HAJ Annual Report 2013 -2014 by HAJ Limited

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.

HOUSING AGENCY OF JAMAICA LIMITED

MISSION STATEMENT

HOUSING AGENCY OF JAMAICA LIMITED

CORE VALUES I CARE, together we care. I - NTEGRITY

C - ARE

A - CCOUNTABILITY

R - ESPECT

E - XCELLENCE

Table of Contents

WHO WE ARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

................................6 BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 MESSAGE FROM THE MANAGING DIRECTOR . . . . . . . . . . . . . . . . . 12 SENIOR MANAGEMENT TEAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 UPLIFTING JAMAICANS THROUGH HOMEOWNERSHIP . . . . . . . . . 15 CORPORATE STRATEGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 REVIEW OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 STRATEGIC OBJECTIVES, TARGETS & ACHIEVEMENTS . . . . . . . . . 22 EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 CHAIRMAN’S MESSSAGE

HOUSING AGENCY OF JAMAICA LIMITED

PROJECTIONS OF KEY FINANCIAL & OPERATIONS MEASURES FOR FY 2014-2015 . . . . . . . . . . . . . . . . 24 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Who We Are Corporate Profile Housing Agency of Jamaica Limited (HAJ), 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 Transport, Works and Housing. It is governed by a Board of Directors and headed by a Managing Director. HAJ’s main activities are those of property development and construction of housing solutions for low income and lower middle income earners.

HOUSING AGENCY OF JAMAICA LIMITED

HAJ’s main functions 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.

•

The Corporate Services Division comprises the Finance and Information, Legal and Company Secretariat, Mortgage Administration, 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 three (3) locations within Jamaica, with its head office located in Kingston at 13 Caledonia Avenue.

Corporate Information Registered Office 13 Caledonia Avenue Kingston 5 Tel. : (876) 968-7536-9; 968-7522-4 Fax: (876) 929-5908 Email: info@hajl.gov.jm Website: www.hajl.gov.jm Facebook: www.facebook.com/HousingAgencyofJamaica Twitter: @HousingAgencyJA

Branches

KPMG The Victoria Mutual Building 6 Duke Street Kingston

HOUSING AGENCY OF JAMAICA LIMITED

Westmoreland Barracks Road Savanna-la-Mar, Westmoreland Tel.: (876) 918-3370 Fax: (876) 918-3332 Auditors

St. James Albion Road Montego Bay, St. James Tel.: (876) 940-2559-60; 940-5539 Fax: (876) 940-0311

Chairman’s Message Hon. Derick Latibeaudiere, OJ The current board of directors was appointed at a critical time in the Agency’s existence. The Agency faced issues related to its financial standing, operations and staffing, and performance, relative to its mandate to deliver housing solutions to its target market.

HOUSING AGENCY OF JAMAICA LIMITED

During fiscal year 2014-2015, the Board’s focus will be on stabilising the financial affairs of the company. The completion of existing projects will be synchronized with the availability of resources. Going forward, the Agency will emphasize the achievement

of economically feasible projects which meet market demand. The Agency has been a major provider of housing for low and lower middle income Jamaicans. In this new dispensation, the organisation will retool its operations so as to effectively achieve this mandate while ensuring profitability.

Hon. Derick Latibeaudiere, OJ

7 HOUSING AGENCY OF JAMAICA LIMITED

“During fiscal year 2014-2015, the Board’s focus will be on stabilising the financial affairs of the company.”

Board of Directors

HOUSING AGENCY OF JAMAICA

Hon. Derick Latibeaudiere, O.J.

H. Karl Bennett

Lucille Brodber

Jerron Green

Kenarthur Mitchell

Maureen Stephenson Vernon

Norman Reid

9 9

Donald Moore

HOUSING AGENCY OF JAMAICA

Susan Lawrence

Corporate Governance

The Board of Directors of HAJ is committed to achieving business success and operating at the highest standards of integrity and ethics.

Board and delineates the functions of the Board and those of the management.

Board Composition

Committees of the Board

By Cabinet Decision No. 08/14 dated March 17, 2014, a new Board consisting of eight (8) non-executive directors was appointed for a period of three (3) years beginning March 17, 2014 and ending March 16, 2017. The Managing Director is a member of the Board of Directors and reports to the Chairman of the Board.

There are four Committees of the Board with each Committee having its own charter, which has been approved by the Board and defines the respective roles and responsibilities.

The Board met 14 times during the year.

Board Responsibility The Corporate Governance Policy sets out principles relevant to the operation of the

In addition, there were two ad hoc Committees of the Board, the Bernard Lodge Estates Ad Hoc Committee and the Titling and Land Bank Ad Hoc Committee. Board composition and meetings are shown in the table below.

Table 1. Board Committees Membership and Meetings Audit Committee

HOUSING AGENCY OF JAMAICA LIMITED

No. of Meetings for the year Members

1 The

Finance Committee

Strategic Planning & Organizational Structure

Planning & Projects Committee

Bernard Lodge Ad Hoc Committee

Titling & Land Bank Committee

Lanie Oakley Williams

Denis Lawrence

Maureen Webber

Paul Williams

Maureen Webber

Leonard Green

Kevin Taylor

Mario Mitchell

Manley Nicholson

Nickeisha Lindsay

Rev. Sirrano Kitson

Paul Williams

Errol Johnson

Carl Tucker

Paul Williams

Kevin Taylor

Denis Lawrence

Leonard Green

Vincent Haldane

Lanie Oakley Williams

Vincent Haldane

Philisha Lewis

Carl Tucker

Desmond Malcolm

Denis Lawrence

Cordinal Beckford

Carl Tucker

Cordinal Beckford

former Board consisted of: - Maureen Webber (Chairperson), Cordinal Beckford, Leonard Green, Vincent Haldane, Errol Johnson, Rev. Canon Major Dr. Sirrano Kitson, Denis Lawrence, Philisha Lewis, Nickeisha Lindsay, Desmond Malcolm, Mario Mitchell, Manley Nicholson, Dr. Lanie Oakley Williams, Kevin Taylor, Carl Tucker and Paul Williams.

Table 2. Remuneration and other Payments to Directors The following table shows the remuneration and other payments for the period under review: Directors

Fees ($)

Reimbursements of Travelling Expenses ($)

Maureen Webber - Chairperson

281,500.00

47,997.05

1,547,116.00

1,876,613.00

Cordinal Beckford

138,500.00

75,600.00

166,002.21

380,102.21

Leonard Green

154,500.00

94,500.00

Vincent Haldane

108,000.00

Honoraria ($)

All Other Compensation including Non-Cash Benefits as applicable ($)

Total ($)

249,000.00 108,000.00

Errol Johnson

83,500.00

Rev. Sirrano Kitson

88,500.00

Denis Lawrence

250,500.00

Philisha Lewis

131,500.00

5700.00

137,200.00

Nickeisha Lindsay

168,500.00

54,720.00

223,220.00

Desmond Malcolm

46,000.00

3900.00

49,900.00

Mario Mitchell

145,500.00

88,920.00

Manley Nicholson

113,000.00

Lanie Oakley Williams

187,500.00

Kevin Taylor

131,500.00

Carl Tucker

149,500.00

Paul Williams

352,000.00

TOTAL

2,530,000.00

49,170.00

132,670.00

302,813.77

20,520.00

441,027.05

537,233.77

152,020.00

2,015,931.98

4,986,959.98

HOUSING AGENCY OF JAMAICA LIMITED

2 Salary for assigned Administrative Assistant 3 Accommodation

Message from the Managing Director H. Karl Bennett

HOUSING AGENCY OF JAMAICA LIMITED

Stepping into the position of Managing Director just one week shy of the end of the financial year means that I cannot provide a first-hand report of the operations of the Agency. What I am able to do is to review, assess and present the status of the organization as at the end of March 2014, and offer a message to you, our stakeholders, focused on the way forward in restoring the viability and credibility of the company, as well as the trust of the Jamaican people. Financial year 2013-2014 proved challenging for the Agency in ways that most would have thought not possible; and to the onlooker, the challenges may seem insurmountable. However, no challenge is insurmountable. Clearly, there is evidence of the tenacity, drive, commitment and dedication of the men and women who bond together each day to meet the housing needs of the average working class Jamaican. Somehow, adversity seemed to have forced the unveiling of inner strengths, creativities and talents that many did not know they had possessed. The foundations of the Agency may have been shaken but they have not been destroyed. It is no longer business as usual and we must

and will step up to the greater demands and expectations of the Jamaican people. During financial year 2014-2015, the Agency will focus efforts on completing Greenfield projects that have been stalled for one reason or the other, and on increasing the number of titles to homeowners while resolving known issues with some legacy projects. In this regard, we will be replenishing our technical capacity in the near term. We are confident that as an Agency, we will find the resolve to increase the number of sales closures of affordable housing solutions while returning to profitability. We will also be taking a more active role in engaging our customers and stakeholders as we strengthen our social and corporate partnerships, both of which are crucial to the longevity of the Agency. The Agency, with your support, will strive to realize its potential for satisfying the housing needs of low income to lower-middle income earners for years to come.

H. Karl Bennett

13 HOUSING AGENCY OF JAMAICA LIMITED

“...we must and will step up to the greater demands and expectations of the Jamaican people.”

Senior Management Team

Members of the Senior Management Team

HOUSING AGENCY OF JAMAICA LIMITED

(seated, from left to right): Joan Sicard – Senior Manager, Internal Audit Cheryl Clarke – Senior Manager, Human Resources & Administration Loretta Reid Pitt – Senior Manager, Legal Services and Company Secretary (standing, from left to right): Deryke Smith – Senior Manager, Finance & Information Kevin McFarlane – Acting Senior Manager, Project Implementation Gary Howell – Senior Manager, Sales & Services.

Uplifting Jamaicans through Homeownership

Providing those beneficiaries with titles at significantly subsidized rates underlined the Government’s commitment to expand legitimate land ownership among low and lower middle income Jamaicans, previously informal settlers. The Jamaica Titling Programme is scheduled to continue as over 3,000 Jamaicans are projected to receive their land titles in the 2014-2015 financial year.

•

Persons will be better able to plan their future knowing that they are now in legal occupation of the land on which they reside.

•

Persons can proceed to erect block and steel houses, as they were mostly dwelling in deteriorating wooden houses.

•

Persons will be able to receive land titles in the future for the lot of land they now occupy, as the lots have been properly surveyed and allotted.

As HAJ seeks to carry out construction at Luana Phase 4 in St. Elizabeth, approximately 20 households (over 50 informal residents) will also benefit from security of tenure through relocation activities. The process of engaging the residents has already begun and the informal residents are expected to, within the first six months of the 2014-2015 financial year, be settled on alternate lots provided by the Government.

During the financial year, security of tenure was also provided for a number of Jamaican citizens who were informally occupying lands in Pear Tree Bottom in Runaway Bay, St. Ann. This relocation resulted in over 120 informal settlers (inclusive of children) being relocated to an area located in Belle Air Phase 2 in Runaway Bay, St. Ann. Some of the benefits that will accrue to relocated residents are as follows: These two residents of the Donaldson, St. Thomas community smile as they receive their title from Hon. Dr. Morais Guy, MP, Minister without Portfolio in the Ministry of Transport, Works & Housing (right) at a special titles presentation ceremony held in the community in February.

HOUSING AGENCY OF JAMAICA LIMITED

During the financial year 2013-2014, HAJ continued to build on its commitment to uplift ordinary Jamaicans through homeownership. The Jamaica Titling Programme and relocation activities comprised the main Community Development foci for the period. Longstanding residents of 45 Operation PRIDE communities across the island became proud, legal landowners as just under 1,500 registered land titles were delivered to these beneficiaries. A total of seven title delivery ceremonies were held in communities including: Hague, Martha Brae and Duanvale in Trelawny; Vaughnsfield and Barrett Hall in St. James; Whitehouse in Westmoreland; Gravel Heights in St. Catherine and Donaldson in St. Thomas.These titles were issued in 11 parishes across the island.

Corporate Strategy

HOUSING AGENCY OF JAMAICA LIMITED

The Agency continued to face major financial challenges coupled with declining and uncertain economic conditions. However the demand for quality, affordable housing solutions for the average working class Jamaican remains high. For the financial year 2014-2015, the Agency’s foci will be: •

To strictly manage the finances of the organization, bringing the entity back to a position of positive growth and viability;

•

To properly manage each development to ensure quality assurance at all stages of the construction and sales process;

•

To improve and maintain a team of highly skilled, committed and motivated staff; and

•

To provide excellent customer service and rebuild the reputation of the organization.

Review of Operations

Financial Status Net Operating Revenue for the financial year ended March 31, 2014 was a loss of ($608.79M). Total Operating Expenses was ($319.54M), when compared to the previous year of $169.92M, and is a $489.46M or 288% increase. This was due mainly to adjustment in the provision for impairment in respect to Operation PRIDE development projects of $298.04M. The Total Assets of the Agency was $14.03B at March 31, 2014. Cash and cash-equivalents were $351.36M.

Five Year Financial Highlights Table 3.

2010

2011

2012

2013

2014

Net Assets ($ ‘000)

314,865

2,273,815

2,393,707

2,513,216

1,904,418

Net Profit ($ ‘000)

177,832

334,452

119,784

119,509

(608,798)

Mortgage Portfolio Housing Agency of Jamaica Limited’s mortgage portfolio comprised 7,528 mortgages with an asset value of $1.42 billion as at April 1, 2014 as follows: Table 4.

HAJL

# OF MORTGAGES

PRINCIPAL BALANCE ($) MONTHLY INSTALLMENT ($)

145

76,744,685

1,612,207

USAID

1,658

226,382,161

2,916,582

GREATER PORTMORE

3,833

878,111,451

24,307,218

24,651,692

557,875

483

31,796,905

280,773

1,117

22,904,580

355,011

237

155,440,786

1,616,154

595,700

9,877

7,528

1,416,627,960

31,655,697

REFINANCE MINISTRY OF FINANCE MINISTRY OF WATER AND HOUSING OPERATION PRIDE KINGSTON PORTWORKERS/JMB

HOUSING AGENCY OF JAMAICA LIMITED

PORTFOLIO

Table 5. Summary of Mortgage Portfolio as at March 31, 2013 PORTFOLIO

# OF MORTGAGES

HAJL

PRINCIPAL BALANCE ($) MONTHLY INSTALLMENT ($)

205

94,097,880

1,944,103

USAID

1,675

228,133,425

2 ,940,196

GREATER PORTMORE

4,212

1,065,440,714

26,300,585

26,319,082

570,618

483

31,841,968

279,380

1,148

23,916,949

383,687

255

164,597,930

1,688,936

652,668

10,516

8,039

1,635,000,616

34,102,296

REFINANCE MINISTRY OF FINANCE MINISTRY OF WATER AND HOUSING OPERATION PRIDE KINGSTON PORTWORKERS/JMB

Tables 4 & 5 indicate that the number of accounts decreased by 511, moving from 8,039 at March 31, 2013 to 7,528 as at April 1, 2014. The principal balance also decreased by $218,372,656 for the same period. Following is a summary of the arrears for the periods April 1, 2013 and April 1, 2014: Table 6. PORTFOLIO HAJL

ARREARS AS AT April 1, 2014 ($)

VARIANCE ($)

3,751,727

6,168,244

(2,416,517)

461,578,280

490,574,232

(28,995,952)

GREATER PORTMORE

32,040,342

41,133,041

(9,092,699)

REFINANCE

29,095,892

31,216,509

(2,120,617)

MINISTRY OF FINANCE

58,721,187

61,772,413

(3,051,226)

MINISTRY OF WATER AND HOUSING

64,780,289

66,427,782

(1,647,493)

OPERATION PRIDE

58,007,953

63,630,983

5,623,030)

1,564,989

1,447,066

117,923

709,540,659

762,370,270

(52,829,611)

USAID

HOUSING AGENCY OF JAMAICA LIMITED

ARREARS AS AT April 1, 2013 ($)

KINGSTON PORTWORKERS/JMB

With the exception of Kingston Portworkers/JMB, the above table reflects increasing arrears balances for the other seven (7) schemes. The overall increase in arrears of $52,829,611 was due largely to increased arrears in the USAID schemes.

Sales Portfolio

Sales collections for the year amounted to $598,329,292. This amount reflects a negative variance of $1,712,358,033 below the budgeted amount of $2,310,687,325. The negative variance is due primarily to construction delays. Table 7. Summary of Sales Collections: APRIL 1, 2013 - MARCH 31, 2014 PROJECT WESTMEADE WILLOWS

TOTAL COLLECTION ($) 106,571,243

STADIUM GARDENS 3

51,011,166

COUNTRY CLUB 2

46,157,665

HILLS OF BOSCOBEL

142,107,777

WHITEHALL 3

119,165,897

BOURKESFIELD

15,900,900

RETIREMENT 2

5,567,298

GREEN POND

WHITEHALL 2

7,969,359

OAKGLADES

359,900

BARRETT HALL

6,129,135

LILLIPUT

2,020,243

BOSCOBEL VIEW (BROWNFIELD)

6,079,931

Table 8.

$ 2,500,000,000

$2,000,000,000

$1,500,000,000

2014 2013 2012

$1,0 00,000,000

$500,000,000

$0 TOTAL COLLECTED

PORTMORE VILLAS 2B EDEN PARK WENTWORTH

0 3,043,516 9000

DECREASE IN SALES COLLECTION ATTRIBUTABLE TO THE DELAY OF PROJECTS: - Hills of Boscobel - Whitehall Phase 3

TOTAL

86,236,262

598,329,292

Procurement Procedures Housing Agency of Jamaica Limited continues to comply with the Government of Jamaica Procurement Policies and Procedures. The Agency has made a distinct effort in maintaining its previous Level 1 compliance standard. This is evident in the Procedures for Testing Compliance Audit, carried out by the external auditors annually.

HOUSING AGENCY OF JAMAICA LIMITED

OTHER SCHEMES

- Belle Air 3.

Internal Audit The Internal Audit function is guided by a Charter, which underpins its objectivity and independence. The Charter is developed in accordance with the authoritative guidance promulgated by the Institute of Internal Auditors (IIA). The Department’s key focus is to provide reasonable assurance that risk management, control and governance systems are functioning as intended and will enable the organization’s objectives and goals to be met. Internal Audit aims to support the mission of the company by providing independent, objective assurance and advisory services designed to add value and enhance the efficiency and effectiveness of the company’s operations. Internal Audit also seeks to work with management and staff to ensure that the company’s assets are effectively utilized and safeguarded and its objectives are efficiently achieved. We seek to accomplish this by: •

Assisting management to assess the complex landscape of risk;

•

Performing evaluations of the effectiveness of the established control procedures; and

•

Providing recommendations to enhance the efficiency and effectiveness of those processes.

The Department reports to the Board through the Audit Committee and is guided by global standards and the Professional Practices Framework issued by the IIA. The Internal Audit Department’s terms of reference and annual audit plans were approved by the Audit Committee at the beginning of the year 2013-2014. During 2013-2014, the Internal Audit function focused on various company activities and operations, covering a variety of financial, operational, strategic and compliance related business processes. A formal Internal Audit plan was approved by the Audit Committee, and executed across the company’s operations using internal resources.

HOUSING AGENCY OF JAMAICA LIMITED

Human Resources The Agency experienced a series of changes this past year which resulted in staff numbers being reduced by 44, including two Managing Directors, Joseph Shoucair and Rosemarie Brown. HAJ is still in a process of transition and will continue to strengthen the team, people and capabilities to achieve the

mandate of becoming the Housing Provider of Choice in Jamaica. To ensure the team is ready and capable, HAJ will embark on a series of targeted training, as the Agency strives to create the best fit between its staff and the requirements of each function.

Public Relations Despite the challenges of the 2013-2014 financial year, the focus of the Public Relations effort continued to be building the awareness of the HAJ brand and increasing the appeal and trust in the Agency and its solutions. Continued focus was also placed on the Bernard Lodge Estates, St. Catherine housing development. On August 14, 2013, an Open House event for this development was held at the Agency’s head office which saw over 400 persons visiting throughout the day.

Two frontal views of the studio model unit at the Bernard Lodge Estates development in St. Catherine.

The Open House featured scaled versions of the studio and one-bedroom units along with a virtual tour of these housing options, as well as exhibits from the National Housing Trust, Jamaica National Building Society, Scotiabank Jamaica and Courts Jamaica. An outside broadcast was also aired live on RJR 94FM with callers making various queries about the development and on how to become a homeowner. This event was followed later in the year by the opening of the studio and one-bedroom model units on location at Bernard Lodge Estates, with furniture provided by Courts Jamaica.

HOUSING AGENCY OF JAMAICA LIMITED

For the financial year 2014-2015, greater focus will be placed on rebuilding the Agencyâ&#x20AC;&#x2122;s image and the expansion of a Public Education Programme focused on prospective landowners in Brownfield projects.

Strategic Objectives, Targets & Achievements The following table represents the Strategic Objectives, Targets & Achievements (in JMD) for the period: Table 9. OBJECTIVES

2012 - 2013 TARGETS

CASH 1

ACHIEVEMENTS

TARGETS

ACHIEVEMENTS

$ 1,136,466,764

$ 181,545,000

$ 1,827,029,370

$ 351,359,000

$ 159,423,493

$ 119,397,000

$ 136,028,768

($ 608,798,000)

700

573

1,200

688

805

2,895

937

HOUSING SOLUTIONS - STARTS

3,374

NIL

2,895

1,584

HOUSING SOLUTIONS - DELIVERED

2,215

2,086

1,085

155

OPERATING PROFIT MANAGING THE CONSTRUCTION OF WOODEN HOUSES UNDER THE GOJ/FFP PARTNERSHIP TRANSFER SPLINTER TITLES IN EACH OF THE SELECTED (28) BROWNFIELD PROJECTS UNDER THE JAMAICA TITLING PROGRAMME

1 Cash, cash equivalents and resale agreements

HOUSING AGENCY OF JAMAICA LIMITED

2013 - 2014

1,549,857.00

3,846,592.25

339,625.26

SENIOR MANAGER - PROJECT DEVELOPMENT & PROCUREMENT

SENIOR MANAGER - LEGAL SERVICES & COMPANY SECRETARIAT

SENIOR MANAGER - ENGINEERING & DESIGN

4,229,692.76

234,435.83

205,230.00

37,146.63

361,204.80

215,491.50

30,784.50

287,322.04

179,576.25

281,986.02

389,937.00

PERFORMANCE INCENTIVE [1]

975,720.00

162,620.00

823,792.82

325,240.00

829,139.26

628,734.04

162,620.00

975,720.00

601, 916.81

406,550.00

VALUE OF ASSIGNMENT OF MOTOR VEHICLE

2,222,365.39

2,058,515.03

1,223,486.54

1,496,942.15

1,666,967.34

5,874 ,80.97

1,176,609.89

1,620,194.98

46,600.00

7,766.66

46,600.00

7,766.66

46,600.00

7,766.66

13,333.33

3,132,099.53

OTHER ALLOWANCES [3]

OTHER RETIREMENT BENEFITS [2]

NONE

NON - CASH BENEFITS

7,708,813.98

3,468,043.47

1,600,258.43

6,575,132.02

2,137,188.50

6,360,163.60

3,947,268.94

7,202,483.80

6,930,369.43

5,464,782.78

404,263.51

11,935,425.91

TOTAL

HOUSING AGENCY OF JAMAICA LIMITED

[1] Maximum 15% of annual basic salary for Managing Director whereas Director & Senior Managers – maximum 35% of basic salary as applicable to all other employees. [2] Managing Director, Director & Senior Managers being contracted officers whose positions do not fall under the Company’s pension scheme receive a gratuity of 25% on their compensation package. [3] Clothing allowance as well as Acting Allowance for two (2) Senior Management positions.

SENIOR MANAGER - SALES REVENUE

1,033,911.78

3,786,672.50

SENIOR MANAGER - PROJECT IMPLEMENTATION

SENIOR MANAGER - PUBLIC RELATIONS & COMMUNITY DEVELOPMENT

3,023,446.20

978 ,39.92

4,449,453.52

SENIOR MANAGER - HUMAN RESOURCE & ADMINISTRATION

SENIOR MANAGER - MORTGAGE & ADMINISTRATION

SENIOR MANAGER - INTERNAL AUDIT

2,844,967.33

404,263.51

DIRECTOR - TECHNICAL SERVICES

SENIOR MANAGER - FINANCE & INFORMATION

8,383,443.05

SALARY

MANAGING DIRECTOR

POSITION OF SENIOR EXECUTIVE

Table 10. HAJ’s Annual Executive Compensation for the period April 1, 2013 to March 31, 2014 (in JMD)

Executive Compensation 23

Projections Projections of Key Financial & Operations Measures for FY 2014-2015 During fiscal year 2014-2015, it is projected that the Agency will deliver 1,178 completed housing solutions from six (6) schemes. Financing, which has been identified, is as follows: • • • •

Construction and other Loans from the National Housing Trust (NHT) - $318,600,379 Grant from the Government of Jamaica for the Jamaica Economical Housing Project $1,700,000,000 Credit Facility from NCB - $150,000,000 Completed Sales and Deposits - $2,829,855,419

It is projected that sales will be finalized on 1,300 solutions and deposits collected on 741 houses and lots. Dividends for FY 2013-2014

HOUSING AGENCY OF JAMAICA LIMITED

No dividend payments were made during the year.

FINANCIAL STATEMENTS MARCH 31, 2014

HOUSING AGENCY OF JAMAICA LIMITED

Financial Statements

4 HOUSING AGENCY OF JAMAICA LIMITED Statement of Profit or Loss and Other Comprehensive Income Year ended March 31, 2014 Note INCOME FROM LENDING AND DEVELOPMENT Lending and borrowing: Interest income from mortgages Interest income from other loans

2014 $'000

2013 $'000

133,425 922

152,096 1,746

134,347 ( 49,980)

Fees and interest expense on loans payable Net income from lending and borrowing

(

84,367

Sale of houses and lots - greenfield Cost of sales

230,142 (411,040)

Net (loss)/income from sale of houses and lots - greenfield Sale of houses and lots - brownfield Cost of sales Net loss from sale of houses and lots â&#x20AC;&#x201C; brownfield Loss from lending and development Other income: Fees for servicing loans Interest income from resale agreements (Loss)/gain on disposal of property, plant and equipment Foreign currency gains Sundry

153,842 57,252) 96,590

1,639,847 (1,448,008)

(180,898)

191,839

30,625 (285,600)

271,752 ( 748,790)

(254,975)

( 477,038)

(351,506)

( 188,609)

(

Total other income

1,618 9,307

12,708 9,958

67) 768 50,628

910 114,514

62,254

138,090

Loss from lending and development and other income

(289,252)

(

EXPENSES AND OTHER LOSSES Administrative and general expenses Maintenance of closed projects Impairment reversal

(489,495) ( 51,678) 221,637

( 493,971) ( 30,696) 694,583

(319,536)

169,916

(608,788)

119,397

Total operating expenses and other (losses)/gains (Loss)/profit for the year

50,519)

OTHER COMPREHENSIVE INCOME Item that may be transferred to profit or loss in future Change in fair value of available-for-sale investments

(

10)

112

Total comprehensive (loss)/income for the year

(608,798)

119,509

The accompanying notes form an integral part of the financial statements.

5 HOUSING AGENCY OF JAMAICA LIMITED Statement of Changes in Equity Year ended March 31, 2014

Balances at March 31, 2012

Share capital $'000 (Note 17)

Reserve fund $'000 (Note 18)

Capital Fair value Contributed Accumulated reserve reserve capital deficit $'000 $'000 $â&#x20AC;&#x2122;000 $'000 (Note 19) (Note 20)

629,159

1,286,429

129

1,671,462

Total $'000

(1,193,472)

2,393,707

Total comprehensive income for the year Profit for the year Other comprehensive income: Change in fair value of available-for-sale investments Total comprehensive income for the year

112

Balances at March 31, 2013

629,159

1,286,429

241

1,671,462

119,397

112

119,397

119,509

(1,074,075)

2,513,216

( 608,788)

Total comprehensive income for the year Loss for the year Other comprehensive income: Change in fair value of available-for-sale investments Total comprehensive loss for the year Balances at March 31, 2014

(

10)

(

10)

( 608,788)

( 608,798)

629,159

1,286,429

1,671,462

(1,682,863)

1,904,418

231

The accompanying notes form an integral part of the financial statements.

(

10)

6 HOUSING AGENCY OF JAMAICA LIMITED Statement of Cash Flows Year ended March 31, 2014 Note Cash Flows From Operating Activities (Loss)/profit for the year Adjustments: Interest income Interest expense Depreciation 14 Amortisation 13 BOJ interest written -back (Gain)/loss on disposal of property, plant and equipment Impairment charge/(reversal) - Development projects - Other receivables - Mortgage loans Operating loss before changes in other assets and other liabilities Loans receivable Other receivables Operation PRIDE development projects Jamaica Economical Housing projects in progress Other development projects in progress Income tax recoverable Trade and other payables Interest received Interest paid Net cash used by operating activities Cash Flows from Investing Activities Resale agreements and investments Land held for development Acquisition of intangible assets Acquisition of property, plant and equipment Proceeds of sale of properties, plant and equipment Net cash provided by investing activities Cash Flows from Financing Activities Deposits by purchasers Loans payable Deferred income Net cash provided by financing activities

13 14

2014 $'000 ( 608,788)

2013 $'000 119,397

( 143,654) 49,980 6,337 1,623 67 ( 234,776) 13,170

( 163,800) 57,252 5,401 5,270 ( 32,737) ( 910) ( 702,436) 2,338 ( 10,189)

( 916,041) 493,563 125,709 ( 235,440) (1,847,404) ( 55,837) ( 1,778) 93,788 133,897 ( 46,422)

( 720,414) 244,557 1,243,124 2,071,144 (2,690,036) (1,434,939) ( 2,713) ( 234,284) 156,219 ( 56,848)

(2,255,965)

(1,424,190)

66,706 5,026 1,223) 16,563) 164

162,292 360,193 ( 5,015) 1,813

( (

54,110 283,389 111,293 2,043,693 2,438,375

519,283 ( 66,586) ( 575,909) 1,425,414 782,919

Net increase/(decrease) in cash and cash-equivalents

236,520

( 121,988)

Cash and cash-equivalents at beginning of year

114,839

236,827

Cash and cash-equivalents at end of year

351,359

114,839

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014

Identification Housing Agency of Jamaica Limited (“the company”) 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, which is also its principal place of business. 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). These financial statements have been prepared on the basis that the company owns such assets and is liable for such loans although formal transfer to the company of ownership of loans receivable (note 7) and loans payable (note 16) has not been effected, as management is of the view that such transfer would be of no economic benefit to the company. The main activities of the company comprise development; construction of houses, lots and related infrastructure; sale of those houses and lots; administering loans secured by first mortgages on freehold properties; and performing administrative services on behalf of other mortgagees and property developers.

Basis of preparation (a)

Statement of compliance: The financial statements as at and for the year ended March 31, 2014 (“reporting date”), are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, and comply with the relevant provisions of the Jamaican Companies Act. New, revised and amended standards and interpretations that became effective during the year: Certain new, revised and amended standards and interpretations came into effect during the current financial year. The company has assessed them and has adopted those which are relevant to its financial statements, viz: The adoption of the amendment to IAS 1, Presentation of Financial Statements, entitled “IAS 1, Presentation of Financial Statements: Presentation of Items of Other Comprehensive Income”, led to the following changes in the financial statements: 

Items of other comprehensive income (OCI) that may be reclassified to profit or loss in the future are presented separately from those that would never be reclassified to profit or loss.



The title of the statement has changed from 'Statement of Comprehensive Income' to 'Statement of Profit or Loss and Other Comprehensive Income'.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 2.

Basis of preparation (continued) (a)

Statement of compliance (continued): New, revised and amended standards and interpretations that became effective during the year (continued): 

IFRS 13, Fair Value Measurement, establishes a single framework for measuring fair value and making disclosures about fair value measurements when such measurements are required or permitted by other IFRSs. It unifies the definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It replaces and expands the disclosure requirements about fair value measurements in other IFRSs, including IFRS 7. The adoption of the standard led to additional disclosures but did not have any significant impact on the measurements of the company’s assets and liabilities [note 27(f)].

New, revised and amended standards and interpretations not yet effective: At the date of authorisation of these financial statements, certain new and amended standards were in issue but were not yet effective and had not been early-adopted by the company. The company has assessed them and has determined that the following may be relevant to its operations: 

IFRS 9, Financial Instruments, is effective for annual reporting periods beginning on or after January 1, 2018. 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, available-for-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 at 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.



IFRIC 21, Levies, which is effective for annual reporting periods beginning on or after January 1, 2014, provides guidance on accounting for levies in accordance with the requirements of IAS 37, Provisions, Contingent Liabilities and Contingent Assets. The interpretation defines a levy as an outflow from an entity imposed by a government in accordance with legislation. It requires an entity to recognise a liability for a levy when and only when the triggering event specified in the legislation occurs.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 2.

Basis of preparation (continued) (a)

Statement of compliance (continued): New, revised and amended standards and interpretations not yet effective (continued): 

Improvements to IFRS, 2010-2012 and 2011-2013 Cycles, contain amendments to certain standards and interpretations and are effective for annual reporting periods beginning on or after July 1, 2014. The main amendments applicable to the company are as follows: -

IFRS 13, Fair Value Measurement, has been amended to clarify that issuing of the standard and consequential amendments to IAS 39 and IFRS 9 did not intend to prevent entities from measuring short-term receivables and payables that have no stated interest rate at their invoiced amounts without discounting, if the effect of not discounting is immaterial.

IAS 16, Property, Plant and Equipment and IAS 38, Intangible Assets, have been amended to clarify that, at the date of revaluation: (i)

the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount of the asset, and the accumulated depreciation (amortization) is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset after taking account of accumulated impairment losses; or

(ii) the accumulated depreciation (amortization) is eliminated against the gross carrying amount of the asset. -

IAS 24, Related Party Disclosures, has been amended to extend the definition of ‘related party’ to include a management entity that provides key management personnel services to the reporting entity, either directly or through a group entity. For related party transactions that arise when key management personnel services are provided to a reporting entity, the reporting entity is required to separately disclose the amounts that it has recognized as an expense for those services that are provided by a management entity; however, it is not required to ‘look through’ the management entity and disclose compensation paid by the management entity to the individuals providing the key management personnel services.

The Company is assessing the impact that the new, revised and amended standard and interpretations will, when they become effective, have may have on it financial statements. (b)

Basis of measurement: The financial statements are prepared on the historical cost basis, except for available-forsale 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.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 2.

Basis of preparation (continued) (d)

Accounting estimates and judgements: The preparation of the financial statements in accordance with IFRS requires management to, based on certain assumptions, make estimates that affect the reported amounts of, and disclosures relating to, assets, liabilities, contingent assets and contingent liabilities at the reporting date and the income and expenses for the year then ended. Actual amounts could differ from those estimates. The estimates, and the assumptions underlying them, are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Management is sometimes required to make judgements in applying IFRSs. For the purpose of these financial statements, prepared in accordance with IFRS, judgement refers to the informed identification and analysis of reasonable alternatives, considering all relevant facts and circumstances, and the well-reasoned, objective and unbiased choice of the alternative that is most consistent with the agreed principles set out in IFRS. (i)

Key sources of estimation uncertainty Estimates that had a significant effect on these financial statements or that give rise to a significant risk of material adjustment in the next financial year relate to the following: (1)

Loans and other receivables In determining amounts to be recorded for impairment of loans and other receivables, management makes assumptions in assessing whether certain facts and circumstances, such as repayment default and adverse economic conditions, are indicators that there may be a measurable decrease in the estimated future cash flows from outstanding balances. Management also makes estimates of the likely estimated future cash flows from impaired receivables, as well as the timing of cash flows. If the receivables are individually significant the amount and timing of cash flows are estimated for each receivable individually. Where indicators of impairment are not observable on individually significant receivables, or on a group or portfolio of receivables that are not individually significant, management estimates the impairment by placing each receivable or group of receivables in a class according to their characteristics, such as credit risks, and applying appropriate factors, such as historical loss experience, to each class with similar characteristics.

(2)

Operation Pride and other development projects The recoverability of project costs is determined principally on the basis of expected recovery from sale of lots and housing units. An estimate is made of expected sales price based on the location of projects and on certain assumptions, including assumptions about market demand and current market prices. Where management expects that a project will not be successfully completed, the carrying amount is fully written off.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 2.

Basis of preparation (continued) (d)

Accounting estimates and judgements (continued): (i)

Key sources of estimation uncertainty (continued) (2)

Operation Pride and other development projects (continued) Because there may be significant differences between actual outcomes and the assumptions made by management in estimating the likelihood of successful completion of projects, the costs to complete the projects, the expected sales proceeds, and other relevant factors, the carrying amounts of projects, based on such estimates, may change significantly from one reporting date to the next.

The use of assumptions makes uncertainty inherent in such estimates. (ii)

Critical judgements in applying the companyâ&#x20AC;&#x2122;s accounting policies There were no critical judgements in applying the companyâ&#x20AC;&#x2122;s accounting policies

(e)

Going concern: The preparation of the financial statements in accordance with IFRS assumes that the company will continue in operation for the foreseeable future. This means, in part, that the statement of profit or loss and other comprehensive income and the statement of 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. The company reported a loss for the year and, as at the reporting date, had an accumulated deficit of $1,682,863,000 (2013: $1,074,075,000). In addition, although new funding is anticipated in the foreseeable future, agreements for such funding are not in place, and, further, the company has not been given any commitment of continuing financial support by Government of Jamaica. However, shortly before the reporting date the Minister of Transport, Works and Housing appointed a new Board of Directors. The new Board has made the financial stability of the company a priority. A strategic plan and budget have been developed indicating that Management has plans to lift the profitability of the company and to generate sufficient cash flow to meet the liabilities of the company. The Board and management are of the view that they will be able to raise a substantial portion of the funding required for normal operations, and, accordingly, believe that preparation of the financial statements on the going concern basis continues to be appropriate.

Significant accounting policies (a)

Cash and cash-equivalents: Cash comprises cash in hand and demand and call deposits. Cash equivalents comprise short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments (these include collections held in trust for mortgagors and property developers, and short-term deposits and other monetary investments with original maturities of three months or less from the acquisition date). Bank overdrafts that are repayable on demand and form an integral part of the companyâ&#x20AC;&#x2122;s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Cash and cash equivalents are carried at amortised cost.

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 3.

Significant accounting policies (continued) (b)

Resale agreements: Resale agreements represent purchases of securities by the company under agreements to resell them on specified dates, at specified prices. They are accounted for as short-term collateralised lending, are classified as loans and receivables, and are carried in the statement of financial position at amortised cost. The difference between the purchase and resale considerations is recognised over the period of the agreement using the effective interest method and is included in interest under other income.

(c)

Other receivables: Other receivables are stated at amortised cost, less impairment losses.

(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. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss. Property, plant and equipment are depreciated/amortised on the straight-line method at annual rates 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 life. The estimated useful lives 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. (f)

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.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 3.

Significant accounting policies (continued) (g)

Revenue recognition: Revenue is income that arises in the course of the ordinary activities of the company. (i)

Income from the sale of properties is recognised when full sale consideration has been received, or is 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.

(ii) Interest income is recognised in profit or loss for all interest-earning instruments on the accrual basis using the effective interest method, except as described in the following paragraph. The effective interest rate is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial asset to its carrying amount. The effective interest rate is established on initial recognition of the financial asset and is not revised subsequently. Interest income includes coupons earned on fixed income investments, accretion of discount on treasury bills and other discounted instruments, and amortisation of premium on instruments bought at a premium. Where collection of interest income is considered doubtful, i.e., impaired, they are written down to their recoverable amounts and interest income is thereafter recognised based on the rate of interest that was used to discount the future cash flows for the purpose of measuring the recoverable amount. Future interest receipts are taken into account in estimating future cash flows from the instrument; if no contractual interest payments are expected to be collected, then the only interest income recognised is the unwinding of the discount on those cash flows expected to be received. (h)

Operation PRIDE development projects: Operation PRIDE development projects consist principally of expenditure related to infrastructure development on land (previously occupied as informal settlements) provided by the Government of Jamaica to the company for the purpose. Before the take-over of the projects by the company, monies were advanced to various Industrial and Provident Societies for expenditure on the projects. It is intended that project costs be recovered from the sale of lots at prices determined by the company. Costs accumulated on each project 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 exceed amounts considered recoverable from subsequent sale of serviced lots to beneficiaries, a provision is made for impairment.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 3.

Significant accounting policies (continued) (i)

Jamaica Economical Housing development projects: Jamaica Economical Housing development projects are carried at the expenditure to date on certain former Operation PRIDE projects which were transferred to the Chinese Cluster Programme. In assessing the recoverability of the amount expended to date, account is taken of the grant funding provided by Government of Jamaica [notes 9(c) and 17] and of the anticipated proceeds of sales to be received from beneficiaries. Any expenditure in excess of these amounts is provided for.

(j)

Other development projects in progress: Other development projects in progress consist of costs incurred to date on various housing (â&#x20AC;&#x153;green fieldâ&#x20AC;?) projects and are recognised at cost less provision for impairment. Costs include the cost of land, construction material, labour and an appropriate proportion of relevant overheads.

(k)

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. Gains and losses arising from fluctuations in exchange rates are included in profit or loss.

(l)

Loans receivable and allowances for impairment losses: Loans receivable are stated net of allowances for credit losses. Loans receivable 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 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&#x20AC;&#x2122;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 contractually required payments of the principal and interest. The impairment assessment is done on a collective 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.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 3.

Significant accounting policies (continued) (m)

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. Available-for-sale investments comprise equity securities and 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.

(n)

Impairment: The carrying amounts of the companyâ&#x20AC;&#x2122;s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists for any asset, that assetâ&#x20AC;&#x2122;s recoverable amount is estimated at the 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 in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that has been recognised 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 companyâ&#x20AC;&#x2122;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.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 3.

Significant accounting policies (continued) (n)

Impairment (continued): (ii)

Reversals of impairment: 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. 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 assetâ&#x20AC;&#x2122;s carrying amount does not exceed the carrying amount that would have been determined, if no impairment loss had been recognised.

(o)

Income tax: Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income, in which case it is recognised in other comprehensive income. Current income 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 income tax is provided for all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The amount of deferred income tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using enacted tax rates in existence at the reporting date. A deferred income 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.

(p)

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; they also include post-employment benefits, such as pensions and medical care and termination benefits.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 3.

Significant accounting policies (continued) (p)

Employee benefits (continued): (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. Post-retirement 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 employee’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 profit or loss when due.

(q)

Land held for development: Land held for development includes land which has been contributed by Government of Jamaica. These lands are initially recognised at fair value for housing development projects (and treated as a capital contribution). The fair value has been determined by professional property valuators. An amount equivalent to the fair value is recognised as a capital grant and presented as contributed capital (note 21).

(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 credit: Grant funding received to finance certain development projects is shown as “Deferred Credit” in the statement of financial position. When the related project expenditure is incurred it is carried as development in progress; when the development is completed and the housing solutions (lots or houses, and related infrastructure) are sold or otherwise handed over to beneficiaries, a relevant portion of the development and construction expenditure is transferred to profit or loss, and an equivalent amount transferred from deferred credit to profit or loss. The amounts received are, until they are transferred to income, presented as a liability as it is the company’s policy to regard itself as obligated to the donor until each relevant project is completed in accordance with the donor’s stipulations, at which time a qualifying amount is transferred to profit or loss.

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 4.

Cash and cash-equivalents 2014 $'000 Collections held in trust for mortgagors and property developers Other cash and bank balances

2013 $'000

108 351,251

108 114,731

351,359

114,839

Resale agreements At March 31, 2014, the company had no resale agreements; at the previous reporting date, the fair value of securities underlying resale agreements was $71,464,000.

Loans receivable The formalities of the transfer to the company of ownership of some loans receivable are still in process (see note 1). Loans receivable comprise: 2014 2013 $'000 $'000 Residential mortgage loans [see (a) below]: Principal 1,171,369 1,379,155 Interest 88,606 76,814 Staff loans: Residential mortgage loans at 3% Other loans at 3% Less: Staff loan re-measurement Other long-term loans [see (b) below] Infrastructure development loan [see (c) below] Gross loans receivable Less: Allowance for impairment Residential mortgage loans Interest receivable Other long-term loans Infrastructure development loan Net loans receivable

(

1,259,975

1,455,969

7,924 7,128

18,357 13,281

15,052 4,567)

(

31,638 4,021)

10,485

27,617

22,606 170,650

25,501 170,650

193,256

196,151

1,463,716

1,679,737

( 98,250) ( 128,608) ( 9,537) ( 72,122)

( 94,627) ( 128,608) ( 9,537) ( 62,706)

( 308,517)

( 295,478)

1,155,199

1,384,259

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 6.

Loans receivable (continued) (a)

The residential mortgage loans, secured by first mortgages on houses, are as follows: 2014 2013 $'000 $'000 4% 10, 13 and 15% 13% 11½% 7½% 18% 7% 6-10% 6-10% 19% 10, 10½ and 15% 10% 10%, 12%

(i)

Thirty and forty year loans Twenty year loans Twenty-five year loans Twenty-five year loans Twenty year loans Twenty to twenty-five year loans Twenty-five year loans Thirty year loans [see (i) below] Twenty to twenty-five year loans Twenty-five year loans Twenty-five year loans Ten year loans Twenty-five year loans

126,487 49,541 474,407 2,635 416 46 172,369 32,606 5,372 906 300,008 582 5,994

132,630 52,664 561,878 5,320 416 96 219,914 33,360 5,385 1,137 359,372 598 6,385

1,171,369

1,379,155

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. No provision for loan losses has, therefore, been made for amounts up to $15,000,000 (2013: $15,000,000) as recovery up to that amount is expected from the Government of Jamaica.

(b)

Other long-term loans bear interest at 10% and 13% per annum, and are repayable from the date of disbursement in equal 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.

(d)

Loans receivable are due for collection from the reporting date as follows: 2014 $'000 Within 3 months Over 3 months to 1 year Over 1 year to 3 years Thereafter

2013 $'000

331,043 168,517 50,571 918,152

322,222 170,953 53,613 1,136,970

1,468,283

1,683,758

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 6.

Loans receivable (continued) (e)

The credit quality of loans receivable as at the reporting date is measured by the extent to which the loans are past due, as follows:

Not past due Past due 0-30 days Past due 31-60 days Past due 61-90 days Over 90 days

2014 $’000

2013 $’000

1,080,315 8,684 11,380 36,002 331,902

1,306,278 8,479 11,167 32,423 325,411

1,468,283

1,683,758

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)

Allowance for impairment – loans receivable: 2014 $'000

2013 $'000

295,478 13,039 -

305,667 1,898 ( 12,087)

13,039

( 10,189)

308,517

295,478

2014 $'000

2013 $'000

National Housing Trust (NHT) Amounts due from sale of properties Interest receivable Staff loans and advances Other accounts receivable and advances

40,099 103,829 9,222 1,872 11,024

40,099 214,366 11,257 2,273 25,795

Gross receivables

166,046

293,790

Less: Allowance for impairment: National Housing Trust Interest receivable Amounts due from sale of properties Other accounts receivable and advances

( 40,099) ( 9,222) ( 13,692) ( 7,705)

( 40,099) ( 9,890) ( 17,511) ( 3,218)

Total allowance for impairment

( 70,718)

95,328

223,072

At beginning of the year Charge for impairment during the year Reversal of allowance no longer required Net charge / (reversal) for year (note 22) At end of the year 7.

Other receivables

Net receivables

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 7.

Other receivables (continued) The movement in the allowance for impairment is as follows:

2014 $'000

2013 $'000

At beginning of the year Charge for the year

70,718 -

68,382 2,336

At the end of the year

70,718

Housing development projects - Operation PRIDE (a)

Expenditure on Operation PRIDE Projects

3,281,865 254,246 248

5,306,797 388,488 -

( 285,241) ( 2) 308

(2,385,750) ( 27,670) -

At end of year Less: Allowance for impairment [see (d) below]

3,251,424 (1,044,326)

3,281,865 (1,342,361)

2,207,098

1,939,504

Deposits by purchasers

At beginning of year Collections during the year Deposits relating to units transferred At end of year (c)

2013 $'000

At start of year Expenditure during the year Interest charges Transfer of costs relating to units and lots transferred to beneficiaries Adjustments Sales and marketing expenses

Net development expenditure (b)

2014 $'000

2013 $'000

894,350 47,325 ( 30,625)

1,077,223 88,879 ( 271,752)

911,050

894,350

Expenditure net of deposits

Expenditure, as above Deposits, as above Excess of net development expenditure over collections

2014 $'000

2013 $'000

2,207,098 ( 911,050)

1,939,504 ( 894,350)

1,296,048

1,045,154

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 8.

Housing development projects - Operation PRIDE (continued) (d)

The movement in the allowance for impairment is as follows: 2014 $'000

2013 $'000

At beginning of year Reversal of allowance no longer required (note 22)

(1,342,361) 298,035

(2,044,797) 702,436

At end of year

(1,044,326)

(1,342,361)

2014 $'000

2013 $'000

At start of year Expenditure during the year Adjustments

3,490,564 1,847,239 165

1,227,481 2,263,083 -

At end of year

5,337,968

3,490,564

2014 $'000

2013 $'000

4,537,567 343,070 457,331

2,692,789 342,505 455,270

5,337,968

3,490,564

Housing development projects - Jamaica Economical Housing (a)

Project expenditure

The specific projects involved are as follows:

Belle Air 1, 2, and 3 Mount Edgecombe 4 and 5 Luana Gardens

These projects, which were previously under Operation PRIDE, are now being financed under the Chinese Cluster programme. Under this programme, the Government of Jamaica, from the proceeds of a loan obtained from the Export Import Bank of China, makes grants to the company to finance these projects [see notes 9(c) and 17]. (b)

Deposits by purchasers 2014 $'000

2013 $'000

At beginning of year Collections during the year

202,447 38,916

201,114 1,333

At end of year

241,363

202,447

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 9.

Housing development projects - Jamaica Economical Housing (continued) (c)

Grant funding received

At beginning of year Grant funding drawn down during the year At end of year (note 17) (d)

2013 $'000

2,611,293 1,833,682 4,444,975

1,053,989 1,557,304 2,611,293

Expenditure net of grant funding received Expenditure, as above Grant funding, as above

5,337,968 (4,444,975)

Excess of expenditure over grant funding 10.

2014 $'000

892,993

3,490,564 (2,611,293) 879,271

Other development projects in progress (a)

Expenditure on projects

2014 $'000

2013 $'000

Accumulated expenditure at start of year Expenditure during the year Interest charges Grants utilised Transfer of costs relating to units and lots sold Adjustments

3,332,952 426,423 40,897 ( 411,033) ( 350)

1,968,823 1,277,862 ( 74,431) (1,448,008) 1,608,706

Accumulated expenditure at end of year Less: Allowance for impairment (note 22)

(

3,388,889 63,359)

3,332,952 -

3,325,530

3,332,952

Net development in progress (b)

The specific projects involved are as follows:

Westmeade Willows I Boscobel 2 Country Club 2 Stadium 3 Whitehall Frazers and Ebony View Other development costs

[see (i) below] [see (ii) below] [see (iii) below] [see (iv) below] [see (v) below] [see (vi) below] [see (vii) below]

Allowance for impairment charge for year and balance at end of year

(

2014 $'000

2013 $'000

690,936 26,195 2,491,468 28,659 151,631

101,329 891,375 36,329 9,434 2,129,754 28,659 136,072

3,388,889

3,332,952

63,359) 3,325,530

3,332,952

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 10.

Other development projects in progress (continued) (b)

The specific projects involved are as follows (continued): (i)

The project was completed and closed during the year.

(ii)

The development is being financed by a 9% loan from National Housing Trust and is secured by the housing units being constructed. The loan will be repaid from the sale of these units.

(iii) The development was financed by a 8.57% loan from National Commercial Bank Limited and was secured by the housing units being constructed. The loan was repaid from the sale of these units during the year. (iv)

The development is being financed by a 9% loan from the National Housing Trust and is secured by the lots and housing solutions being constructed. The loan will be repaid from the sale of the lots and solutions.

(v)

The development is being financed by a 9% loan from National Housing Trust and is secured by the housing units being constructed. The loan will be repaid from the sale of these units.

(vi)

This represents cost incurred to date on developments under joint venture arrangements.

(vii) This represents developments by the company at Porto Bello 2, Grange Pen, Greater Retirement, Bernard Lodge, Shooters, Eden Park II, West Albion 2, Mona, Portmore Villa 2B and Bourkesfield. (c)

Deposits by purchasers: 2014 $'000 At beginning of year Collections during the year Deposits relating to units transferred to beneficiaries

(d) 11.

2013 $'000

1,219,063 457,915 ( 230,142)

1,121,007 1,737,903 (1,639,847)

At end of year

1,446,836

1,219,063

Net development in progress, per (a) above Deposits by purchasers, per (c) above

3,325,530 1,446,836

3,332,952 1,219,063

Investment

Available for sale: Quoted equity

2014 $'000 76

2013 $'000 86

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 12.

Land held for development

2014 $'000

2013 $'000

1,490,843 5,026) -

1,851,036 66,753 ( 426,946)

Balance at end of year

1,485,817

1,490,843

Broken down as: Lands held for development [see (a) below] Pre-construction costs [see (b) below] Jointly controlled operations in progress [see (c) below]

1,296,930 44,967 143,920

1,308,925 37,998 143,920

1,485,817

1,490,843

Balance at beginning of year Development costs incurred Land transferred without charge as project subsidy

(

(a)

This represents lands acquired through the Ministry of Housing and with funds from Tourism Enhancement Fund as well as lands contributed by the Government of Jamaica for the development of housing projects (see note 20).

(b)

This represents pre-construction costs of development of lands held for the purpose stated in (a) immediately above.

(c)

This represents amounts expended in respect of Bushy Park 2, Luana 2 and Porto Bello 2 which are being developed under jointly controlled operations as follows:

Land contributed (at cost) Cash expenditure

2014 $'000

2013 $'000

91,500 52,420

143,920

For these projects, surpluses or losses are shared 50:50. The joint ventures for the Bushy Park 2 and Luana 2 developments are with the National Housing Trust, while that for the Porto Bello 2 development is with Seal Investments Limited. (d) 13.

Titles to all land held for development are registered in the name of the Minister of Housing who holds them on behalf of the company.

Intangible asset - software

Cost: At beginning of year Additions At end of year Amortisation: At beginning of year Charge for the year At end of year Net book value: March 31, 2014

2014 $'000

2013 $'000

24,361 1,223

24,361 -

25,584

24,361

23,284 1,623

18,014 5,270

24,907

23,284

677

1,077

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 14.

Property, plant and equipment

Cost: March 31, 2012 Additions Disposals

Freehold land and buildings $'000

Computers $'000

Office furniture and fixtures $'000

Motor vehicles $'000

Equipment $'000

Total $'000

54,600 1,491 -

14,296 2,841 -

9,861 497 -

10,212 ( 4,212)

13,473 186 ( 449)

102,442 5,015 ( 4,661)

March 31, 2013 Additions Disposals

56,091 -

17,137 2,740 ( 848)

10,358 497 ( 155)

6,000 10,525 -

13,210 2,801 ( 15)

102,796 16,563 ( 1,018)

March 31, 2014

56,091

19,029

10,700

16,525

15,996

118,341

22,064 928 -

9,541 1,035 -

8,478 564 -

6,832 1,204 ( 3,286)

8,638 1,670 ( 472)

55,553 5,401 ( 3,758)

22,992

10,576

9,042

4,750

9,836

57,196

Depreciation: March 31, 2012 Charge for the year Eliminated on disposals March 31, 2013 Charge for the year Eliminated on disposals

941

(

2,013 628)

(

468 152)

1,415 -

(

1,500 7)

(

6,337 787)

March 31, 2014

23,933

11,961

9,358

6,165

11,329

62,746

Net book values: March 31, 2014

32,158

7,068

1,342

10,360

4,667

55,595

March 31, 2013

33,099

6,561

1,316

1,250

3,374

45,600

March 31, 2012

32,536

4,755

1,383

3,380

4,835

46,889

Freehold land and buildings include land costing $12,455,000 (2013: $12,455,000). A revaluation of certain of the companyâ&#x20AC;&#x2122;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&#x20AC;&#x2122; cost. 15.

Trade and other payables

Accrued charges Interest payable Staff related accruals and statutory liabilities Project related expenses Other payables

2014 $'000

2013 $'000

77,651 12,489 35,337 306,100 737,588

55,266 8,931 54,418 521,146 432,058

1,169,165

1,071,819

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 16.

Loans payable The formalities of the transfer to the company of the obligation under certain loans payable are still in process (see note 1); the loans payable are nevertheless included in these financial statements, as follows: 2014 2013 $'000 $'000 National Housing Trust (â&#x20AC;&#x153;NHTâ&#x20AC;?): 5% loan [see (a) below] 8% loan [see (b) below] 3% loan [see (c) below] 3% loan [see (d) below] 3% loan [see (e) below] 8% loan [see (f) below] 9% loan [see (g) below] 9% loan [see (h) below] 5% loan [see (i) below] 9% loan [see (j) below] 5% loan [see (k) below] 3.25% loan [see (l) below]

Ministry of Housing and Water 4 - 8% [see (m) below] Loan - Ministry of Finance and the Public Service [see (n) below] PanCaribbean Finance Limited [see note (o) below] Alliance Finance Limited [see note (p) below] Accountant General [see note (q) below]

449,210 34,070 32,742 232,787 253,905 7,892 88,619 571,234 16,129 806,039 176 133,070

489,785 41,717 41,757 310,722 325,820 7,208 135,741 426,183 63,118 663,070 230 -

2,625,873

2,505,351

188

100

12,760 107,777

7,930 14,059 107,777

2,746,698

2,635,405

2014 $'000 Comprising - current and past due portions - long-term portions

2013 $'000

1,820,590 926,108

1,502,157 1,133,248

2,746,698

2,635,405

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 16.

Loans payable (continued) (a)

This loan relates to the construction of the Greater Portmore Project (GPP). 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 5% per annum. Repayment is on a monthly basis.

(b)

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, with interest payable monthly at 8% per annum.

(c)

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.

(d)

This loan is secured by a letter of undertaking from the Ministry of Finance and 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.

(e)

This loan is secured by $1.405 billion of GPP mortgages, and the repayment period was extended to 20 years commencing August 2002 and ending in 2022.

(f)

This is a revolving loan, secured by the deposit of splinter titles for the Whitehall 2 and Eden Park land development. It was specifically obtained to fund new Operation PRIDE projects. The loan is being repaid from sales proceeds.

(g)

This loan is secured by a first legal mortgage over the project lands and was obtained to finance the Stadium Gardens Phase 3 development project. The interest rate is 9% per annum; it is expected to be repaid from sales proceeds.

(h)

This loan is secured by a first legal mortgage over certain project lands and was obtained to finance the Whitehall 3 development project. The interest rate is 9% per annum. The loan is expected to be repaid from sales proceeds.

(i)

This loan is secured by a first legal mortgage over certain project lands and was obtained to finance the Westmeade development project. The interest rate is 5% per annum. The loan is expected to be repaid from sales proceeds.

(j)

This loan is secured by a first legal mortgage over certain project lands and was obtained to finance the â&#x20AC;&#x2DC;Hills of Boscobelâ&#x20AC;&#x2122; development project. The loan is expected to be repaid from sales proceeds.

(k)

The loan is being repaid in quarterly instalments and is scheduled to be fully repaid by March 2016.

(l)

This loan was obtained for nine months to finance the Whitehall 3 housing development. The loan bears an interest rate of 5% and is due for repayment in September 2014.

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 16.

17.

Loans payable (continued) (m)

The loans were secured by mortgages; the repayment period has not yet been specified but this had been assumed to be over the twenty five-year life of the related mortgages which ended in 2010.

(n)

The loan is repayable to the Ministry of Finance and the Public Service. The interest rate, repayment date and other provisions of the loan have not yet been determined.

(o)

This loan was repaid in full during the financial year.

(p)

This represents insurance premium financing for mortgage creditor life insurance. The loan bears interest at 3.25% per annum and is repayable December 2014.

(q)

This represents amounts paid on the company’s behalf by the Accountant General on the Commonwealth Development Corporation loan. The loan is interest-free and the repayment date has not been fixed.

Deferred credit 2014 GOJ - Other $'000

TEF $'000

UDC $'000

JEHP $'000

At beginning of year Funds received during the year

368,755 19,061

191,775 46,715

2,611,293 1,833,682

389,957 144,235

3,561,780 2,043,693

At end of year

387,816

238,490

4,444,975

534,192

5,605,473

TEF $'000

UDC $'000

JEHP $'000

At beginning of the year Funds received during the year Projects closed during the year At end of the year

457,249 89,152 55,677 102,623 (144,171) 368,755

191,775

2013 GOJ -Other $'000

Total $'000

1,053,989 1,557,304 -

535,976 (146,019)

2,136,366 1,715,604 ( 290,190)

2,611,293

389,957

3,561,780

“Deferred credit” refers to grant funding received from the Tourism Enhancement Fund (“TEF”), Government of Jamaica (“GOJ”) and Urban Development Corporation (“UDC”) to assist in the funding of certain ‘brownfield’ projects [see notes 8 and 9]. GOJ entered into a Framework Agreement with the Government of China (“GOC”) under which GOC made a loan to GOJ at a concessionary rate of interest. GOJ then gave the proceeds of this loan as a grant to the company for the development of housing solutions under the Chinese Cluster Programme.

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 18.

Share capital

Authorised, issued and fully paid: 200 ordinary shares of no par value

2014 $'000

2013 $'000

*The actual amount is $200; it is shown as $Nil due to rounding as these financial statements are presented to the nearest thousand dollars. 19.

Reserve fund Pursuant to Article 98 of the companyâ&#x20AC;&#x2122;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 Nil% (2013: Nil %). 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 bonuses. It may also be used for other purposes for which the profits of the company may lawfully be applied.

20.

Capital reserve This comprises the net surplus of the book values of assets over liabilities arising on the transfer to the company, and merger of the operations, of the entities mentioned in note 1 and adjustments arising from revaluation of certain property, plant and equipment.

21.

Contributed capital This represents the value of lands contributed by the Government of Jamaica for housing development projects [note 12(a)].

22.

Impairment (charge)/reversal 2014 $'000 Loans receivable (note 6) Other receivables (note 7) Operation PRIDE projects [note 8(d)] Other development projects [note 10(a)] Net impairment reversal for year

( 13,039) 298,035 ( 63,359) 221,637

2013 $'000 (

10,189) 2,336 702,436 694,583

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 23.

(Loss)/ profit for the year The following are among the items that have been charged in arriving at the (loss)/profit for the year:

Directors' emoluments [note 26(d)]: Fees Management remuneration [included in staff costs (note 25)] Auditors' remuneration Depreciation and amortisation 24.

2014 $'000

2013 $'000

2,530 11,935 8,665 7,960

2,030 14,722 7,755 10,671

Income tax Taxation losses, subject to agreement by the Commissioner General, Tax Administration Jamaica, available for set-off against future taxable profits, amount to approximately $3,879,469,000(2013: $4,262,450,000) as at the reporting date. Deferred tax asset of $1,293,156,000 (2013: $1,420,817,000) in respect of taxation losses has not been recognised, as management does not expect that in the foreseeable future sufficient future taxable profits will be available against which the asset will be utilised.

25.

Staff costs and numbers The average number of persons employed full-time during the year was 99 (2013: 121). The costs for these employees were as follows:

Compensation: Salaries Redundancy Statutory payroll contributions Pension scheme contributions (note 28) Gratuity and incentive Other costs: Training and development Staff welfare Other benefits

2014 $'000

2013 $'000

186,085 40,870 29,217 15,904 49,762

223,486 764 30,628 18,909 23,929

321,838

297,716

701 2,084 43,022

1,797 1,759 54,631

367,645

355,903

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 26.

Related party balances and transactions (a)

Definition of related party: A related party is a person or entity that is related to the company. (i)

(ii)

A person or a close member of that personâ&#x20AC;&#x2122;s family is related to the company if that person: 1)

has control or joint control over the company;

has significant influence over the company; or

is a member of the key management personnel of the company.

An entity is related to the company if any of the following conditions applies: 1)

The entity and the company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).

Both entities are joint ventures of the same third party.

One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

The entity is a post-employment benefit plan for the benefit of employees of either the company or an entity related to the company.

The entity is controlled, or jointly controlled by a person identified in (i).

A person identified in (i)(1) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

A related party transaction is a transfer of resources, services or obligations between the company and related parties, regardless of whether a price is charged. (b)

The statement of financial position includes the following balances with related parties in the ordinary course of business:

Trade and other receivables: National Housing Trust Ministry of Water and Housing Jamaica Mortgage Bank Loans receivable: Director Ministry of Finance & Planning

2014 $'000

2013 $'000

40,099 6,691 587

40,099 10,444 154

1,382 7

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 26.

Related party balances and transactions (b)

The statement of financial position includes the following balances with related parties in the ordinary course of business (Continued): 2014 $'000

(c)

2013 $'000

Operation PRIDE development project: Ministry of Water and Housing

415,383

266,104

Other development project costs: Ministry of Water and Housing Tourism Enhancement Fund Urban Development Corporation Government of Jamaica

28,659 156,591 255,021 19,061

28,659 137,757 200,112 18,834

459,332

385,362

Trade and other payables: Inland Revenue National Housing Trust Ministry of Water and Housing Bay Farm National Land Agency

13,131 685 120,178 562 10,000

9,101 1,494 124,314 527 10,000

Loans payable: Ministry of Water and Housing National Housing Trust Accountant General

188 2,492,803 107,777

188 2,505,350 107,777

The statement of profit or loss and other comprehensive income includes the following income earned, and expenses incurred, in transactions with related parties, in the ordinary course of business:

Income: Fees for servicing loans: Ministry of Water and Housing Expense: Fees and interest expense on loans: National Housing Trust

2014 $'000

2013 $'000

1,618

12,708

45,160

40,661

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 26.

Related party balances and transactions (continued) (d)

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the company, directly or indirectly, including any director. The directors and two senior executives of the company are its "key management" personnel. Compensation for such persons was as follows:

Directors' emoluments (note 23): Fees Management remuneration Other key management personnel - short-term employee benefits included in staff costs

27.

2014 $'000

2013 $'000

2,530 11,935

2,030 14,722

13,173

13,117

27,638

29,869

Financial risk management (a)

Overview The company has exposure to the following risks from its use of financial instruments:   

credit risk liquidity risk market risk

This note presents information about the company’s exposure to each of the above-listed risks, the company’s objectives, policies and processes for measuring and managing each risk, and the company’s management of capital. Further quantitative disclosures are included throughout the financial statements. 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 three committees -Audit, Finance and Projects - 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.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 27.

Financial risk management (continued) (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, trade and other receivables cash and cash-equivalents 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. Lending activity is confined to either ‘brown-field’ or ‘green-field’ loans. ‘Brown-field’ loans are those in schemes which are heavily squatted and in volatile areas, while ‘green-field’ loans are not. Collateral and other credit enhancements held against financial assets The company holds collateral against credits to borrowers, primarily in the form of mortgages over properties. Estimates of fair values are based on value of collateral assessed at the time of borrowing and are generally not updated except when credits to borrowers are individually assessed as impaired. Collateral generally is not held over balances with banks or broker/dealers, except when securities are held under resale agreements. Collateral is generally not held against investment securities, and no such collateral was held at the reporting date. The fair value of collateral held against resale agreements is included at note 5. The fair value of collateral held against loans to borrowers is not readily available. 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 loans. 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.

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 27.

Financial risk management (continued) (b)

Credit risk (continued): (i)

Loans receivable (continued): Loans with renegotiated terms Loans with renegotiated terms are loans that have been restructured due to deterioration in the borrowers’ 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 had no renegotiated loans at the reporting date (2013: none). Allowances for impairment The company establishes an allowance for impairment 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) when it determines that the loans are uncollectible. This determination is usually made after considering information such as changes in the borrower’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 on cash and cash-equivalents and resale agreements by investing only in liquid assets with counterparties that have high credit ratings. Therefore, management does not expect any counterparty to fail to meet its obligations. Collateral is held for all resale agreements.

(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 loans, as follows:

Loans receivable from purchasers of housing solutions in: Green-field projects Brown-field projects

2014 $’000

2013 $’000

1,016,227 138,972

1,238,329 145,930

1,155,199

1,384,259

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 27.

Financial risk management (continued) (b)

Credit risk (continued): (iii) Exposure to credit risk (continued): The carrying amount of financial assets recorded in the financial statements (net of impairment losses), represents the company’s maximum exposure to credit risk, without taking account of the value of any collateral held. There has been no change in the nature of the company’s exposure to credit risk or the manner in which it measures and manages 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 ensuring the availability of funding through an 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. 1 to 3 months $’000

3 to 12 months $’000

2014 Over 12 months $’000

Contractual cash flows $’000

Trade and other payables 379,617 Deposits by purchasers 2,599,249 Loans payable 53,611

893,521 1,766,029

178,115 927,058

1,451,253 2,599,249 2,746,698

1,169,165 2,599,249 2,746,698

3,032,477

2,659,550

1,105,173

6,797,200

6,515,112

1 to 3 months $’000

3 to 12 months $’000

2013 Over 12 Contractual months cash flows $’000 $’000

Carrying amount $’000

Trade and other payables 282,598 Deposits by purchasers 2,315,860 Loans payable 377,276

384,143 1,125,138

500,977 1,132,991

1,167,718 2,315,860 2,635,405

1,071,819 2,315,860 2,635,405

2,975,734

1,509,281

1,633,968

6,118,983

6,023,084

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 measures and manages the risk.

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 27.

Financial risk management (continued) (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 currency giving rise to this risk is primarily the United States (US$). The company’s exposure to foreign currency risk at the reporting date was as follows: 2014 US$’000 Cash and cash-equivalents Resale agreements

2013 US$’000

44 155

199

Sensitivity to exchange rate movements A 1 percent (2013: 1 percent) strengthening of the Jamaica dollar against the US dollar at March 31, 2014 would have decreased loss for the year (2013: increased profit for the year) by the amounts shown below. 2014 $’000

2013 $’000

151

A 15 percent (2013: 10 percent) weakening of the value of the Jamaica dollar against the US dollar at March 31, 2014 would have increased loss for the year (2013: decreased profit for the year) by the amounts shown below. 2014 $’000

2013 $’000

(

(1,513)

59)

The analysis assumes that all other variables, in particular, interest rates, remain constant. The analysis was performed on the same basis as for 2013.

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 27.

Financial risk management (continued) (d)

Market risk (continued): (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. 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 Cash and cash equivalents Loans receivable Other receivables Investment

351,359 -

Total financial assets

3 to 12 months $’000

2014 Over 12 months $’000

1,155,199 -

Non-rate sensitive $’000 95,328 76 95,404

Total $’000 351,359 1,155,199 95,328 76

351,359

1,155,199

Trade and other payables Deposits Loans payable

( 53,611)

(1,766,029)

( 927,058)

(1,169,165) (2,599,249) -

(1,169,165) (2,599,249) (2,746,698)

1,601,962

Total financial liabilities

( 927,058)

(3,768,414)

(6,515,112)

(3,673,010)

(4,913,150)

Non-rate sensitive $’000

Total $’000

( 53,611)

(1,766,029)

Total interest rate gap

297,748

(1,766,029)

Cumulative gap

297,748

(1,468,281)

(1,240,140)

Within 3 months $’000

3 to 12 months $’000

2013 Over 12 months $’000

Cash and cash equivalents Resale agreements Other receivables Investment Loans receivable

114,839 66,706 -

1,384,259

223,072 86 -

114,839 66,706 223,072 86 1,384,259

Total financial assets

181,545

1,384,259

223,158

1,788,962

Trade and other payables Loans payable

(377,276)

(1,125,138)

(1,132,991)

(1,167,718) -

(1,167,718) (2,635,405)

Total financial liabilities

(377,276)

(1,125,138)

(1,132,991)

(1,167,718)

(3,803,123)

Total interest rate gap

(195,731)

(1,125,138)

( 944,560)

(2,014,161)

Cumulative gap

(195,731)

(1,320,869)

(2,014,161)

228,141

251,268 (1,069,601)

HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2014 27.

Financial risk management (continued) (d)

Market risk (continued): (ii)

Interest rate risk (continued): Average effective yields by the earlier of the contractual re-pricing and maturity dates. Immediately rate sensitive % Cash and cash equivalents Loans receivable Loans payable

3.00 - 9.00 Immediately rate sensitive %

Cash and cash equivalents Resale agreements Loans receivable Loans payable

3.00 - 9.00

2014 Within 3 to 12 3 months months % % 1.00 - 3.00 3.00 - 8.00

3.00 - 9.00

2013 Within 3 to 12 3 months months % % 1.00 - 3.00 4.50 - 6.50 3.00 - 8.00

3.00 - 9.00

Over 12 months % 4.00 - 12.00 3.00 - 9.00 Over 12 months % 4.00 - 12.00 3.00 - 9.00

Sensitivity to interest rate movements The company materially contracts financial assets and liabilities at fixed rates for the duration of the term. It does not account for any financial assets or liabilities at fair value, except for investments, which are insignificant. Therefore, a change in interest rates at the reporting date would not affect profit or loss or the fair value of the companyâ&#x20AC;&#x2122;s financial instruments. (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. The companyâ&#x20AC;&#x2122;s holding of equity securities is insignificant and therefore equity price risk is negligible There was no change during the year in the nature of the companyâ&#x20AC;&#x2122;s exposure to market risks or the manner in which it measures and manages the risk.

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 27.

Financial risk management (continued) (e)

Capital management: The companyâ&#x20AC;&#x2122;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, reserves and retained earnings. The company has no externally imposed capital requirements. There were no changes in the companyâ&#x20AC;&#x2122;s approach to capital management during the year.

(f)

Fair values of financial assets and financial liabilities: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of financial instruments is determined as indicated below. Determination of fair value: The fair values of cash and cash-equivalents, resale agreements, trade and other receivables, amounts due from the Ministry of Finance and the Public Service, and trade and other payables are assumed to approximate their carrying values, due to their shortterm nature. The fair values of loans receivable is considered to approximate the carrying amounts as coupon rates are generally comparable to market yields on similar loans at the reporting date. The fair value of loans payable is assumed to approximate the carrying value as no discount or premiums on settlements are anticipated. The fair value of equity investment is its quoted bid price at the reporting date. The valuation method falls in the Level 1 of the fair value hierarchy which is defined as quoted prices (unadjusted) in an active market for identical assets.

27.

(f)

(i)

Financial liabilities not measured at fair value: Trade and other payables Deposits by purchasers: Operation PRIDE Jamaica Economical Housing Other developments Loans payable

Financial assets not measured at fair value: Cash and cash equivalents Loans receivable Other receivables

Financial assets measured at fair value: Investments

6,515,112

911,050 241,363 1,446,836 2,746,698

1,169,165

1,601,886

Carrying amount Other Available financial for sale liabilities $’000 $’000

351,359 1,155,199 95,328

Loan and receivables $’000

Accounting classifications and fair values:

6,515,112

911,050 241,363 1,446,836 2,746,698

1,169,165

1,601,886

351,359 1,155,199 95,328

Total $’000

2014

Level 1 $’000

Level 2 $’000

Fair value

Level 3 $’000

Total $’000

The fair value of financial assets and liabilities, together with the carrying amounts and their classifications shown in the statement of financial position, are as follows:

Fair values (Continued):

Financial risk management (continued)

Notes to the Financial Statements March 31, 2014

HOUSING AGENCY OF JAMAICA LIMITED

27.

(f)

(i)

Financial liabilities not measured at fair value: Trade and other payables Deposits by purchaser: Operation PRIDE Jamaica Economical Housing Other developments Loans payable

Financial assets not measured at fair value: Cash and cash equivalents Resale agreements Loans receivable Other receivables

Financial assets measured at fair value: Investments

6,023,084

894,350 202,947 1,219,063 2,635,405

1,071,819

1,788,876

114,839 66,706 1,384,259 223,072

Loan and receivables $’000

Carrying amount Other Available financial for sale liabilities $’000 $’000

Accounting classifications and fair values (Continued):

6,023,084

894,350 202,447 1,219,063 2,635,405

1,071,819

1,788,876

114,839 66,706 1,384,259 223,072

Total $’000

2013

Level 1 $’000

Level 2 $’000

Fair value

Level 3 $’000

Total $’000

The fair value of financial assets and liabilities, together with the carrying amounts and their classifications shown in the statement of financial position, are as follows (Continued):

Fair values (Continued):

Financial risk management (continued)

Notes to the Financial Statements March 31, 2014

HOUSING AGENCY OF JAMAICA LIMITED

Notes to the Financial Statements March 31, 2014 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 $15,904,000 (2013: $18,909,000) (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 (2013: $Nil).

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 legal 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 financial performance.

(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 loss suffered in consequence of the claimant’s negligence.