method is recognised in profit or loss. Management determines the appropriate classification of investments at the time of purchase. The fair value of investments is based on their quoted market bid price at the reporting date. Where a quoted market price is not available, the fair value of the instrument is estimated using acceptable pricing models or discounted cash flow techniques.
15 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 3.
Significant accounting policies (continued) (m)
Impairment: The carrying amounts of the company‟s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, an asset‟s recoverable amount is estimated at each reporting date. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. When a decline in the fair value of an available-for-sale financial asset has been recognised directly in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that has been recognised directly in other comprehensive income is recognised in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss. (i)
Calculation of recoverable amount: The recoverable amount of the company‟s loans and receivables is calculated as the present value of expected future cash flows, discounted at the original effective interest rate inherent in the asset. Receivables with a short duration are not discounted. The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss in respect of loans and receivables and securities is reversed, if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised. For all other assets, an impairment loss is reversed, if there has been a change in the estimate used to determine the recoverable amount.
(ii)
Reversals of impairment: An impairment loss in respect of an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss. If the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss shall be reversed, with the amount of the reversal recognised in profit or loss. An impairment loss is reversed only to the extent that the asset‟s carrying amount does not exceed the carrying amount that would have been determined, if no impairment loss had been recognised.
16 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 3.
Significant accounting policies (continued) (n)
Taxation: Income tax on the profit or loss for the year comprises current and deferred tax. Taxation is recognised in profit or loss, except to the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised in other comprehensive income. Current tax is the expected tax payable on the income for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is computed using the balance sheet liability method, providing for all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(o)
Employee benefits: Employee benefits comprise all forms of consideration given by the company in exchange for service rendered by employees. These include current or short-term benefits such as salaries, NIS contributions paid, annual vacation leave, sick leave, education cost reimbursements, and non-monetary benefits, such as medical care and housing; post-employment benefits, such as pensions and medical care and termination benefits. (i)
General benefits: Employee benefits that are earned as a result of past or current service are recognised in the following manner: Short-term employee benefits are recognised as a liability, net of payments made, and charged as expense. The expected cost of vacation leave that accumulates is recognised when the employee becomes entitled to the leave. Postretirement benefits are accounted for as described in (ii) below. Other long-term benefits, including termination benefits, which arise when either (1) the employer decides to terminate an employeeâ€&#x;s employment before the normal retirement date, or (2) an employee decides to accept voluntary redundancy in exchange for termination benefits, are accrued as they are earned and charged as an expense, unless not considered material, in which case they are charged when they fall due.
(ii)
Post-retirement benefits: The company participates in a defined-contribution pension scheme (see note 28), the assets of which are held separately from those of the company. Obligations for contributions are recognised as an expense in the income statement when due.
17 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 3.
Significant accounting policies (continued) (p)
Land held for development: Land held for development includes land which has been contributed by the Government, in the form of capital, for housing development projects. The value of these lands have been determined by professional property valuators and have been initially recognised at their fair values. The reserve arising on valuation is included in contributed capital. Subsequent expenditure incurred are recognised at cost.
(q)
Related parties: A party is related to the company, if: (i)
directly, or indirectly through one or more intermediaries, the party controls, is controlled by, or is under common control with, the company (this includes parents, subsidiaries and fellow subsidiaries); has an interest in the company that gives it significant influence over the company; or has joint control over the company;
(ii)
the party is an associate of the company;
(iii) the party is a joint venture in which the company is a venturer; (iv)
the party is a member of the key management personnel of the company or its parent;
(v)
the party is a close member of the family of any individual referred to in (i) or (iv);
(vi)
the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or
(vii) the party is a post-employment benefit plan for the benefit of employees of the company, or of any entity that is a related party of the company. A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged. (r)
Interest bearing borrowings: Interest-bearing borrowings are recognised initially at fair value, less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost, with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on the effective interest basis.
(s)
Deferred income: Deferred income represents grant funding received to finance certain development projects. These are recognised in profit or loss when the related project expenses are recognised in profit or loss.
18 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 3.
Significant accounting policies (continued) (t)
Other development projects in progress: Other development projects in progress consist of costs incurred to date on various housing projects and are recognised at cost less provision for impairment. Costs include the cost of land, construction material, labour and an appropriate proportion of overhead costs.
4.
Cash and cash-equivalents
Collections held in trust for mortgagees and property developers Other cash and bank balances
5.
2011 $'000
2010 $'000
113 241,179
115 65,762
241,292
65,877
Resale agreements At March 31, 2011, the fair value of underlying securities for resale agreements was $240,431,000 (2010: $135,171,000). Repurchase agreements amounting to $31,000,000 is pledged as collateral for a guarantee in the amount of $31,000,000 (2010: $31,000,000) issued to National Housing Trust on behalf of the company. This is a fifteen year facility which commenced in March 2002 and is renewable every twelve months.
6.
Trade and other receivables
National Housing Trust (NHT) Amounts due for sale of properties Interest receivable Staff loans and advances Other advances Other accounts receivable and advances Provision for impairment: National Housing Trust Interest receivable Other accounts receivable
2011 $'000
2010 $'000
40,099 175,459 13,599 2,495 11,889 57,648
40,099 279,934 13,506 790 15,654 12,426
301,189
362,409
( 40,099) ( 11,059) ( 21,218)
( 40,099) ( 11,393) ( 16,874)
( 72,376)
( 68,366)
228,813
294,043
19 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 7.
Due from Ministry of Finance & the Public Service
Guaranteed exchange differences [see (i) below]: CDC loans Direct drawdown [see (ii) below]
8.
2011 $'000
2010 $'000
-
79,652 3,035
-
82,687
(i)
These represented exchange differences on loans guaranteed by the Ministry of Finance & the Public Service against any losses arising from devaluation of the Jamaica dollar [see notes 16 (c) and (d)]. The related notes payable were written off during the year with the authorisation of the Ministry (see note 15).
(ii)
This represented the Jamaica dollar equivalent of US$512,000, at the rate of exchange of US$1.00 = J$5.93058, drawn down directly by the Ministry of Finance & the Public Service.
Loans receivable The formalities of the transfer to the company of ownership of some loans receivable are still in process (see note 1). 2011 $'000
2010 $'000
1,863,550 69,690
2,284,141 194,248
1,933,240
2,478,389
38,538 170,650
42,305 171,891
Loans receivable comprise: Residential mortgage loans [see (a) below]: Principal Interest Other long-term loans [see (b) below] Infrastructure development loan [see (c) below] Less: Staff mortgage loan re-measurement
Provision for impairment: Residential mortgage loans Infrastructure development loan Other long-term loans Provision for interest
(
2,142,428 10,972)
(
2,692,585 10,972)
2,131,456
2,681,613
( 104,375) ( 128,608) ( 12,912) ( 59,855)
( 96,129) ( 85,945) ( 13,922) ( 186,935)
( 305,750)
( 382,931)
1,825,706
2,298,682
20 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 8.
Loans receivable (continued) (a)
The residential mortgage loans, secured by first mortgages on houses, are as follows:
4% 10, 13 & 15% 13% 11½% 7½% 6% 18% 7% 9% 6-10% 6-10% 8% 19% 10, 10½ & 15% 10% 10%, 12%
Thirty and forty year loans Twenty year loans Twenty-five year loans [see (i) below] Twenty-five year loans Twenty year loans [see (ii) below] Twenty year loans Twenty to twenty-five year loans Twenty-five year loans Twenty year loans Thirty year loans [see (iii) below] Twenty to twenty-five year loans Five year loans Twenty-five year loans Twenty-five year loans Ten year loans Twenty-five year loans
2011 $'000
2010 $'000
149,720 68,490 716,216 12,061 416 19,823 110 321,775 5 35,085 5,453 5,597 2,372 517,305 1,919 7,203
173,393 90,913 954,603 15,480 417 32,988 127 370,244 5 35,629 5,534 0 3,172 562,714 31,498 7,424
1,863,550
2,284,141
(i)
During the year, the Government of Jamaica assumed responsibility for the notes payable under the USAID Housing Guarantee Programme and the corresponding mortgage loans have been written-off.
(ii)
The 7½% twenty-year loans are repayable in pounds sterling £3,051 (2010: £3,081).
(iii) The Government of Jamaica has guaranteed the reimbursement to the company of any losses suffered as a result of failure of mortgagors under the Basic Shelter Programme to repay their loans [note 16(c)]. No provision for loan losses has therefore been made for amounts below $15,000,000 (2010: $Nil) as recovery is expected from the Government of Jamaica [note 8(f) (i)]. (b)
Other long-term loans bear interest at 10% and 13% per annum, and are repayable from the date of disbursement in equal principal payments over twenty-five years.
(c)
This represents two unsecured loans that were provided to do infrastructure development and are repayable on completion of projects. One loan bears interest at a floating rate of 2% above the average Treasury bill rate, adjusted every 90 days, and the other loan bears interest at 20% per annum.
21 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 8.
Loans receivable (continued) (d)
Loans receivable are due for collection from the reporting date as follows: 2011 $'000 Within 3 months 3 months to 1 year From 1 year to 3 years Thereafter
(e)
2010 $'000
315,790 147,548 453,877 1,225,213
413,136 237,098 399,038 1,643,313
2,142,428
2,692,585
The credit quality of loans receivable as at the reporting date was as follows: 2011 $â€&#x;000 Not past due Past due 0-30 days Past due 30-60 days Past due 61-90 days Over 90 days
2010 $â€&#x;000
1,762,676 4,151 6,774 74,550 294,277
2,129,667 4,363 7,109 200,396 351,050
2,142,428
2,692,585
An estimate of the fair value of the collateral held against past due loans has not been determined. Based on past experience, the company believes that no impairment allowance is necessary in respect of loans receivable not past due as these are adequately secured by prime properties. (f)
Provision for losses on loans:
At beginning of the year Provision made during the year Amounts written back [see (i)] At end of the year
2011 $'000
2010 $'000
382,931 ( 83,778) 6,597
516,428 74,597 (208,094)
305,750
382,931
(i) The provision for losses previously recorded in respect of the Basic Shelter Programme and which is guaranteed by GOJ in the amount of $6,597,000 was written back in the current year.
22 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 9.
Operation PRIDE development projects Operation PRIDE development projects are stated net of a provision for impairment of $2,259,604,000 [2010: $2,947,839,000] (see note 22). There were no transfers during the year arising from gain on sale of land under the Operation PRIDE programme. The loss for Operation PRIDE was $194,485,000 (2010: $234,969,000). Provision for loss was $189,268,000 (2010: $160,584,000) and the interest expense, other finance and administration costs were $4,582,000 (2010: $113,330,000).
10.
Other development projects in progress 2011 $'000
2010 $'000
Infrastructure development expenditure: Rosemount, Norwood & Succaba Pen projects [see (i) below] Public sector project [see (ii) below] Lilliput phase I, II & Flankers projects [see (iii) below] Flankers project [see (iv) below] Lilford [see (v) below] Westmeade phase I [see (vi) below] Country Club 2 [see (vii) below] Other development costs [see (viii) below]
118,874 18,834 58,253 167,037 327,221 72,503
233,236 14,408 104,993 18,834 491,160
Less provision for impairment [see (i) and (ii) below]
762,722 -
862,631 (212,564)
762,722
650,067
(i)
The developments were financed by 15% loans which were secured by Government and provided under the USAID Housing Guarantee Programmes 532-HG-012 & 014 through the Ministry of Finance & the Public Service. On completion, the project costs were converted into long-term mortgages. A provision for impairment of $Nil (2010: $198,156,000) was made as at the reporting date. The Government of Jamaica made good on its guarantee and the amounts were written off during the year.
(ii)
The development was financed by 101/4% loans which were secured by Government and provided under the USAID Housing Guarantee Programmes 532-HG-012C Basic Shelter Agreement through the Ministry of Construction (Housing) [MOC(H)] and the Urban Development Corporation (UDC). On completion, the company would collect amounts from beneficiaries under the programme. Funds collected would be used to repay the 532HG-012C loan. A provision for impairment of $Nil (2010: $14,408,000) was made as at the reporting date. The Government of Jamaica made good on its guarantee and the amounts were written off during the year.
(iii)
The development is being financed by grants provided by the Tourism Enhancement Fund (note 21).
23 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 10.
11.
Other development projects in progress (continued) (iv)
The project is being financed by subvention from the Government of Jamaica (note 21).
(v)
The development is being financed by 18% loan from the Jamaica Mortgage Bank and is secured by the housing units being constructed. The loan will be repaid from the sale of these units.
(vi)
The development is being financed by 8% loan from the National Housing Trust and is secured by the housing units being constructed. The loan will be repaid from the sale of these units.
(vii)
The development is being financed by 12% loan from the National Housing Trust and is secured by the housing units being constructed. The loan will be repaid from the sale of these units.
(viii)
This represents developments at Stadium Gardens 3, Luana phase 3, Melrose Mews 3, Portmore Villas 2B, Ebony View, Fraser, Mona and Seacrest.
Investments
Available for sale: Quoted equity 12.
2011 $'000
2010 $'000
186
240
2011 $'000
2010 $'000
215,715
215,219
Land held for development
Balance at beginning of the year Land and development costs transferred to development projects in progress Development costs incurred Land acquired with TEF funds Land received as capital contribution (note 20)
(
25,972) 20,709 410,000 1,671,462
496 -
Balance at end of the year
2,291,914
215,715
Broken down as: Lands held for development [see (a) below] Development costs [see (b) below] Jointly controlled operations-in-progress [see (c) below]
2,188,800 29,110 74,004
137,898 8,401 69,416
2,291,914
215,715
(a)
This represents lands acquired through the Ministry of Water and Housing for the development of housing projects.
24 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 12.
Land held for development (continued) (b)
This represents pre-construction costs of development of lands held for that purpose.
(c)
This represents amounts advanced in respect of Bushy Park 2 and Luana 2 which are being developed under joint controlled operations and includes lands costing $22,500,000. For these projects, surpluses or losses are shared 50:50 with the National Housing Trust.
Titles to all land held for development are registered in the name of Minister of Housing and held on behalf of the company. 13.
Intangible assets Software $â€&#x;000 Cost: March 31, 2009 Additions Transfer from property, plant and equipment
15,507 1,401 4,068
March 31, 2010 Additions
20,976 1,784
March 31, 2011
22,760
Amortisation: March 31, 2009 Charge for the year Transfer from property, plant and equipment March 31, 2010 Charge for the year
4,635 3,000 7,635 5,270
March 31, 2011
12,905
Net book values: March 31, 2011
9,855
March 31, 2010
13,341
March 31, 2009
15,507
25 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 14.
Property, plant and equipment
At cost or deemed cost: March 31, 2009 Additions Disposals Adjustment March 31, 2010 Additions Disposals Adjustment March 31, 2011 Depreciation: March 31, 2009 Charge for the year Eliminated on disposals Adjustment March 31, 2010 Charge for the year Eliminated on disposals Adjustment
Office Freehold furniture land and and Motor buildings Computers fixtures vehicles $'000 $'000 $'000 $'000
Equipment $'000
Total $'000
56,880 20 ( 2,302) -
14,575 1,070 ( 124) ( 4,068)
9,549 298 ( 148) -
12,749 3,628 ( 4,430) -
16,959 1,189 ( 9,104)
110,712 6,205 ( 7,004) ( 13,172)
54,598
11,453
9,699
11,947
9,044
96,741
-
640 ( 685) ( 1,015)
54,598
10,393
9,925
10,212
10,921
96,049
20,086 903 ( 753) -
8,488 2,237 ( 27) ( 3,000)
3,963 1,167 ( 166) -
9,695 1,563 ( 2,930) -
13,186 1,166 ( 9,141)
55,418 7,036 ( 3,876) ( 12,141)
20,236
7,698
4,964
8,328
5,211
46,437
2,535 33) 439
1,206 ( 4,234) -
903 -
1,830 ( 635) ( 1,118)
(
(
146 55) 135
2,500 ( 4,235) -
(
(
1,074 81) 884
1,393 72) 693
(
(
4,360 5,056) 4
7,867 4,974) 14
March 31, 2011
21,139
7,775
7,905
5,300
7,225
49,344
Net book values: March 31, 2011
33,459
2,618
2,020
4,912
3,696
46,705
March 31, 2010
34,362
3,755
4,735
3,619
3,833
50,304
March 31, 2009
36,794
6,087
5,586
3,054
3,773
55,294
Freehold land and buildings include land costing $12,455,000 (2010: $12,473,000). A review of certain of the companyâ€&#x;s furniture and fixtures by Baird and Henderson Valuators Limited in November 2005 resulted in adjustments to the carrying value of these assets which has been deemed as the assetsâ€&#x; cost.
26 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 15.
Trade and other payables
Interest payable Loan [see (a) below] Deposits on other development projects Stabilization fund [see note 7(i)] Other payables
2011 $'000
2010 $'000
65,844 100 139,911 584,040
43,571 100 254,159 131,511 332,748*
789,895
762,089
* Restated (a) The loan is repayable to the Ministry of Finance & the Public Service. The interest rate and repayment terms for the loan have not yet been determined. 16.
Loans payable The formalities of the transfer to the company of ownership of some loans payable are still in process (see note 1). Loans payable comprise:
Jamaica Mortgage Bank [see note (a) below]: 16% - repayable by 2010 16% - repayable by 2011 18% - repayable by 2012 (i) 16% - repayable by 2016 Ministry of Housing and Water 4 - 8% - repayable by 2010 [see note (b) below] USAID notes payable [see note (c) below] Commonwealth Development Corporation [see note (d) below]: 9% - repayable by 2011 National Housing Trust: 8% loan [see note (e) below] 10% loan [see note (f) below] 3% loan [see note (g) below] 3% loan [see note (h) below] 3% loan [see note (i) below] 8% loan [see note (j) below] 12% loan [see note (k) below] 8% loan [see note (l) below] 8% loan [see note (m) below] 8% loan [see note (n) below] 8% loan repayable by 2018 Pan Caribbean Bank Limited [see note (o) below] JN Finance Limited [see note (p) below] Accountant General [see note (q) below]
2011 $'000
2010 $'000
608 19 56,323 10,336
5,127 34 12,252
188 -
187 269,845
-
90,048
574,700 56,914 60,861 511,722 466,160 43,616 230,943 160,406 75,183 377 43,315 13,098 90,574
620,331 64,629 70,914 569,000 544,975 34,574 216,609 5,057 63,867 420 44,344 483,442
2,395,343
3,095,655
27 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 16.
Loans payable (continued)
Comprising - current and past due portions - long-term portions
(a)
2011 $'000
2010 $'000
835,166 1,560,177
500,302 2,595,353
2,395,343
3,095,655
These loans are secured by mortgages. Under the terms of the loan agreements, mortgage loan repayments are required to be applied towards repayment of the loans on a semi-annual basis. The loans become immediately repayable in certain circumstances, including defaults of obligations under the agreements and passing of resolutions for the winding-up or appointment of a receiver on the undertaking of the borrower. (i)
The loan is secured by the housing units being constructed and will be repaid from the sale of these units.
(b)
The loans are secured by mortgages and the repayment period has not yet been specified but this has been assumed to be over the twenty five-year life of the related mortgages which ended in 2010.
(c)
These represented amounts received under USAID Housing Programme Agreements, AID532-HG-012 Basic Shelter and AID-532-HG-014 Private Sector ("Programme Agreements"). Under the terms of the Programme Agreements, the company may, under related loan agreements ("loan agreements"), borrow up to US$30 million from private investors, such borrowings to be guaranteed by USAID. Government of Jamaica (GOJ) has issued guarantees to USAID. The Programme Agreements also required GOJ to provide, in cash or in kind, counterpart resources of at least J$38 million and also to provide or cause to be provided all other resources required to carry out the programme effectively and in a timely manner. GOJ issued guarantees to CHFC, undertaking to reimburse CHFC for losses suffered, as the agents implementing the programme, where the losses arise from exchange rate fluctuations [see note 7(i)], from lending at rates less than those paid on funds borrowed under these agreements, or, in the case of mortgage loans made under the Basic Shelter Programme, from failure of mortgagors to repay their loans [note 8(a)(ii)]. Since April 1, 2002, in addition to the guarantee, these debts are being serviced through the Ministry of Finance & the Public Service. A guarantee fee of ½% per annum of the unpaid balance of USAID-guaranteed notes is payable semi-annually and quarterly for 532-HG-012 and 532-HG-014 loans, respectively. Fees charged during the year in respect of these loans totalled $Nil (2010: $4,733,820.96). By Cabinet decision on May 10, 1993, the Ministry of Finance & the Public Service assumed the role of primary borrower in respect of Housing Guarantee Programme Loans Nos. AID532-HG-012 and AID-532-HG-014. Effective December 1993, CHFC [now merged (see note 1)] became the "agent" of GOJ in the continued implementation of the programme.
28 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 16.
Loans payable (continued) (c)
(Continued) Amounts outstanding under the Programme are as follows: 2010
2011 US$'000
J$'000
US$'000
J$'000
AID-532-HG-012 [see (i) below]: Notes payable 1998 - 2017
-
-
2,500
13,750
AID-532-HG-014 [see (ii) below]: Notes payable 1999 - 2019
-
-
10,189
256,095
-
-
12,689
269,845
(i)
These notes were repayable in forty equal semi-annual instalments from July 1, 1998. Interest was payable semi-annually based on 6 months LIBOR plus 47.5 basis points above the discount rate determined at the auction from time to time. The notes payable were written off during the year with the authorisation of the Ministry of Finance & the Public Service.
(ii)
These notes were repayable in forty equal semi-annual instalments which commenced September 30, 1999. Interest was payable quarterly at a floating rate of 75 basis points above the discount rate determined at the auction, from time to time, of U.S. Government 26-week Treasury Bills. The notes payable were written off during the year with the authorisation of the Ministry of Finance & the Public Service.
(iii) The notes payable and related interest capitalised were accounted for at the weighted average of the exchange rates ruling at the dates drawn down [HG-012: $5.50 and HG014: J$$25.13]. Repayments to GOJ/MOF were based on these amounts. (d)
This loan was secured by government guarantees and principal and interest were repayable by semi-annual instalments [see note 7(i)]. The notes payable were repaid during the year by the Ministry of Finance & the Public Service on behalf of the company.
(e)
This loan relates to the construction of the Greater Portmore Project (GPP). During the construction period, which extended to December 31, 1996, interest was accrued at 11% per annum but is paid semi-annually at 8% per annum. The principal amount of the loan together with deferred interest of 3% per annum was rolled over into a twenty five-year loan on which interest accrues at 8% per annum. Repayment is on a quarterly basis.
(f)
This loan relates to the construction of 279 units in the GPP in a joint venture with NHT. The principal amount of the loan which is secured by mortgages on those units, is repayable over fifteen years and interest is payable monthly.
29 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 16.
17.
Loans payable (continued) (g)
This loan is guaranteed by the Government of Jamaica and the repayment period was extended to 15 years commencing May 2002 and ending in 2017.
(h)
This loan is secured by $1.405 billion GPP mortgages and the repayment period was extended to 20 years commencing August 2002 and ending in 2022.
(i)
This loan is secured by a letter of undertaking from the Ministry of Finance & the Public Service as well as GPP and Operation PRIDE mortgages. The loan was obtained specifically to fund Operation PRIDE projects and is due for repayment in 2018.
(j)
This revolving loan, secured by the deposit of splinter titles for the Portmore Villas 11a and Frontier 11 land developments, was specifically obtained to fund new Operation PRIDE projects. The loan is being repaid from sales proceeds.
(k)
This loan is secured by a first legal mortgage over certain project lands and was obtained to finance the Country Club 2 development project. The interest rate is 12% and the loan will be repaid from sales proceeds.
(l)
This loan amount is secured by first legal mortgage over certain project lands and was obtained to finance the Portmore Villa 2B development project. The interest rate is 8% and the loan will be repaid from sales proceeds.
(m)
This loan is secured by first legal mortgage over certain project lands and was obtained to finance the Westmeade development project. The interest rate is 8% and the loan will be repaid from sales proceeds.
(n)
This loan is secured by first legal mortgage over the project lands and was obtained to finance the Palms of Portmore development project. The interest rate is 8% and the loan will be repaid from sales proceeds.
(o)
This represents insurance premium financing. The loan bears interest at 6.95% (2010: 5.90%) and is repayable over ten (10) months [2010: eight (8) months].
(p)
This represents insurance premium financing. The loan bears interest at 6.85% and is repayable over ten (10) months.
(q)
The loan represents amounts paid on the companyâ€&#x;s behalf by the Accountant General for the Commonwealth Development Corporation and USAID loans. The loan is interest free and has no fixed repayment terms.
Share capital 2011 $'000 Authorised, issued and fully paid: 200 ordinary shares at no par value *Actual amount is $200; it is shown as $Nil due to rounding.
-
2010 $'000 -
*
30 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 18.
Reserve fund Pursuant to Article 98 of the company‟s Articles of Association, the company transfers to reserve fund a percentage of profits after tax, if any, each year. The percentage to be transferred is determined at the discretion of the directors and has been set at 90% (2010: 90%). The reserve fund may only be utilized for the purposes set out in the Articles, namely, meeting contingencies, repairing or maintaining any work connected with the business of the company, equalizing dividends and making distributions by way of special dividends or bonus. It may also be used for other purposes for which the profits of the company may lawfully be applied.
19.
Capital reserve This comprises the net surplus of the book values of assets over liabilities arising on the transfer and merger of the operations of the entities mentioned in note 1 and adjustments arising from review of certain property, plant and equipment.
20.
Contributed capital This represents the value of lands contributed by the Government of Jamaica for housing developments.
21.
Deferred credit TEF $'000
2011 GOJ $'000
104,993 290,593 260,000 ( 13,684)
113,869 -
218,862 290,593 260,000 ( 13,684)
641,902
113,869
755,771
TEF $'000
2010 GOJ $'000
Total $'000
Balance at beginning of the year Funds received during the year
104,993
95,035 18,834
95,035 123,827
Balance at end of the year
104,993
113,869
218,862
Balance at beginning of the year Funds received during the year Valuation reserve on Grange Pen land Lilliput phase 1 project closed during the year Balance at end of the year
Total $'000
This represents grant funding received from the Government of Jamaica (GOJ) and the Tourism Enhancement Fund (TEF) to assist in the funding of certain „Brownfield‟ projects [see notes 10 (iii) and (iv)].
31 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 22.
Impairment loss - Operation PRIDE development projects This represents an increase in provision for impairment in respect of Operation PRIDE projects (note 9).
23.
Profit/(loss) for the year Profit/(loss) for the year is arrived at after charging:
Directors' emoluments [note 26]: Fees Directorâ€&#x;s travel Management remuneration [included in staff costs (note 25)] Auditors' remuneration Depreciation and amortisation 24.
2011 $'000
2010 $'000
1,969 369 10,046 5,884 13,137
2,009 209 11,372 5,605 11,671
Taxation Taxation losses, subject to agreement by the Commissioner of Taxpayer Audit and Assessment, available for set-off against future taxable profits, amount to approximately $4,686,784,000 (2010: $4,332,978,000) as at the reporting date. Deferred tax assets have not been recognised, however, management is of the opinion that when future taxable profits are sustained, the tax asset will be recognised to the extent that it is expected to be recovered from those future taxable profits.
25.
Staff costs and numbers The average number of persons employed full-time during the year was 113 (2010:117). The costs for these employees were as follows:
Salaries Redundancy Statutory contributions Pension scheme contributions (note 28) Training and development Staff welfare Gratuity and incentive Other benefits
2011 $'000
2010 $'000
211,355 23,823 15,402 2,290 15,317 68,211 42,792
197,502 306 22,986 16,064 1,102 6,991 50,500 38,150
379,190
333,601
32 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 26.
Related party balances and transactions The statement of financial position includes the following balances with related parties in the ordinary course of business: 2011 $'000
2010 $'000
40,099 39,440 16,984 -
40,099 191 11,053 220,000
96,523
271,343
1,906
2,136
28,659 118,874 113,869
28,659 104,993 113,869
261,402
247,521
Taxation recoverable: Inland Revenue
32,302
60,505
Land held for development: National Housing Trust
74,004
69,415
Trade and other payables: Accountant General Inland Revenue National Housing Trust Ministry of Water and Housing Bay Farm Jamaica Defence Force Jamaica Mortgage Bank National Housing Trust
20,671 23,884 1,394 63,621 417 20,000 3
32,029 1,463 43,315 1,610 2,321 17
129,990
80,755
188 67,286 2,180,882 90,574
187 17,413 2,190,376 483,442
2,338,930
2,691,418
Trade and other receivables: National Housing Trust Ministry of Water and Housing Tourism Enhancement Fund National Insurance Fund Loans receivable: Managing Director Other development projects: Ministry of Water and Housing Tourism Enhancement Fund Government of Jamaica
Loans payable: Ministry of Water and Housing Jamaica Mortgage Bank National Housing Trust Accountant General
33 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 26.
Related party balances and transactions (continued) The statement of comprehensive income includes the following income and expenses incurred in transactions with related parties in the ordinary course of business:
Fees and interest expense on loans: National Housing Trust Jamaica Mortgage Bank
Management fees for servicing loans: Ministry of Water and Housing
2011 $'000
2010 $'000
75,712 1,628
79,706 1,834
77,340
81,540
6,024
916
The company's directors and two senior executives are referred to as "key management" personnel. Key management personnel compensation for the year is as follows:
Directors' fees and remuneration (note 23) Director‟s travel Other key management personnel - short-term employee benefits included in staff costs (note 25)
27.
2011 $'000
2010 $'000
12,015 369
13,381 209
13,338
12,932
25,722
26,522
Financial risk management (a)
Introduction and overview: The company has exposure to the following risks from its use of financial instruments: credit risk liquidity risk market risk operational risk This note presents information about the company‟s exposure to each of the above risks, the company‟s objectives, policies and processes for measuring and managing risk, and the company‟s management of capital. Further quantitative disclosures are included throughout the financial statements.
34 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 27.
Financial risk management (continued) (a)
Introduction and overview (continued): The Board of Directors has overall responsibility for the establishment and oversight of the company‟s risk management framework. The company‟s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The Board, through its various committees, is responsible for monitoring compliance with the company‟s risk management policies and procedures, and for reviewing the adequacy of the risk management framework in relation to the risks faced by the company. All committees report regularly to the Board on their activities. Assistance is received in these functions from Internal Audit which undertakes periodic reviews of risk management controls and procedures.
(b)
Credit risk: Credit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises primarily from the company‟s lending activities and deposits with other financial institutions. There is also credit risk exposure in respect of off-balance sheet financial instruments, such as loan commitments and guarantees, which expose the company to similar risks as loans and are managed in the same manner. Balances arising from these activities include loans receivable, cash and cashequivalents and resale agreements. (i)
Loans receivable: The management of credit risk in respect of loans is executed by the management of the company. The management of credit risk, particularly, as it relates to managing delinquent loans is delegated to the Finance Committee. Management is responsible for formulating credit policies, reviewing and assessing credit risk and limiting concentration of exposure to counterparties. The company has not engaged in any lending activities over the past three (3) years. Lending activity is classified as either „brown-field‟ or „green-field‟. „Brown-field‟ loans are those in schemes which are heavily squatted and in volatile areas while „green-field‟ loans are not. Collateral
The company holds collateral against loans in the form of mortgage interests over property. Estimates of fair values are based on value of collateral assessed at the time of borrowing and are generally not updated, except, when a loan is individually assessed as impaired. Impaired loans
Impaired loans are loans for which the company determines that it is probable that it will be unable to collect all principal and interest due according to the contractual terms of the loan.
35 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 27.
Financial risk management (continued) (b)
Credit risk (continued): (i)
Loans receivable (continued): Past due but not impaired loans
These are loans where contractual interest or principal payments are past due but the company believes that impairment is not appropriate based on the quality and value of security available or the stage of collection of amounts owed to the company. Loans with renegotiated terms
Loans with renegotiated terms are loans that have been restructured due to deterioration in the borrowersâ€&#x; financial position and where the company has made concessions that it would not otherwise consider. Once the loan is restructured, it is classified and monitored. The company has no renegotiated loans.
Allowances for impairment
The company establishes an allowance for impairment losses that represents its estimate of incurred losses in its loan portfolio. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loan loss allowance established on a portfolio basis in respect of losses that have been incurred but have not been identified on loans subject to individual assessment for impairment. Write-off policy
The company writes off a loan (and any related allowances for impairment losses) when it determines that the loans are uncollectible. This determination is usually made after considering information such as changes in the borrowerâ€&#x;s financial position, or that proceeds from collateral will not be sufficient to pay back the entire exposure. (ii)
Cash and cash equivalents and resale agreements: The company limits its exposure to credit risk by investing only in liquid assets with counterparties that have high credit ratings. Cash and cash equivalents and resale agreements are held with reputable financial institutions. Therefore, management does not expect any counterparty to fail to meet its obligations. Collateral is held for all resale agreements.
36 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 27.
Financial risk management (continued) (b)
Credit risk (continued): (iii) Exposure to credit risk: The company‟s exposure to credit risk is geographically concentrated based on the location of the properties held as securities against mortgage loans, as follows: 2011 $‟000 Green-field projects Brown-field projects
2010 $‟000
2,893,135 32,755
1,849,738 434,403
2,925,890
2,284,141
The carrying amount of financial assets recorded in the financial statements (net of impairment losses), which represents the company‟s maximum exposure to credit risk, without taking account of the value of any collateral held, was:
Cash and cash equivalents Resale agreements Trade and other receivables Due from Ministry of Finance & the Public Service Loans receivable
2011 $‟000
2010 $‟000
241,292 223,878 228,813 1,825,706
65,877 132,465 294,043 82,687 2,298,682
2,519,689
2,873,754
There has been no change to the company‟s exposure to credit risk or the manner in which it manages and measures the risk. (c)
Liquidity risk: Liquidity risk is the risk that the company will not be able to meet its financial liabilities as they fall due. The company‟s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due under both normal or stressed conditions, without incurring unacceptable losses or risking damage to its reputation. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the availability of funding through adequate amount of committed facilities. The following table presents the undiscounted contractual maturities of financial liabilities, including interest payments, on the basis of their earliest possible contractual maturity.
37 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 27.
Financial risk management (continued) (c)
Liquidity risk (continued):
Trade and other payables Loans payable
Trade and other payables Loans payable
2011 Over 12 months $‟000
1 to 3 months $‟000
3 to 12 months $‟000
745,399 82,971
44,496 232,097
789,895 2,080,275 2,806,981
789,895 2,395,343
828,370
276,593
2,080,275 3,596,876
3,185,238
1 to 3 months $‟000
3 to 12 months $‟000
647,751 70,172
6,611 430,129
107,727 762,089 2,595,354 3,587,619
762,089 3,095,655
717,923
436,740
2,703,081 4,349,708
3,857,744
2010 Over 12 months $‟000
Contractual cash flows $‟000
Contractual cash flows $‟000
Carrying amount $‟000
Carrying amount $‟000
There has been no change during the year to the company‟s exposure to liquidity risk or the manner in which it manages and measures the risk. (d)
Market risk: Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the company‟s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Market risk exposures are measured using sensitivity analysis. (i)
Currency risk Currency risk is the risk that the market value of, or the cash flows from, financial instruments will vary because of exchange rate fluctuations. The company is exposed to foreign currency risk due to fluctuations in exchange rates on transactions and balances that are denominated in currencies other than the Jamaica dollar. The company is primarily exposed to the United States (US$) and the British pound sterling (£). In the prior year, the company‟s exposure to Pound Sterling liabilities, however, was covered by Government guarantee [note 8(a) (ii)].
38 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 27.
Financial risk management (continued) (d)
Market risk (continued): (i)
Currency risk (continued) The company‟s exposure to foreign currency risk at the reporting date was as follows: 2011 US$‟000 Cash and cash equivalents
Loans payable
2010 US$‟000
81
98
2011 £‟000
2010 £‟000
-
667
Foreign currency sensitivity analysis A 1 percent (2010: 5 percent) change in the value of the Jamaica dollar against the following currencies at March 31 would have increased/decreased profit or loss by the amounts shown below. The analysis assumes that all other variables, in particular, interest rates, remain constant. The analysis is performed on the same basis for 2010.
United States dollar (US$) Pounds Sterling (£)
2011
2010
69 -
438 4,445
(ii) Interest rate risk: Interest rate risk is the risk of loss from fluctuations in the future cash flows or fair values of financial instruments because of a change in market interest rates. It arises when there is a mismatch between interest-earning assets and interest-bearing liabilities, which are subject to interest rate adjustments, within a specified period. It can be reflected as a loss of future net interest income and/or a loss of current market values. Interest rate risk is managed by holding primarily fixed rate financial instruments.
39 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 27.
Financial risk management (continued) (d)
Market risk (continued): (ii)
Interest rate risk (continued): The following tables summarise the carrying amounts of financial assets and liabilities to arrive at the company‟s interest rate gap based on the earlier of contractual repricing and maturity dates: Within 3 months $‟000
3 to 12 months $‟000
2011 Over 12 months $‟000
Non-rate sensitive $‟000
Total $‟000
Cash and cash equivalents Resale agreements Trade and other receivables Loans receivable Investment
241,292 223,878 -
-
1,825,706 -
228,813 186
241,292 223,878 228,813 1,825,706 186
Total financial assets
465,170
-
1,825,706
228,999
2,519,875
Trade and other payables Loans payable
58,875
381,580
1,954,888
789,895 -
789,895 2,395,343
Total financial liabilities
58,875
381,580
1,954,888
789,895
3,185,238
Total interest rate gap
406,295 (381,580) ( 129,182)
(560,896) ( 665,363)
Cumulative gap
406,295
( 104,467)
(665,363)
2010 Over 12 months $‟000
Non-rate sensitive $‟000
Total $‟000
-
294,043
65,877 132,465 294,043
Within 3 months $‟000
24,715
3 to 12 months $‟000
-
Cash and cash equivalents Resale agreements Trade and other receivables Due from Ministry of Finance & the Public Service Loans receivable Investment
65,877 132,465 -
-
-
-
2,298,682 -
82,687 240
82,687 2,298,682 240
Total financial assets
198,342
-
2,298,682
376,970
2,873,994
Trade and other payables Loans payable
70,172
430,129
2,595,354
762,089 -
762,089 3,095,655
Total financial liabilities
70,172
430,129
2,595,354
762,089
3,857,744
Total interest rate gap
128,170 (430,129) ( 296,672)
(385,119) ( 983,750)
Cumulative gap
128,170 (301,959) ( 598,631)
(983,750)
-
40 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 27.
Financial risk management (continued) (d)
Market risk (continued): (ii)
Interest rate risk (continued): Average effective yields by the earlier of the contractual repricing and maturity dates. Immediately rate sensitive % Cash and cash equivalents Resale agreements Loans receivable Loans payable 10.00-16.00
Immediately rate sensitive % Cash and cash equivalents Resale agreements Loans receivable Loans payable 10.00-16.00
Within 3 months %
2011 Three to 12 months %
1.00- 3.00 9.50-16.60 4.00-10.00
Within 3 months %
3.00-16.00
2010 Three to 12 months %
1.00- 3.00 9.50-16.60 4.00-10.00
3.00-16.00
Over 12 months % 4.00 - 20.00 3.00 - 16.00
Over 12 months % 4.00 - 20.00 3.00 - 16.00
Interest rate sensitivity analysis The company materially contracts for financial assets and liabilities at fixed rates for the duration of the term. It does not account for any fixed rate financial assets or liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss. (iii) Equity price risk: Equity price risk arises from available-for-sale equity securities held by the company. The primary goal of management is to maximise investment returns. The securities are listed on the Jamaica Stock Exchange. A 10% (2010:5%) increase or decrease in quoted bid prices at the reporting date would increase or decrease, respectively, other comprehensive income by $19,000 (2010: $12,000). There has been no change during the year to the companyâ€&#x;s exposure to market risks or the manner in which it manages and measures the risk.
41 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 27.
Financial risk management (continued) (e)
Capital management: The company‟s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide benefits for stakeholders and to maintain a strong capital base to support the development of its business. The company defines its capital base as share capital, capital and other reserves and retained earnings. The company has no externally imposed capital requirements. There were no changes in the company‟s approach to capital management during the year.
(f)
Fair values: Fair value amounts represent estimates of the arm‟s length consideration that would be currently agreed upon between knowledgeable, willing parties who are under no compulsion to act and is best evidenced by a quoted market price, if one exists. Many of the company‟s financial instruments lack an available trading market and fair values shown may not necessarily be indicative of the amounts realisable in an immediate settlement of the instruments. The fair value of financial instruments is determined as their carrying amounts shown on the statement of financial position and are determined as indicated below. Determination of fair value: The fair values of cash and cash-equivalents, bank overdraft, resale agreements, trade and other receivables, amounts due from the Ministry of Finance & the Public Service, and trade and other payables are assumed to approximate their carrying values, due to their short-term nature. The fair value of equity investment is its quoted bid price at the reporting date. The valuation method falls in the level 1 fair value hierarchy which is defined as quoted prices (unadjusted) in an active market for identical assets. The fair values of loans receivable and Operation PRIDE development projects are assumed to be the costs incurred to date, less any provision for losses and impairment. The fair value of loans payable is assumed to approximate its carrying value, as no discounts or premiums on settlement are anticipated.
Available for sale financial assets No other fair value hierarchy levels were used to determine fair value.
2011 $‟000
2010 $‟000
186
240
42 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 27.
Financial risk management (continued) (g)
Operational risk Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the company‟s processes, personnel, technology and infrastructure, and from external factors other than financial risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. The company‟s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to its reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity. The primary responsibility for the development and implementation of controls to identify operational risk is assigned to internal audit. This responsibility is supported by overall company standards for the management of operational risk in the following areas: requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified requirements for appropriate segregation of duties, including the independent authorisation of transactions requirements for the reconciliation and monitoring of transactions compliance with regulatory and other legal requirements documentation of controls and procedures
28.
Employee benefit obligation The company provides for post-retirement pension benefits through a defined-contribution pension scheme, administered by a life assurance company. Employees of the company, who have satisfied certain minimum service requirements, are eligible to become members of the scheme. The scheme is funded by contributions from the company and employees in accordance with the rules of the scheme. Under this scheme, retirement benefits will comprise an annuity of such amount as may be purchased by the sum of the members‟ and company‟s contributions together with credited interest thereon, and, therefore, the company has no further liability to fund benefits. The company‟s contribution for the year amounted to $15,402,000 [2010: $16,064,034] (note 25). The company, by exception, also provides post-retirement medical benefits to certain selected retirees. The company‟s future obligations are considered by the directors to be insignificant and the amount recognised at the reporting date in respect of the post retirement medical benefits is $Nil (2010: $Nil).
43 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements (Continued) March 31, 2011 29.
Contingencies
As at the reporting date, the company was contingently liable in respect of the following:
(a)
Various claims, disputes and legal proceedings, which occur as part of the normal course of business. Provision is made for such matters when, in the opinion of management and its professional advisors, it is probable that a payment will be made by the company and the amount can be reasonably estimated. In respect of claims asserted against the company which, according to the principles outlined above, have not been provided for, management is of the opinion that such claims are either without merit, can be successfully defended or will result in exposure to the company which is immaterial to both the financial position and results of operations.
30.
(b)
A claim which has been filed against the company claiming damages of $13,537,765 for breach of contract. The company has filed a counter claim in the sum of $18,030,219 being the excess suffered in consequence of the claimant‟s negligence. In the opinion of the company‟s attorneys, the counter claim has a reasonable chance of success.
(c)
A claim which has been filed by a contractor alleging unpaid sums and interest totaling $173,776,359. In the opinion of the company and its attorney, the claim is without foundation and unlikely to succeed.
Prior year adjustment This represents accrual for retroactive salaries for 2009/2010 which was not previously recorded. The effect of the adjustment on the financial statements as at and for the year ended March 31, 2010 is as follows:
As previously stated Effect of adjustment Restated balances as at March 31, 2010
Profit/loss $‟000
Trade and other payables $‟000
Accumulated deficit $‟000
196,950 ( 19,118)
742,971 19,118
(1,133,699) ( 19,118)
177,832
762,089
(1,152,817)