HAJ Annual Report 2014 - 2015

Page 1

2014/2015

Annual R e p o rt

ANNUAL R E P ORT “Enhancing Delivery through Improved Customer Service”



Vision The Market Leader providing affordable, innovative and environmentally friendly housing solutions and services.

Mission The HAJ provides affordable housing solutions and services to potential homeowners and agencies through product innovation, excellent customer service and strategic partnerships delivered by highly motivated employees.

1


Core Values I CARE, together we care.

2

I

ntegrity

C

are

A

ccountability

R

espect

E

xcellence


CONTENTS 4 6

2014-2015

Annual R e p o rt

ANNUAL R E P ORT “Enhancing Delivery through Improved Customer Service”

7 8 12 15 18 19 22 26 27

Who We Are Message From The Chairman Of The Board The Board Of Directors Board Of Directors’ Report Managing Director’s Report Corporate Governance Senior Management Team Corporate Strategy Review Of Operations Senior Executive Compensation Financial Statements

HAJ 2014/2015 Annual Report

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WHO WE ARE Corporate Profile

T

he 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, self-funding government entity and falls under the portfolio responsibility of the Ministry of Transport, Works and Housing. The Agency is headed by a Managing Director and governed by a Board of Directors. HAJ’s main activities include property development, the construction and sale of housing solutions for low to middle income earners and the regularization of tenure on land through titling services. 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 and Project Implementation. • The Corporate Services Division comprises Finance and Information, Legal and Company Secretariat, Mortgage Administration, Sales &

Services, Public Relations, Marketing and Community Development. • 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 at 13 Caledonia Avenue, Kingston 5.

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HAJ 2014/2015 Annual Report


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

St. James Albion Road Montego Bay, St. James Tel: (876) 940-2559-60; 940-5539 Fax: (876) 940-0311 Westmoreland Barracks Road Savanna-la-Mar, Westmoreland Tel: (876) 918-3370 Fax: (876) 918-3332

Auditors

KPMG The Victoria Mutual Building 6 Duke Street Kingston

HAJ 2014/2015 Annual Report

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MESSAGE from THE chairman

of the board

T

he past year has been a challenging one for the Housing Agency of Jamaica (HAJ). Nonetheless, the organisation has made progress in meeting its targets and moving towards financial stability. The completion of existing projects was delayed by the limited availability of resources. The Hills of Boscobel housing development located in St. Mary was opened in December 2014. It is expected that this project as well as Whitehall 3 in Westmoreland and Luana Gardens, St. Elizabeth will be completed and the housing solutions sold in FY 2015/2016, subject to demand conditions in the

The Agency has succeeded in renegotiating the terms of its construction loan financing with the National Housing Trust

economy. The Agency has succeeded in renegotiating the terms of its construction loan financing with the National Housing Trust and has collaborated with the Trust on a fast-track low income housing programme approved by the Cabinet.

Going forward, HAJ will embark on a combination of Public Private Partnership Agreements, Joint Ventures and Memoranda of Understanding pursuant to which project management and titling services will be provided to other agencies. These Agreements will be on a revenueearning basis with terms and conditions limiting the Agency’s risks. The Agency will continue to retool its operations and refine its business model to enhance its mission of providing affordable housing solutions and services to potential homeowners and agencies. I thank the Honourable Ministers and members of the Board of Directors for their support during the year.

Derick Latibeaudiere Chairman

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HAJ 2014/2015 Annual Report


BOARD OF DIRECTORS The members of the Board are: Hon. Derick Latibeaudiere, OJ - Chairman H. Karl Bennett, PE – Managing Director Lucille Brodber, JP, FJIQS Jerron Green Susan Lawrence Kenarthur Mitchell, JP Donald Moore Norman Reid, JP Loretta Reid Pitt – Company Secretary Maureen Vernon

HAJ 2014/2015 Annual Report

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Board Of Directors’ Report

Financial Overview

T

he Financial Year 2014/2015 was not a good one for the organization as its plans were hampered by the lack of financing. Proposals pursued with the Ministry of Transport, Works and Housing (MTWH) and the National Housing Trust (NHT) to address funding gaps resulted in renegotiation of the terms of existing construction loans with the NHT. This had the impact of reducing monthly repayment amounts and extending repayment periods. This action, along with the renegotiation of a line of credit with the National Commercial Bank Jamaica Limited, brought some relief to monthly cash flow demands. Despite the implementation of these financial and operational strategies to improve financial performance, the Agency ended the year with a net loss of $539.09 million. This loss is less than the loss of $608.79 million in the previous year. Total operating expenses increased to $666.24 million compared to $319.54 million in the previous year due mainly to adjustments in the provision for impairment amounting to $239.82 million. The accumulated loss of $2.2 billion is a source of concern and has become the focus of attention. There are ongoing discussions with MTWH aimed at developing a solution that will curtail losses and put the organization on a sustainable growth path.

Project Starts & Deliveries

During the period, the Agency entered into negotiations with a major developer/investor aimed at renegotiating the Public Private Partnership Agreements for both the Bernard Lodge Estates and Green Pond housing projects. These projects have been stalled for more than a year and once restarted, could result in delivery of approximately 1,900 housing solutions. However, during the financial year 2014/2015, there were 282* housing starts and 840** deliveries. The projected achievements for starts and deliveries did not materialise because of the deferment of some projects and a funding shortfall.

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HAJ 2014/2015 Annual Report


Objectives, Targets & AchievementS for FY 2014/2015 OBJECTIVES

2014/2015 TARGETS

ACHIEVEMENTS

Transfer and issue splinter titles in each of the selected (50) Brownfield projects under the Jamaica Land

3,000

1,050

Housing Solutions – Starts

2,980

282*

Housing Solutions – Delivered

2,188

840**

Titling Programme

*Bourkesfield, St. Catherine - Two-bedroom Units: 77; Serviced Lots: 125 Belle Air, St. Ann – Two-bedroom Units: 80 **Belle Air, St. Ann – Serviced Lots: 744 Luana Gardens, St. Elizabeth – Studio Units: 70; Serviced Lots: 26

Re-Launch of the Hills of Boscobel Housing Development

Of significance, the Agency completed the Hills of Boscobel housing development in St. Mary – a development that had been stalled for months due to financing shortfall and unforeseen technical issues encountered during construction. This completion brought relief to depositors who had become restive as a result of the delays. The development was reopened at a special ceremony held on December 11, 2014 and was subsequently targeted to benefit from enhanced strategies to increase purchaser appeal including: • Increased advertising of the development on traditional and online media • Furnishing and re-launching of the model unit

• Combined presentation of keys and titles ceremony to boost sales of remaining units – keys were presented to the first tranche of homeowners at the development (Greenfield) while residents of the adjoining Brownfield development were presented with land titles

HAJ 2014/2015 Annual Report

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Minister of Transport, Works & Housing, Dr. the Hon. Omar Davies, MP (5th from right) cuts the ribbon to the newly re-furnished model unit at the Hills of Boscobel housing development at the December 11, 2014 Boscobel Keys & Titles Ceremony. Looking on are (l – r): Councillor Fitzroy Wilson (Boscobel, St. Mary Division); His Worship the Mayor Levan Freeman (Port Maria); Mr. Derick Latibeaudiere, Chairman of the HAJ Board; Mr. Jolyan Silvera, Member of Parliament for St. Mary Western; Mrs. Audrey Sewell, CD, Permanent Secretary in the Ministry of Transport, Works & Housing; and, Managing Director of HAJ, Mr. H. Karl Bennett.

Land Titling Programme

Titling of lands continues to be a major focus of the Agency with the implementation of new strategies aimed at increasing the number of beneficiaries who pay for their titles and enable transfers to occur. For the period under review, 1,050 Certificates of Titles were issued across 50 Operation PRIDE communities including Bedward Gardens in St. Andrew, and Boscobel View in St. Mary.

Projections of Key Financial & Operations Measures for FY 2015/2016

Going forward, the focus of the Agency will be on completing Greenfield developments that are at various stages of construction including: Luana (St. Elizabeth), Whitehall 3 (Westmoreland) and Belle Air 3 (St. Ann). In addition, the Agency is also expected to be put in a position to significantly increase the number of serviced lots available to low income earners under a proposed initiative with the NHT that is being considered by Cabinet.

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HAJ 2014/2015 Annual Report


During FY 2015/2016, it is projected that the Agency will transfer 1,500 titles to Operation PRIDE beneficiaries. In addition, approximately 320 housing solutions from five (5) schemes will be delivered. About 52% of these projects will be funded by external sources with the remaining 48% from internal cash flows. Financing is expected as follows: • Construction and other loans from National Housing Trust (NHT) $246M • Loan from National Commercial Bank Jamaica Limited - $141M

• Private sector funding for Public Private Partnerships - $1,600M • Completed Sales and Deposits $1,824M

It is projected that sales will be finalized on 929 solutions and deposits collected on 378 houses and lots. In addition, the Agency projects to complete preliminary designs for projects that will form a part of its new starts beyond 2015/2016.

HAJ 2014/2015 Annual Report

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MANAGING DIRECTOR’s REPORT

I

n reviewing the performance of the Agency for the financial year 2014/2015, it is obvious that management was successful in both stabilizing the organization and in establishing the foundation for future business growth and success.

The turmoil that characterised the organization in the years immediately preceding the reporting period was brought under control as evidenced by anecdotal reports by staff and other stakeholders. In addition, the rebranding of the organization Throughout that started with the launch of new mission and vision statements in the period, the July 2014, followed by the establishment of a comprehensive Customer Agency worked extremely hard Service Improvement Initiative, augurs well for the future. These at reducing initiatives, although they are not panaceas for solving all problems expenses by 21% within the company, send a strong message that business will not compared to expenses in the be the same going forward. Several additional activities aimed at maintaining momentum, and enhancing staff morale and engagement previous year. were executed including the following: • Fortnightly email updates on internal/ external HAJ happenings and events • Periodic in-house staff giveaways • Re-establishment of a suggestion box • Implementation of a well-received lunch subsidy programme

• Buy-out of an incentive clause in the labour agreement with the Bustamante Industrial Trade Union that removed a source of distrust and benefitted all staff • Establishment of a multi-purpose space on the ground floor of the office building providing staff with much needed space for recreational and other activities.

During the year, the Agency faced a complicated situation in which it had insufficient funding to complete housing developments that were at an advanced stage of construction; and, was unable to indicate to depositors when sales could be completed. The management team spent the first nine months of the year sourcing and obtaining financing offers from private sector financial institutions. However, it encountered unexplained, lengthy

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HAJ 2014/2015 Annual Report


delays in obtaining approval by the Ministry of Finance and Planning and was unable to accept the offers. In the end, only $385.83 million in financing from the NHT was finalized, representing approximately 52% of its total financing need. Without adequate financing, the Agency had no ability to close sales as projected resulting in a negative impact on its cash flow. Consequently, the existing $150 million overdraft facility with the National Commercial Bank Jamaica Limited was converted into a 12-month working capital facility at a fixed interest rate with quarterly repayments so as to minimize the impact on its cash flow. Throughout the period, the Agency worked extremely hard at reducing expenses by 21% compared to expenses in the previous year. Despite this, the Agency had no option but to order elevators to replace the old units located in the office building that had stopped working and could no longer be repaired.

The Sales & Services Department is commended for implementing measures to enhance collections on the mortgage portfolio during this critical period. Also, the Finance Department has responded well to the many demands for evaluating multiple financing offers and responding to requests for multiple financial projections associated with financing scenarios. Despite the aforementioned environment, the Project Implementation Department must also be commended for bringing the construction of the Hills of Boscobel project to substantial completion in December 2014. Construction completion allowed for sales closures and prospective homeowners were able to move into their new homes. At year-end, 57 of the 99 housing units were sold and 156 of 159 serviced lots were sold. Throughout the year, both the Finance and Legal Departments spent significant time in evaluating offers from prospective investors and in negotiations with the preferred investor for the proposed Bernard Lodge Estates housing development in St Catherine and the Green Pond housing development in St. James. These projects are to be developed using Public Private Partnership Agreements. The issuing of splinter titles was accorded high importance during the period under review. Despite the challenges brought about by financial constraints, the Agency was able to issue 1,050 land titles to beneficiaries. The Public Relations Department, Legal Department and the Community Development Division worked to put in place new strategies that assisted in increasing the number of titles to be issued. These new

HAJ 2014/2015 Annual Report

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arrangements included leveraging the capacity of other Agencies such as the Social Development Commission to assist in raising awareness levels amongst beneficiaries and encouraging them to pay for their titles. I wish to thank Dr. the Hon. Omar Davies, MP, Minister of Transport Works and Housing; the Hon. Dr. Morais Guy, MP, Minister without Portfolio (Housing); Mrs. Audrey Sewell, CD, Permanent Secretary in the Ministry of Transport, Works & Housing; Chairman, Mr. Derick Latibeaudiere and the Board of Directors for their continued guidance and support. I also extend my appreciation and thanks to the staff for their hard work and support during a challenging period.

H. Karl Bennett, P.E. Managing Director

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HAJ 2014/2015 Annual Report


Corporate GoverNance

T

he Board of Directors of HAJ, as representatives of the Government (shareholder) is committed to the achievement of business success and the enhancement of long-term value with the highest standards of integrity and ethics.

Board Composition

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. The eight-member Board is comprised of: Chairperson, Derick Latibeaudiere; Quantity Surveyor and Project Manager, Mrs. Lucille Brodber, JP, FJIQS; Public Management Consultant, Mr. Jerron Green; Attorney-at-Law, Ms. Susan Lawrence; Business Consultant, Mr. Kenarthur Mitchell; Engineer, Mr. Donald Moore; Banker, Mr. Norman Reid and Development Economist, Mrs. Maureen Vernon.

Committees of the Board

The Board Charter provides for three (3) committees to which members were named: Finance, Projects and Planning, and Audit. However, due to the small size of the Board, Human Resources matters and, on occasion, Finance matters were considered directly by the Board without review by the relevant Board committees.

Finance Committee: Derick Latibeaudiere (Chair) Kenarthur Mitchell Maureen Vernon H. Karl Bennett

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Projects and Planning Committee: Donald Moore (Chair) Lucille Brodber Jerron Green H. Karl Bennett

Audit Committee: Norman Reid (Chair) Susan Lawrence Maureen Vernon

H. Karl Bennett – Observer The Board met for a total of fourteen (14) sessions throughout the year. In addition, the sub-committees met thirteen (13) times throughout the year.

Attendance at Board and Committee Meetings Committees

16

Board Finance Committee Committee

Projects and Audit Pension Planning Committee Trustees Committee

Total

No of Meetings for the year

14

2

7

3

1

27

Derick Latibeaudiere

14

2

1

-

-

17

Lucille Brodber

11

2

5

-

-

18

Jerron Green

11

1

5

-

-

17

Susan Lawrence

13

2

2

3

-

20

Kenarthur Mitchell

10

1

1

-

1

13

Donald Moore

12

1

6

-

-

19

Norman Reid

11

-

-

3

-

14

Maureen Vernon

12

2

1

2

-

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HAJ 2014/2015 Annual Report


Directors’ compensation

The following table shows total remuneration for the period under review:

Directors

Fees ($)

Motor Vehicle Upkeep/ Travelling or Value of Assignment of Motor Vehicle ($)

Honoraria ($)

All other Compensation including NonCash Benefits as applicable ($)

Total ($)

Chairman

247,000

-

-

-

247,000

Director

106,000

-

-

-

106,000

Director

102,500

-

-

-

102,500

Director

123,000

-

-

-

123,000

Director

95,500

-

-

-

95,500

Director

128,500

-

-

-

128,500

Director

111,000

-

-

-

111,000

Director

111,000

-

-

-

111,000

1,024,500

-

-

-

1,024,500*

TOTAL

* HAJ paid $34,000 to previous Board Members during the year making the total amount paid $1,058,500 (as reflected in the Financial Statements).

HAJ 2014/2015 Annual Report

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SENIOR MANAGEMENT TEAM

The members of the Team are:

18

H. Karl Bennett

Managing Director

Cheryl Clarke

Senior Manager, Human Resources & Administration

Gary Howell

Senior Manager, Sales & Services

Kevin McFarlane

Acting Senior Manager, Project Implementation

Loretta Reid Pitt

Senior Manager, Legal Services & Corporate Secretariat and Company Secretary

Joan Sicard

Senior Manager, Internal Audit

Deryke Smith

Senior Manager, Finance & Information

HAJ 2014/2015 Annual Report


CORPORATE STRATEGY

T

he Agency’s Corporate Strategy will continue the effort to stabilize the finances and strengthen the technical capacity of the organisation, a process that was started in FY 2014/2015. To support the Government of Jamaica’s initiatives in providing access to housing, HAJ will carry out key initiatives that will result in defined outcomes as follows:

Initiatives

Outcomes

1. Finalize Public Private Partnerships (PPPs), Joint Venture or Definitive Agreements

Deliver 2,212 housing solutions by March 31, 2018

2. Improve project administrative efficiencies by including a cost margin of at least fifteen per cent (15%) on all developments

Establish cash reserve funds in the amount of $50M (JMD) by March 31, 2016

3. Intensify Land Titling Programmes Issue 4,500 titles by March 31, 2018 4. Implement policies and procedures regarding design and implementation which will mitigate project delays and increased costs

Undertake business reengineering processes by March 31, 2016

5. Improve internal procedures to reduce processing times such as the Housing Act approval process and the processing of sales agreements

Update internal processes, manuals and policies by March 21, 2017

HAJ 2014/2015 Annual Report

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Jamaica Land Titling Programme

HAJ remains steadfast in its commitment to “Building Jamaica. One community at a time.” Under the umbrella of the Jamaica Land Titling Programme and in keeping with its mandate, HAJ continues to work assiduously to ensure that Operation PRIDE beneficiaries across the island become proud, legal landowners despite fiscal restraints. This process has already resulted in thousands of Jamaicans receiving Certificates of Titles for the Operation PRIDE lands they occupy. In fact, all the communities involved have seen a reduction in the purchase price of the lots by as much as $20,000. Throughout the 2014/2015 fiscal year, the titling programme has impacted and transformed the lives of residents in 50 Operation PRIDE communities across Jamaica by providing security of tenure with more than 1,000 Certificate of Titles delivered to residents. Some of these communities include:

• Bedward Gardens; St. Benedicts; Callaloo Mews – St. Andrew • Beverly Flats; Gravel Heights; Spanish Villa – St. Catherine • Boscobel – St. Mary • Mammee Bay; Shaw Park Heights – St. Ann • Donaldson – St. Thomas

• Norwood; Retirement; Pitfour; Barrett Hall; Flankers; Meadowsvale; Lilliput – St. James • Elgin Town; Bulls Bay; Haughton Court – Hanover • Whitehouse; Galloway; Llandilo 5 – Westmoreland • Font Hill; Lower Works – St. Elizabeth

This effectively means, that, over a two-year period (FY 2013/2014 & 2014/2015), the Agency transferred and delivered over 2,500 Certificates of Titles to Operation PRIDE beneficiaries across the island. Despite the many challenges encountered in the administration of this programme, the Agency has tried to find creative ways to work with the communities; to ensure that every Operation PRIDE beneficiary, regardless of their economic or social status, has the opportunity to become a legal landowner. During the 2014/2015 fiscal year, in an effort to enhance the land titling programme, the Agency employed a number of strategies including:

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HAJ 2014/2015 Annual Report


A resident of the Galloway community in Westmoreland seems elated to receive his land title from the Hon. Dr. Morais Guy, MP, Minister without Portfolio (Housing) at the Galloway Titles Ceremony held on March 27, 2015.

• Forming strategic partnerships/ Memoranda of Understanding with other social agencies such as Social Development Commission (SDC)

aspects of the programme to make persons aware of the benefits of having their land titles

• Engaging local community stakeholders, such as churches and schools, as well as other stakeholders

• Recruiting and training of recommended community representatives to assist as Community Field Agents in the land titling process

• Increasing the public relations

• Community meetings and fora

It is projected that a total of 1,500 Certificates of Titles will be delivered to Operation PRIDE beneficiaries during FY 2015/2016. At least two additional Operation PRIDE communities will be incorporated under the titling programme for the 2015/2016 fiscal year - Pleasant Heights in St Andrew (35 splinter titles) and Frontier 1, St. Mary (235 splinter titles). It is also anticipated that throughout the fiscal year, splinter titles for other Operation PRIDE communities across the island will be pursued, where possible, so that more Jamaicans can be empowered through legal landownership.

HAJ 2014/2015 Annual Report

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REVIEW OF OPERATIONS Financial Status

Net Operating Revenue for the financial year ended March 31, 2015 was a loss of ($539.09M). Total Operating Expenses was ($666.24M), and when compared to the previous year of ($319.54M), is a $346.7M or 108% increase. This was due mainly to adjustments in the provision for impairment amounting to ($239.82M). The Total Assets of the Agency was $15.84B at March 31, 2015. Cash, cash-equivalents and securities purchased under resale agreements were $322.82M.

Five-Year Financial Highlights\ FIVE-YEAR FINANCIAL HIGHlights 2011 Net Assets ($’000) Net Profit/(Loss) ($’000)

2012

2013

2014

2015

2,273,815 2,393,707 2,513,216 1,904,418 1,365,323 334,452

119,784

119,509 (608,798) (539,095)

Sales Portfolio

Sales collections for the year amounted to $499,652,079. This reflects a variance of $1,794,943,846 below the budgeted collections of $2,294,595,925. The primary reason for the variance is unexpected delays in construction that have resulted in the inability to close sales.

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HAJ 2014/2015 Annual Report


Summary of Sales Collections APRIL 1, 2014 MARCH 31, 2015 Project

Total Collections

BELLE AIR 3

$78,123,111

HILLS OF BOSCOBEL

$159,943,552

WHITEHALL 3

$156,288,051

OTHER PROJECTS (inclusive of Brownfield Projects)

$105,297,365

TOTAL

$499,652,079

$350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000

$50,000,000 $0

E

R AI

B

L EL

L

LS

HI

3 OF

C

S BO

L

E OB

3

H

E IT

H

W

L AL

R

O

E TH

OJ

PR

S

T EC

2013/2014 2014/2015

HAJ 2014/2015 Annual Report

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Summary of Mortgage Portfolio as at March 31, 2015

The Agency’s mortgage portfolio as at March 31, 2015 is comprised of 6,965 mortgages with an asset value of $1.21 billion, as follows:

PORTFOLIO

# OF MORTGAGES

HAJL

89

USAID Greater Portmore Refinance Ministry of Finance Ministry of Water & Housing Operation PRIDE Kingston Portworkers/JMB

PRINCIPAL BALANCE ($)

MONTHLY INSTALLMENT ($)

58,449,346

1,288,210

1,638

223,631,090

2,873,342

3,401

703,086,065

22,555,856

23

22,326,089

527,525

482

31,713,748

281,368

1,086

22,236,156

340,811

145,527,063

1,572,817

461,326

7,980

1,207,430,883

29,447,909

224 22 6,965

Projects Portfolio

During the period under review, construction at the Hills of Boscobel housing development in St. Mary was substantially completed and sales closed on both serviced lots and housing units. Deposits were taken on 57 houses and 156 lots of the total number of 99 houses and 159 lots. Infrastructure works continued on other projects such as Luana Gardens in St. Elizabeth and Whitehall 3 in Westmoreland with remedial works ongoing at Belle Air 3, St. Ann. The Agency also commenced infrastructure works at Bourkesfield in St. Catherine in January 2015.

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HAJ 2014/2015 Annual Report


A two-bedroom detached unit at the Hills of Boscobel housing development in St. Mary

A section of the Luana Gardens housing development in St. Elizabeth

HAJ 2014/2015 Annual Report

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SENIOR EXECUTIVE COMPENSATION

HAJ’s Senior Executive Compensation for the period April 1, 2014 to March 31, 2015 Position of Senior Executive

Salary

Managing Director

Senior Manager, Finance & Information

Senior Manager, Internal Audit

Senior Manager, Human Resources & Administration

Senior Manager, Legal Services & Company Secretariat

Senior Manager, Sales & Services

Retro Salary [a]

GOJ Payment [b]

($)

8,152,877.32

-

8,333.32

4,183,534.50

-

4,183,534.50

159,926.76

4,183,534.50

4,183,534.50

4,183,534.50

Incentive Buy-Out [c]

($)

Travelling Allowance or Value of Assignment of Motor Vehicle

Pension or Other retirement Benefits

Other Allowances

Non-Cash Benefits

Total

($)

($)

($)

($)

($)

[e]

[f]

[d]

-

856,250.00

2,130,111.49

46,600.00

None

11,194,172.13

12,500.00

315,738.00

975,720.00

-

46,600.00

None

5,534,092.50

25,000.00

315,738.00

975,720.00

1,112,363.38

46,600.00

None

6,818,882.64

-

6,250.00

315,738.00

975,720.00

-

46,600.00

None

5,527,842.50

-

6,250.00

315,738.00

975,720.00

1,120,213.72

46,600.00

None

6,648,056.22

25,000.00

315,738.00

975,720.00

1,054,778.41

46,600.00

None

6,690,884.54

89,513.63

[a] The balance of the payment from the last Wage Agreement. [b] This is the one-off payment under the 2012 -2015 Heads of Agreement. [c] An agreement was reached to permanently remove the ‘Performance Incentive Clause’ from all employment contracts as at October 1, 2014. [d] Managing Director and Senior Managers being contract officers whose positions do not fall under the company’s pension scheme receive a gratuity of 25% in lieu of pension on the basic salary. [e] Clothing Allowance [f] In the Audited Financial Statements Note 27 (d), Page 33, discloses the following: i. Management remuneration of $8.199M; which is the Managing Director’s compensation i.e. Basic Salary and Other Allowances ii. Other key management personnel short term employee benefits (included in staff costs) of $29.641M; which is the Senior Managers’ compensation i.e. Salary, Retro Salary, GOJ Payment, Travelling Allowance, Gratuity and Other Allowances.

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HAJ 2014/2015 Annual Report


Financial statemenTS fy 2014/2015

1 3 4 6 7

Independent Auditors’ Report Statement of financial position Statement of Changes in Equity Statement of cash flows Notes to the financial statements

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HAJ 2014/2015 Annual Report





4 HOUSING AGENCY OF JAMAICA LIMITED Statement of Profit or Loss and Other Comprehensive Income Year ended March 31, 2015

Notes

2015 $'000

2014 $'000

112,811 804

133,425 922

113,615 ( 41,654)

134,347 ( 49,980)

71,961

84,367

226,312 (242,689)

230,142 (411,040)

( 16,377)

(180,898)

-

30,625 (285,600)

-

(254,975)

Profit/(loss) from lending and development

55,584

(351,506)

Other income: Fees for servicing loans Interest income from resale agreements Gain/ (loss) on disposal of property, plant and equipment Foreign currency gains Collections on projects closed in previous years Collections for titles provided in closed brownfield projects Sundry

2,633 19,422 618 519 15,401 20,325 12,639

1,618 9,307 ( 67) 768 4,713 29,493 16,422

71,557

62,254

127,141

(289,252)

(372,773) ( 53,645) (239,822)

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

(666,240)

(319,536)

(539,099)

(608,788)

INCOME FROM LENDING AND DEVELOPMENT Lending and borrowing: Interest income from mortgage loans Interest income from other loans Fees and interest expense on loans payable Net income from lending and borrowing Sale of houses and lots - greenfield Cost of sales Net loss from sale of houses and lots – greenfield Sale of houses and lots - brownfield Cost of sales Net loss from sale of houses and lots – brownfield

Total other income Profit/(loss) from lending and development and other income EXPENSES AND OTHER LOSSES Administrative and general expenses Maintenance of closed projects Impairment (charges)/reversal

23

Total operating expenses and other losses Loss for the year

24

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

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

4 (539,095)

(

10)

(608,798)


5 HOUSING AGENCY OF JAMAICA LIMITED Statement of Changes in Equity Year ended March 31, 2015

Share capital $'000 (Note 18)

Reserve fund $'000 (Note 19)

-

629,159

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

-

629,159

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, 2015

-

Balances at March 31, 2013

Capital Fair value Contributed Accumulated reserve reserve capital deficit $'000 $'000 $’000 $'000 (Note 20) (Note 21) (Note 22) 1,286,429

Total $'000

241

1,671,462

(1,074,075)

2,513,216

-

-

( 608,788)

( 608,788)

(

10)

-

-

(

10)

-

( 608,788)

( 608,798)

231

1,671,462

(1,682,863)

1,904,418

-

-

( 539,099)

( 539,099)

4

-

-

4

-

( 539,099)

( 539,095)

1,671,462

(2,221,962)

1,365,323

Total comprehensive income for the year

1,286,429

(

10)

Total comprehensive income for the year

629,159

-

1,286,429

235

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

4


6 HOUSING AGENCY OF JAMAICA LIMITED Statement of Cash Flows Year ended March 31, 2015 Notes Cash Flows From Operating Activities Loss for the year Adjustments: Interest income Interest expense Depreciation 14 Amortisation 13 (Gain)/loss on disposal of property, plant and equipment Impairment charge/(reversal) - Development projects - Other receivables - Mortgage loans Changes in operating assets and 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 Land held for development Pre-construction costs Acquisition of intangible assets Acquisition of property, plant and equipment Proceeds of sale of property, plant and equipment

12 12 13 14

Net cash (used)/provided by investing activities Cash Flows from Financing Activities Deposits by purchasers Loans repaid Deferred credit

17

Net cash provided by financing activities Net (decrease)/increase in cash and cash-equivalents

2014 $'000

( 539,099)

( 608,788)

( 133,037) 41,654 7,746 2,337 ( 618) 190,647 ( 435) 49,610

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

( 381,195) 205,851 1,011 (37,290) (1,726,407) ( 536,187) ( 5,181) ( 328,028) 124,123 ( 45,358)

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

(2,728,661)

(2,255,965)

( 180,580) 20,728 ( 6,447) ( 2,165) ( 2,360) 618

66,706 12,000 6,974) 1,223) 16,563) 164

4

( ( (

( 170,206)

54,110

272,205 672,649 1,744,896

283,389 111,293 2,043,693

2,689,750

2,438,375

( 209,117)

Cash and cash-equivalents at beginning of year Cash and cash-equivalents at end of year

2015 $'000

236,520

351,359

114,839

142,242

351,359


7 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 1.

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 20). 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 6) 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.

2.

Basis of preparation (a)

Statement of compliance The financial statements as at and for the year ended March 31, 2015 (“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. None of them had any significant effect on the amounts and disclosures in the financial statements. New, revised and amended standards and interpretations not yet effective At the date of authorisation of these financial statements, certain new and amended standards and interpretations 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 and are likely to have an impact in the foreseeable future: (i)

IAS 16, Property, Plant and Equipment, and IAS 38, Intangible Assets, have been amended by the issue of “Amendments to IAS 16 and IAS 38, Clarification of Acceptable Methods of Depreciation and Amortisation”, which is effective for annual reporting periods beginning on or after January 1, 2016, as follows: -

The amendment to IAS 16 explicitly states that revenue-based methods of depreciation cannot be used. This is because such methods reflect factors other than the consumption of economic benefits embodied in the assets.

-

The amendment to IAS 38 introduces a rebuttable presumption that the use of revenue-based amortisation methods is inappropriate for intangible assets.


8 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 2.

Basis of preparation (continued) (a)

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

IAS 1, Presentation of Financial Statements, has been amended, effective for annual reporting periods beginning on or after January 1, 2016, to clarify or state the following:   

 

specific single disclosures that are not material do not have to be presented even if they are the minimum requirement of a standard the order of notes to the financial statements is not prescribed line items on the statement of financial position and the statement of profit or loss and other comprehensive income (OCI) should be disaggregated if this provides helpful information to users. Line items can be aggregated if they are not material specific criteria are now provided for presenting subtotals on the statement of financial position and in the statement of profit or loss and OCI, with additional reconciliation requirements for the statement of profit or loss and OCI the presentation in the statement of OCI of items of OCI arising from joint ventures and associates accounted for using the equity method follows the IAS 1 approach of splitting items that may, or that will never, be reclassified to profit or loss.

(iii) IFRS 15, Revenue from Contracts with Customers, effective for annual reporting periods beginning on or after January 1, 2017, replaces IAS 11, Construction Contracts, IAS 18, Revenue, IFRIC 13, Customer Loyalty Programmes, IFRIC 15, Agreements for the Construction of Real Estate, IFRIC 18, Transfer of Assets from Customers, and SIC-31, Revenue - Barter Transactions Involving Advertising Services. It does not apply to insurance contracts, financial instruments or lease contracts, which fall in the scope of other IFRSs. It also does not apply if two companies in the same line of business exchange non-monetary assets to facilitate sales to other parties. The company will apply a five-step model to determine when to recognise revenue, and at what amount. The model specifies that revenue should be recognised when (or as) an entity transfers control of goods or services to a customer at the amount to which the entity expects to be entitled. Depending on whether certain criteria are met, revenue is recognised at a point in time, when control of goods or services is transferred to the customer; or over time, in a manner that best reflects the entity’s performance. There will be new qualitative and quantitative disclosure requirements to describe the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.


9 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 2.

Basis of preparation (continued) (a)

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

IFRS 9, Financial Instruments, which is effective for annual reporting periods beginning on or after January 1, 2018, replaces the existing guidance in IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial assets and liabilities, including a new expected credit loss model for calculating impairment of financial assets and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. Although the permissible measurement bases for financial assets – amortised cost, fair value through other comprehensive income (FVOCI) and fair value though profit or loss (FVTPL) - are similar to IAS 39, the criteria for classification into the appropriate measurement category are significantly different. IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ model, which means that a loss event will no longer need to occur before an impairment allowance is recognised.

(v)

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 on it financial statements.


10 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 2.

Basis of preparation (continued) (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.

(d)

Estimates critical to reported amounts, and judgements made in applying accounting policies The preparation of the financial statements in conformity with IFRS requires management to make estimates, based on assumptions and judgements. Management also makes judgements, other than those involving estimations, in the process of applying the accounting policies. The estimates and judgements affect (1) the reported amounts of assets, liabilities, contingent assets and contingent liabilities at the reporting date and the income and expenses for the year then ended, and (2) the carrying amounts of assets and liabilities in the next financial year. The estimates, and the assumptions underlying them, as well as the judgements 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. Estimates that could cause a significant adjustment to the carrying amounts of assets and liabilities in the next financial year and judgements that have a significant effect on the amounts recognised in the financial statements, include the following: (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.


11 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 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 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 proceeds of sales, 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. 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 company’s accounting policies 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. There were no critical judgements in applying the company’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 of $539,099,000 (2014: $608,788,000) for the year and, as at the reporting date, had an accumulated deficit of $2,221,962,000 (2014: $1,682,863,000). The Board of the company has made the financial stability of the company a priority and has developed a strategic plan reflecting this. The company’s management has prepared a budget which presents the plans to make the company profitable, including generating sufficient cash flow to meet its liabilities. These plans reflect the following: (i)

Arrangements that the company is making to undertake initiatives to provide housing solutions in the foreseeable future, in partnership with other Government of Jamaica agencies involved in the housing sector, including those capable of contributing funding.

(ii)

The provision of services which it is expected will generate revenue.

(iii) The expectation that the company will continue to receive grant funds for housing solutions under the Jamaica Economic Housing Project (see note 9).


12 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 2.

Basis of preparation (continued)

(e)

Going concern (iv)

The proposal to Government of Jamaica to provide additional financial support to the company to better enable it to fulfil its mandate, particularly with respect to “social housing� (ie, regularization of informal settlements) and meeting the need for low income housing solutions. The company expects that this additional support will begin to materialize during fiscal year 2015/2016.

On the basis of the foregoing, 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. 3.

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 company’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.

(b)

Investment securities 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.

(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.


13 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 3.

Significant accounting policies (continued) (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.

(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 by the company of a firm undertaking from 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 an average cost 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.


14 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 3.

Significant accounting policies (continued) (g)

Revenue recognition (continued) (ii) continued Where collection of interest income is considered doubtful, i.e., the financial asset is impaired, the financial asset is written down to its recoverable amount and interest income thereon 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.

(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 (“green field�) 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.


15 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015

3.

Significant accounting policies (continued) (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 management’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.

(m)

Impairment The carrying amounts of the company’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists for any asset, that asset’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 company’s loans and receivables is calculated as the present value of expected future cash flows, discounted at the original effective interest rate inherent in the asset. Receivables with a short duration are not discounted.


16 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 3.

Significant accounting policies (continued) (m)

Impairment (continued) (i)

Calculation of recoverable amount (continued) 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.

(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 asset’s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised.

(n)

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 asset is reduced to the extent that it is no longer probable that the related tax benefit will be realised.


17 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 3.

Significant accounting policies (continued) (o)

Employee benefits Employee benefits comprise all forms of consideration given by the company in exchange for service rendered by employees. These include current or short-term benefits such as salaries, NIS contributions, 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. (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 30), 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.

(p)

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 at the date of contribution is recognised as a capital grant and presented as contributed capital (note 22).

(q)

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.

(r)

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.


18 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015

3.

Significant accounting policies (continued) (r)

Deferred credit (continued) The amounts received are, until they are transferred to profit or loss, 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.

(s) Resale agreements Resale agreements represent purchase of securities by the company under agreements to resell them on specified dates at specified prices. Under collaterialised resale agreements, the company obtains securities on terms which permit it to repledge or resell them to others. Resale agreement 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 on the accrual basis over the period of the transaction using the effective interest method and is included in interest income. 4.

Cash and cash-equivalents 2015 $'000 Collections held in trust for mortgagees and property developers Other cash and bank balances

5.

2014 $'000

108 142,134

108 351,251

142,242

351,359

Resale agreements At March 31, 2015, the fair value of securities collateralising resale agreements was $180,981,000 (2014: No resale agreements).

6.

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: 2015 2014 $'000 $'000 Residential mortgage loans [see (a) below]: Principal 969,589 1,171,369 Interest receivable 97,795 88,606 1,067,384

1,259,975

6,911 3,929

7,924 7,128

Staff loans at 3%: Residential mortgage loans Other loans Less: Unamortised discount on staff loan

(

10,840 3,011) 7,829

(

15,052 4,567) 10,485


19 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 6.

Loans receivable (continued) 2015 $'000 Other long-term loans [see (b) below] Infrastructure development loan [see (c) below]

Gross loans receivable Less: Allowance for impairment: Residential mortgage loans Infrastructure development loan Other long-term loans Interest receivable

Net loans receivable (a)

2014 $'000

21,191 170,650

22,606 170,650

191,841

193,256

1,267,054

1,463,716

( 101,044) ( 170,650) ( 9,537) ( 76,896)

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

( 358,127)

( 308,517)

908,927

1,155,199

The residential mortgage loans, secured by first mortgages on houses, are as follows:

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

2015 $'000 117,468 44,493 393,552 967 416 46 129,202 32,185 4,190 509 239,996 571 5,994

2014 $'000 126,487 49,541 474,407 2,635 416 46 172,369 32,606 5,372 906 300,008 582 5,994

969,589

1,171,369

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 (2014: $15,000,000) in the aggregate as recovery up to that amount is expected from the Government of Jamaica.

(b)

Some of the other long-term loans bear interest at 10% and others at 13% per annum, and are repayable from the date of disbursement in equal instalments over twenty-five years.

(c)

This represents two unsecured loans that were provided for infrastructure development and are repayable on completion of the projects concerned. 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.


20 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 6.

Loans receivable (continued) (d)

Loans receivable are due for collection from the reporting date as follows: 2015 $'000 Within 3 months Over 3 months to 1 year Over 1 year to 3 years Thereafter

(e)

2014 $'000

339,245 168,517 50,571 711,732

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

1,270,065

1,468,283

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

2015 $’000

2014 $’000

873,594 8,927 11,669 38,931 336,944

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

1,270,065

1,468,283

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: 2015 $'000

2014 $'000

At beginning of the year Charge for impairment during the year (note 23)

308,517 49,610

295,478 13,039

At end of the year

358,127

308,517


21 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 7.

Other receivables 2015 $'000

2014 $'000

40,099 88,539 10,134 2,088 23,900

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

164,760

166,046

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

( 40,099) ( 16,306) ( 8,553) ( 5,325)

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

Total allowance for impairment

( 70,283)

( 70,718)

94,477

95,328

2015 $'000

2014 $'000

70,718 ( 435)

70,718 -

70,283

70,718

2015 $'000

2014 $'000

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

Net receivables The movement in the allowance for impairment is as follows:

At beginning of the year Reversal of allowance no longer required (note 23) At the end of the year 8.

Housing development projects - Operation PRIDE (a)

Expenditure on Operation PRIDE Projects

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

3,251,424 37,290 -

3,281,865 254,246 248 ( 285,241) ( 2) 308

3,288,714 (1,095,990)

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

2,192,724

2,207,098


22 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 8.

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

(c)

Deposits by purchasers 2015 $'000

2014 $'000

At beginning of year Collections during the year Deposits relating to units transferred

911,050 49,426 -

894,350 47,325 ( 30,625)

At end of year

960,476

911,050

2015 $'000

2014 $'000

2,192,724 ( 960,476)

2,207,098 ( 911,050)

1,232,248

1,296,048

Expenditure net of deposits

Expenditure, as above Deposits, as above Excess of net development expenditure over deposits collected (d)

9.

The movement in the allowance for impairment is as follows: 2015 $'000

2014 $'000

At beginning of year (Charge)/reversal of allowance no longer required (note 23)

(1,044,326) ( 51,664)

(1,342,361) 298,035

At end of year

(1,095,990)

(1,044,326)

2015 $'000

2014 $'000

At start of year Expenditure during the year Adjustments

5,337,968 1,726,407 -

3,490,564 1,847,239 165

At end of year

7,064,375

5,337,968

2015 $'000

2014 $'000

5,541,212 343,152 1,180,011

4,537,567 343,070 457,331

7,064,375

5,337,968

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


23 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 9.

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

Project expenditure (continued) 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)

(c)

(d)

Deposits by purchasers 2015 $'000

2014 $'000

At beginning of year Collections during the year

241,363 92,335

202,447 38,916

At end of year

333,698

241,363

Grant funding received 2015 $'000

2014 $'000

At beginning of year Grant funding drawn down during the year

4,444,975 1,700,133

2,611,293 1,833,682

At end of year (note 17)

6,145,108

4,444,975

2015 $'000

2014 $'000

7,064,375 (6,145,108)

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

Expenditure net of grant funding received Expenditure, as above Grant funding, as above Excess of expenditure over grant funding

10.

919,267

892,993

2015 $'000

2014 $'000

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

3,325,530 842,235 ( 242,689) -

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

Accumulated expenditure at end of year Less: Allowance for impairment [see (b) below]

3,925,076 ( 202,342)

(

Other development projects in progress (a)

Expenditure on projects

Net development in progress

3,722,734

3,388,889 63,359) 3,325,530


24 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 10.

Other development projects in progress (continued) (b)

(c)

The movement in the allowance for impairment is as follows: 2015 $'000

2014 $'000

At beginning of the year Charge for impairment during the year (note 23)

63,359 138,983

63,359

At end of the year

202,342

63,359

2015 $'000

2014 $'000

The specific projects involved are as follows:

Boscobel 2 Country Club 2 Whitehall Frazers and Ebony View Other development costs

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

868,219 2,813,102 29,452 214,303

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

3,925,076

3,388,889

(i)

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

(ii)

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

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

(d)

(iv)

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

(v)

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.

Deposits by purchasers: 2015 $'000 At beginning of year Collections during the year Deposits relating to units transferred to beneficiaries At end of year

2014 $'000

1,446,836 356,756 ( 226,312)

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

1,577,280

1,446,836


25 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 10.

Other development projects in progress (continued) (e)

Expenditure net of deposits 2015 $'000 Net development in progress, per (a) above Deposits by purchasers, per (d) above Excess of net development expenditure over deposits

11.

3,722,734 (1,577,280)

3,325,530 (1,446,836)

2,145,454

1,878,694

Investment securities 2015 $'000 Available for sale: Quoted equity

12.

2014 $'000

80

2014 $'000 76

Land held for development 2015 $'000

2014 $'000

1,485,817 6,447 ( 20,728)

1,490,843 6,974 ( 12,000) -

Balance at end of year

1,471,536

1,485,817

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

1,276,202 51,414 143,920

1,296,930 44,967 143,920

1,471,536

1,485,817

Balance at beginning of year Development costs incurred Disposal of land 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 Government of Jamaica for the development of housing projects (see note 22).

(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

2015 $'000

2014 $'000

91,500 52,420

91,500 52,420

143,920

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)

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


26 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 13.

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 14.

2015 $'000

2014 $'000

25,584 2,165

24,361 1,223

27,749

25,584

24,907 2,337

23,284 1,623

27,244

24,907

505

677

Property, plant and equipment Freehold land and buildings $'000

Computers $'000

Office furniture and fixtures $'000

Motor vehicles $'000

Equipment $'000

Total $'000

Cost: 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 Additions Disposals

56,091 -

19,029 1,723 -

10,700 637 ( 202)

16,525 ( 1,855)

15,996 -

118,341 2,360 ( 2,057)

March 31, 2015

56,091

20,752

11,135

14,670

15,996

118,644

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

22,992 941 -

10,576 2,013 ( 628)

9,042 468 ( 152)

4,750 1,415 -

9,836 1,500 ( 7)

57,196 6,337 ( 787)

March 31, 2014 Charge for the year Eliminated on disposals

23,933 940 -

11,961 1,826 -

9,358 257 ( 202)

6,165 3,256 ( 1,855)

11,329 1,467 -

62,746 7,746 ( 2,057)

March 31, 2015

24,873

13,787

9,413

7,566

12,796

68,435

Net book values: March 31, 2015

31,218

6,965

1,722

7,104

3,200

50,209

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

Freehold land and buildings include land costing $12,455,000 (2014: $12,455,000). A revaluation of certain of the company’s furniture and fixtures by Baird and Henderson Valuators Limited in November 2005 resulted in adjustments to the carrying value of these assets; the revaluation amount was deemed to be the assets’ cost.


27 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015

15.

Trade and other payables 2015 $'000 Accrued charges Interest payable Staff related accruals and statutory payroll liabilities Project related expenses Due to related parties for land purchased Refunds due to depositors for cancelled sales contracts Mortgage instalments received in advance Other payables

16.

2014 $'000

50,606 8,785 27,301 365,055 184,683 64,277 127,746 8,980

77,651 12,489 35,337 306,100 174,645 55,758 131,940 375,245

837,433

1,169,165

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: 2015 2014 $'000 $'000 National Housing Trust (“NHT�): 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] Alliance Finance Limited [see note (o) below] Accountant General [see note (p) below] National Commercial Bank Jamaica Limited [see (q) below]

464,916 35,700 32,761 224,645 224,216 8,489 93,061 496,733 13,505 1,065,586 79 496,189

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

3,155,880

2,625,873

188

188

100

100

14,402 107,777 141,000

12,760 107,777 -

3,419,347

2,746,698

2015 $'000 Comprising

- current and past due portions - long-term portions

2014 $'000

107,777 3,311,570

1,820,590 926,108

3,419,347

2,746,698


28 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 16.

Loans payable (continued) (a)

This loan relates to the construction of housing under 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; it is now scheduled to end 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 ‘Hills of Boscobel’ 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 was due for repayment in September 2014.

(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.


29 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 16.

17.

Loans payable (continued) (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 represents insurance premium financing for mortgage creditor life insurance. The loan bears interest at 3.25% per annum and was due for repayment in December 2014.

(p)

This represents amounts paid on the company’s behalf by the Accountant General (“AG”) on the Commonwealth Development Corporation loan. This loan from the AG is interestfree and the repayment date has not been fixed.

(q)

This was a six-month working capital overdraft facility in the amount of $150 million, bearing interest at 11.75%. It was approved for the period March 17, 2014 to September 17, 2014, to be repaid from cash inflows. The Ministry of Finance and Planning granted approval for the extension of the facility for six months, to be repaid in a lump sum on March 31, 2015, but only $5million was repaid. Effective November 18, 2014, the overdraft facility was restructured into a loan, bearing interest at 11.75%, secured by the company’s Mona Lands, having a value of $388 million, and with repayment scheduled to be made by April 1, 2016.

Deferred credit 2015 JEHP GOJ - Other $'000 $'000

TEF $'000

UDC $'000

At beginning of year Funds received during the year

387,816 24,984

238,490 -

4,444,975 1,700,133

534,192 19,779

5,605,473 1,744,896

At end of year

412,800

238,490

6,145,108

553,971

7,350,369

2014 JEHP GOJ -Other $'000 $'000

Total $'000

TEF $'000

UDC $'000

Total $'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

“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 9 and 10]. 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 [see note 9 for information on Jamaica Economical Housing Project (JEHP)].


30 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 18.

Share capital 2015 $'000 Authorised, issued and fully paid: 200 ordinary shares of no par value

-

2014 $'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 company’s Articles of Association, the company transfers to reserve fund a percentage of profits after tax, if any, each year. The percentage to be transferred is determined at the discretion of the directors. In view of the loss for the year, there was no transfer (2014: no transfer). 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 (1) the net surplus of the book values of assets over liabilities transferred to the company by the entities mentioned in note 1, and (2) adjustments arising from revaluation of certain property, plant and equipment.

21.

Fair value reserve Fair value reserve represents cumulative unrealised fair value gains, net of losses, on availablefor-sale investment securities, net of deferred tax, if any, which are carried until the investment securities are derecognised or impaired.

22.

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

23.

Impairment (charge)/reversal 2015 $'000

2014 $'000

Loans receivable [note 6(f)] Other receivables (note 7) Operation PRIDE projects [note 8(d)] Other development projects [note 10(b)]

( 49,610) 435 ( 51,664) (138,983)

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

Net impairment (charge)/reversal for year

(239,822)

221,637


31 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 24.

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

Directors' emoluments [note 27(d)]: Fees Management remuneration [included in staff costs see note 27(d)] Auditors' remuneration - current year - prior year overprovision Depreciation and amortisation 25.

2015 $'000

2014 $'000

1,058 8,199 4,950 ( 3,565) 10,083

2,599 11,935 8,665 7,960

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 $5,449,577,000 (2014: $3,879,469,000) as at the reporting date. While tax losses may still be carried forward indefinitely, the amount that can be utilised in any one year is restricted to 50% of the chargeable income for that year. Deferred tax asset of $1,362,394,000 (2014: $1,293,156,000) 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.

26.

Staff costs and numbers The average number of persons employed full-time during the year was 110 (2014: 99). The costs for these employees were as follows: 2015 2014 $'000 $'000 Compensation: Salaries 203,325 186,085 Redundancy 40,870 Statutory payroll contributions 24,004 29,217 Pension scheme contributions (note 30) 13,653 15,904 (Reversal of)/charge for gratuity and incentive, net (41,860) 49,762 Other benefits 41,837 43,022 Other costs: Training and development Staff welfare

27.

240,959

364,860

2,446 4,076

701 2,084

247,481

367,645

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)

A person or a close member of that person’s family is related to the company if that person: (1)

has control or joint control over the company;

(2)

has significant influence over the company; or

(3)

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


32 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 27.

Related party balances and transactions (continued) (a)

Definition of related party (continued) (ii)

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).

(2)

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).

(3)

Both entities are joint ventures of the same third party.

(4)

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

(5)

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

(6)

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

(7)

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: 2015 $'000

2014 $'000

40,099 5,398 592

40,099 6,691 587

7

7

Operation PRIDE development project: Ministry of Water and Housing

434,824

415,383

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

29,452 156,591 257,126 -

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

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


33 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 27.

Related party balances and transactions (continued) (b)

The statement of financial position includes the following balances with related parties, arising in the ordinary course of business (continued) 2015 $'000

(c)

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

9,038 886 179,758 750 10,000

13,131 685 120,178 562 10,000

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

188 3,155,880 107,777

188 2,492,803 107,777

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 (d)

2015 $'000

2014 $'000

2,633

1,618

36,290

45,160

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 24): Fees Management remuneration Other key management personnel - short-term employee benefits (included in staff costs)

28.

2014 $'000

2015 $'000

2014 $'000

1,058 8,199

2,599 11,935

29,641

13,173

39,348

27,707

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


34 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 28.

Financial risk management (continued) (a)

Overview (continued) 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.

(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 the 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 loans to borrowers is not readily available.


35 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 28.

Financial risk management (continued) (b)

Credit risk (continued): (i)

Loans receivable (continued): 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. 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 receivable at the reporting date (2014: 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.


36 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 28.

Financial risk management (continued) (b)

Credit risk (continued): (iii) Exposure to credit risk: The company’s exposure to credit risk is geographically concentrated based on the location of the properties held as collateral against loans, as follows: 2015 $’000 Loans receivable from purchasers of housing solutions in: Green-field projects Brown-field projects

2014 $’000

778,391 130,536

1,016,227 138,972

908,927

1,155,199

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

2015 Over 12 months $’000

Contractual cash flows $’000

Carrying amount $’000

Trade and other payables 281,921 Deposits by purchasers 2,871,454 Loans payable 54,432

398,599 2,454,307

156,913 910,608

837,433 2,871,454 3,419,347

837,433 2,871,454 3,419,347

3,207,807

2,852,906

1,067,521

7,128,234

7,128,234


37 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 28.

Financial risk management (continued) (c)

Liquidity risk (continued): 2014 Over 12 Contractual months cash flows $’000 $’000

1 to 3 months $’000

3 to 12 months $’000

Carrying amount $’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

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. (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$). The company’s exposure to foreign currency risk at the reporting date was as follows: 2015 US$’000 Cash and cash-equivalents

174

2014 US$’000 4

Sensitivity to exchange rate movements A 1 percent (2014: 1 percent) strengthening of the Jamaica dollar against the US dollar at March 31, 2015 would have decreased loss for the year by$200,000 (2014: $4,000).


38 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 28.

Financial risk management (continued) (d)

Market risk (continued): (i)

Currency risk (continued): Sensitivity to exchange rate movements (continued) A 10 percent (2014: 15 percent) weakening of the value of the Jamaica dollar against the US dollar at March 31, 2015 would have increased loss for the year by $998,000 (2014: $59,000). The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis was performed on the same basis as for 2014.

(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 assets matching, as far as possible, fixed rate financial liabilities. 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

2015 Over 12 months $’000

3 to 12 months $’000

Non-rate sensitive $’000

Total $’000

Cash and cash equivalents Resale agreements Loans receivable Other receivables Investment securities

142,242 180,580 -

-

908,927 -

94,477 80

142,242 180,580 908,927 94,477 80

Total financial assets

322,822

-

908,927

94,557

1,326,306

Trade and other payables Deposits Loans payable

( 54,432)

(2,454,307)

( 910,608)

( 837,433) (2,871,454) -

( 837,433) (2,871,454) (3,419,347)

Total financial liabilities

( 54,432)

(2,454,307)

( 910,608)

(3,708,887)

(7,128,234) (5,801,928)

Total interest rate gap

268,390

(2,454,307)

(

1,681)

(3,614,330)

Cumulative gap

268,390

(2,185,917)

(2,187,598)

(5,801,928)

-


39 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 28.

Financial risk management (continued) (d)

Market risk (continued): (ii)

Interest rate risk (continued): Within 3 months $’000

2014 Over 12 months $’000

3 to 12 months $’000

Non-rate sensitive $’000

Total $’000

Cash and cash equivalents Loans receivable Other receivables Investment securities

351,359 -

-

1,155,199 -

95,328 76

351,359 1,155,199 95,328 76

Total financial assets

351,359

-

1,155,199

95,404

1,601,962

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)

Total financial liabilities

( 53,611)

(1,766,029)

( 927,058)

(3,768,414)

(6,515,112)

Total interest rate gap

297,748

(1,766,029)

(3,673,010)

(4,913,150)

Cumulative gap

297,748

(1,468,281)

(4,913,150)

-

228,141 (1,240,140)

Average effective yields by the earlier of the contractual re-pricing and maturity dates. 2015 Immediately Within 3 to 12 Over rate sensitive 3 months months 12 months % % % % Cash and cash equivalents Resale agreements Loans receivable Loans payable

3.00 - 9.00

Immediately rate sensitive % Cash and cash equivalents Loans receivable Loans payable

3.00 - 9.00

1.00 - 3.00 6.00 - 7.00 3.00 - 8.00

3.00 - 9.00

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

3.00 - 9.00

4.00 - 12.00 3.00 - 09.00

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 company’s financial instruments.


40 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 28.

Financial risk management (continued) (d)

Market risk (continued): (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 company’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 company’s exposure to market risks or the manner in which it measures and manages the risk.

(e)

Capital management: The company’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide benefits for stakeholders and to maintain a strong capital base to support the development of its business. The company defines its capital base as share capital, reserves and retained earnings. The company has no externally imposed capital requirements. There were no changes in the company’s approach to capital management during the year.

29.

Financial instruments – Fair value (a)

Definition of fair value and fair value hierarchy The company’s accounting policies on measurement and disclosure require the measurement of fair values for 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. When measuring fair value of an asset or liability, where a quoted market price is available, fair value is computed by the company using the quoted bid price at the reporting date, without any deduction for transaction costs or other adjustments. Where a quoted market price is not available, fair value is computed using alternative techniques, making use of available input data; the company uses observable data as far as possible. Fair values are categorised into different levels in a three-level fair value hierarchy, based on the degree to which the inputs used in the valuation techniques are observable. The different levels in the hierarchy have been defined as follows: Level 1 refers to financial assets and financial liabilities that are measured by reference to published quotes in an active market. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm's length basis.


41 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 29.

Financial instruments – Fair value (cont’d) (a)

Definition of fair value and fair value hierarchy (cont’d) Level 2 refers to financial assets and financial liabilities that are measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions, and for which pricing is obtained via pricing services, but where prices have not been determined in an active market. This includes financial assets with fair values based on broker quotes, investments in funds with fair values obtained via fund managers, and assets that are valued using a model whereby the majority of assumptions are market observable. Level 3 refers to financial assets and financial liabilities that are measured using nonmarket observable inputs. This means that fair values are determined in whole or in part using a valuation technique (model) based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

(b)

Valuation techniques for financial assets and financial liabilities Type

Valuation techniques

Cash and cash-equivalents, resale agreements, other receivables, and trade and other payables

Considered to approximate their carrying values, due to their shortterm nature

Loans receivable

Considered to approximate the carrying amounts as coupon rates are generally comparable to market yields on similar loans at the reporting date.

Loans payable

Fair value not practicably determinable as market information for most of the loans payable of the type the company has is not readily ascertainable and building of a model is not a practical alternative for the company.

Equity investment

Quoted bid price at the reporting date


29.

(c)

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 Resale agreements Loans receivable Other receivables

Financial assets measured at fair value: Investment securities

-

-

-

1,326,226

-

-

142,242 180,580 908,927 94,477

-

Loan and receivables $’000

80

7,128,234

960,476 333,698 1,577,280 3,419,347

837,433

-

-

-

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

7,128,234

960,476 333,698 1,577,280 3,419,347

837,433

1,326,226

142,242 180,580 908,927 94,477

80

Total $’000

2015

80

Level 1 $’000

-

Level 2 $’000

Fair value

-

Level 3 $’000

Where the carrying amounts of financial assets and financial liabilities are measured at fair value, their levels in the fair value hierarchy are also shown. Where the carrying amounts of financial assets and financial liabilities are not measured at fair value, and those carrying amounts are a reasonable approximation of fair value, fair value information (including amounts, and levels in the fair value hierarchy) is not disclosed.

The following table shows the classification of financial assets and financial liabilities and their carrying amounts.

Accounting classifications and fair values:

Financial instruments – Fair value (continued)

Notes to the Financial Statements March 31, 2015

HOUSING AGENCY OF JAMAICA LIMITED

80

Total $’000

42


29.

(c)

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: Investment securities

-

-

-

1,601,886

-

-

76

6,515,112

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

1,169,165

-

-

-

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 (Continued):

Financial instruments – Fair value (continued)

Notes to the Financial Statements March 31, 2015

HOUSING AGENCY OF JAMAICA LIMITED

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

76

Total $’000

2014

76

Level 1 $’000

-

Level 2 $’000

Fair value

-

Level 3 $’000

76

Total $’000

43


44 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2015 30.

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 $13,653,000 (2014: $15,904,000) (note 26). The company, at its own discretion, 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 (2014: $Nil).

31.

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 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.


HOUSING AGENCY OF JAMAICA LIMITED SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS

YEAR ENDED MARCH 31, 2015

HOUSING AGENCY OF JAMAICA LIMITED

Administrative and General Expenses Year ended March 31, 2015

Audit fees Building maintenance and electricity Depreciation and amortisation Directors' travel and other expenses Directors' fees General expenses Insurance Legal and other professional fees Donations and subscriptions Promotions and publications Staff costs Stationery and data processing Telephone and postage Travelling and motor vehicle

2015 $'000

2014 $'000

1,385 51,790 10,083 2,836 1,058 18,133 8,954 510 7,489 247,481 8,843 7,489 6,722

8,665 56,708 7,960 1,003 2,599 5,613 8,168 7,145 512 2,388 367,645 7,128 8,442 5,519

372,773

489,495




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