Page 1

ANNUAL REPORT 2009 - 2010


2

Bloody Bay Hotel Development Limited

26

BOARD OF DIRECTORS

3

Caymanas Development Company Limited

26

OUR HISTORY

4

Central Wastewater Treatment Company Limited

26

CHAIRMAN’S REPORT

6

Hellshire Marble Limited (Dormant)

27

GENERAL MANAGER’S REPORT

7

Kingston Waterfront Re-Development Company Limited (Dormant)

27

Information Systems Department

9

Kingston Waterfront Hotel Company Limited (Dormant)

27

Natural Resources Management Environment Planning

10

Lilliput Development Corporation Limited

27

PROJECTS REPORTS

12

Montego Beach (1975) Limited

27

The Jamaica Conference Centre

12

Montego Freeport Limited

27

REGIONAL REPORTS

15

National Hotels and Properties Limited

27

Montego Bay Convention Centre

15

Ocho Rios Commercial Centre Limited

27

Montego Bay Sport Complex

15

Pegasus Hotels of Jamaica Limited

27

Old Hospital Park

16

Portmore Commercial Development Company Limited

28

DOWNTOWN KINGSTON AND PORT ROYAL

16

Portmore New Town Development Company Limited (Dormant)

28

St. William Grant Park

16

Port Royal Development Company Limited (Dormant)

28

Urban Transport Centre

16

Runaway Bay Water Company Limited

28

Simon Bolivar Cultural Centre

17

Rutland Point Beach Resorts Limited (Dormant)

28

ST. CATHERINE

17

St. Ann Development Company Limited

28

Caymanas Estate

17

Seacastles Limited (Dormant)

28

Hellshire Glades II

17

Seaside at Rose Hall Developments Limited

29

Halfmoon Bay Sewer Line

17

Urban Maintenance (1977) Limited

29

Emancipation Square, Spanish Town

18

UDC Board Committees

29

GC Foster College

18

Audit

29

PORTLAND

18

Contracts Awards

29

Reach Falls Phase I

18

Finance Treasury & Investments

29

Community Outreach

19

Human Resource Management

29

Ocho Rios Commercial Centre Ltd.

20

Information Technology

29

Runaway Bay Water Company Limited

20

Planning & Development

29

St Ann Development Company Ltd. (SADCo)

21

Public Relations & Marketing

29

•Dunn’s River Falls & Park

22

Montego Bay Advisory Committee

30

•Green Grotto Caves and Attractions

23

Negril Advisory Committee

30

•Turtle River Park

23

SENIOR EXECUTIVE COMPENSATION

31

•Craft Market

24

DIRECTORS COMPENSATION

32

•Roaring River Estate

24

FINANCIAL STATEMENTS

33

UDC GROUP SUBSIDIARIES & ASSOCIATE COMPANIES

25

Directors

26

Urban Development Corporation

26

Ackendown New Town Development Company Limited

26

CORPORATE PROFILE



ANNUAL REPORT 2009 - 2010

TABLE OF CONTENTS


ANNUAL REPORT 2009 - 2010

Core Values and Philosophy The UDC believes in people

We see ourselves as an organisation of people serving people. We are committed to making development happen for the people of Jamaica while nurturing a culture which values both our internal and external customers and is sensitive to their needs.

The UDC believes in quality

We are committed to employing the highest standards in the timely and efficient delivery of our products and services and will benchmark our operations against international practices.

The UDC believes in accountability

We will conduct our business in a transparent manner, while assuming responsibility for our actions and communicating openly and regularly with our clients and stakeholders.

Vision

To be the leading urban and rural development agency in the Caribbean.

The Corporate Mission Statement

The mission of the UDC is to fulfill our role as the nation’s main urban and rural development agency and facilitator, by effectively and efficiently assigning and managing our resources, so as to ensure the economic viability of the Corporation, sustainable national development and the best quality of life for the citizens of Jamaica.




Wayne Chen Chairman

Audrey Marks Deputy Chairman

Desmond Young

Joy Douglas General Manager

Cleo Taylor

Tom Tavares-Finson

Dahlia Kelly

Michael Subratie

Daniella Gentles

Zachary Harding

Lennox Elvy

Robert Russell

Ann-Marie Rhoden

Sancia Templer

Sally Porteous

Michael Ammar Jr.



ANNUAL REPORT 2009 - 2010

Board of Directors


ANNUAL REPORT 2009 - 2010

The Urban Development Corporation The post independence period of 1962, saw Jamaicans anxious to write their own history and take charge of their own destinies. This invariably saw an increase in migration levels overseas as well as to principal townships. It was in this context of a strained urban fabric that the Urban Development Corporation (UDC), was established by an Act of Parliament in 1968.

The Corporation was given the responsibility of ensuring ‘planned and orderly development where and when needed in Jamaica, within the framework of national priorities�. Moreso, this would be effected in the planning and designing of urban environments within areas designated or determined for the operation of the Corporation. This also meant the facilitation of urban renewal and revitalization by the undertaking of large scale projects which would not be attractive to the private sector and in so doing play a catalytic role in the development of the particular area.

A statutory Corporation, staffed by a multidisciplinary cadre of professionals, the UDC is involved in urban and regional planning, property development, construction of large resort, residential, educational, sporting and convention facilities. Although traditionally operating in designated

Ms. Yvette Sibble, Deputy General Manager , Legal and Estate Managemant Services, presents award to Employee of the Quarter Mr. Desmond Lennon

Colonel Audley Carter, Chief Business Partner, Human Resource Management, addresses staff at a General Staff Meeting held at the Jamaica Conference Centre




planning for five areas, in keeping with the mandate to return to core functions. These areas are downtown Kingston and Port Royal, Caymanas, St Catherine, Ocho

General Staff Meeting held at the Jamaica Conference Centre

Rios, St. Ann, Falmouth, Trelawny and Montego Bay, St. James. The Corporation’s nonplanning operations are executed through a group of subsidiaries and associate companies involved in the management of recreational facilities including the world famous /award winning Dunn’s River Falls and Park as well as convention and water supply facilities. The UDC is guided by a Board of Directors drawn from the public and private sectors who have responsibility for providing the policy framework and oversight to facilitate the Corporation carrying out of its mandate. The day to day operations of the UDC are guided by an executive team led by a General Manager, with Deputy General Managers responsible for Corporate Security and Facilities Management, Legal and Estate Management Services, Company Secretariat, Economic Development and Corporate Relations, Finance, Administration and Treasury and Human Resource Management.



ANNUAL REPORT 2009 - 2010

areas, the UDC is currently engaged in development


ANNUAL REPORT 2009 - 2010

Chairman’s Report The Corporation during the 2009-10 financial year embarked on an ambitious plan to move the organization to a service oriented entity, while effecting development plans for the five selected areas, during a period of global as well as national recession. The national landscape saw Jamaica preparing to enter a Standby Arrangement under a 27 month programme with the International Wayne Chen

Monetary Fund, to assure adequate foreign reserves over the period, as

the country engages in the streamlining of public sector expenditure. This includes the divestment of loss making public entities and facilities and the strengthening of the legislative frame work and debt management strategy.

Against this background, the Corporation has sought to improve its own efficiencies and to commence the process of divesting management of non-core functions. Consequently, Corporate Goals with a three year life cycle were established to include :

1. Returning the Corporation to its core functions as defined by the UDC Act

2. Redesigning the Corporation structure and staffing in alignment with the mission and objectives of the

UDC (including transforming the culture to one of providing excellent customer service delivery)

3. Assuring the financial viability and solvency of the Corporation

These were underpinned by strategic initiatives inclusive of –

• Restructuring the corporate balance sheet • Identifying and divesting non-core assets • Restructuring the Corporation • Implementing an enterprise wide project management methodology. In reviewing the performance for the period, the Corporation was able to achieve or at a minimum, start the implementation of some of the strategic initiatives. In some instances, the progress was not at the pace expected, but I believe that inroads have been made, an overview of which has been provided in the pages of this Annual Report.

Indeed as the Corporation seeks to return to core functions, we are cognizant that there will be challenges, especially in how the expectations of the Corporation will be dealt with. Honourable Prime Minister, we welcome the challenge as we advance the process of national development and on behalf of the Board, Management and Staff of the Urban Development Corporation, I present the Annual Report of the Corporation for the financial year April 2009 to March 2010.

Wayne Chen Chairman




The Urban Development Corporation having the previous year observed its 40th Anniversary of operation and tasked by portfolio minister and Prime Minister, Honourable Orette Bruce Golding, to return to core, has dedicated itself to achieving this mandate with the same steadfastness that has guided its existence to date. Desmond Young, Acting General Manager

To this end, the Corporation continued to implement the

recommendations coming out of the Management Audit commissioned during the previous financial year, results of which would guide the streamlining and repositioning for greater alignment and efficiencies. This retooling necessitated the wind up of some existing operations and departments to facilitate the reconfigured UDC. One notable action in this regard was the winding up of the Urban Maintenance (1977) Limited, the subsidiary of the UDC responsible for management of parking facilities in downtown Kingston, the maintenance of assets on the Waterfront as well as some of the other areas. Some operations from this entity were subsumed into the portfolio of the Corporate Security and Facilities Management Division. During the year too, greater emphasis was placed on setting the Corporation on the right path with regards to its information technology infrastructure, a programme that will extend into the next financial year. As a responsible urban planning agency, the Corporation has also placed even greater importance on environmental matters and has increased its human resource by establishing a full Department, Natural Resource Management and Environmental Planning, in November 2009. The improvement to the information system infrastructure and creation of the environmental department are critical to the Corporation achieving its objectives and being more responsive to the mandate and as such stand alone reports follow on these areas. The Corporation refined its focus during the year on five development areas – downtown Kingston and Port Royal, Montego Bay, Ocho Rios, Falmouth and Caymanas. This involved the engagement of stakeholders in pulling together development plans for the areas. Even as we were engaged in the development planning process, the Corporation continued to carry out the business as usual activities. Some projects which came in for attention internally were the creation of a comprehensive and integrated IS strategy and the development of an enterprise wide risk management framework and performance management system. Externally, work continued on the Montego Bay Convention Centre, the Simon Bolivar Cultural Centre and the



ANNUAL REPORT 2009 - 2010

General Manager’s Report


ANNUAL REPORT 2009 - 2010

management of the Tax Incentive Programme for Urban Renewal. The tax Incentive Programme for Urban renewal was first launched in downtown Kingston in 1995. Conceied as a vehicle for the galvanising of development and rehabiltation of special development areas, through the accessing of incentives. The Tax Incentive was formally launched in Spanish Town during the review year, was renewed in the Downtown Special Development Area up to 2015, with renewal being pursued for the Montego Bay programme.

There were no new applications during the year, however a review of the programme

commenced with the results expected to drive an accelerated employment of the programme in the development process.




A new Information Strategic plan has been developed with one of the main tenets being the modernisation of the Corporation’s technology infrastructure. One key achievement has been the virtualisation of the server environment through the deployment of VMWare, an industry leader, for the replacement of physical servers. This has resulted in the retirement of 8 of the older systems and the replication of the new environment. The virtualisation of the organisation’s server infrastructure is in keeping with leading trends in the industry. The benefits to be gained include improved manageability of resources, heightened network resilience, administrative and functional flexibility and improved power consumption, translating essentially into a greener environment. Network improvements have also been realized. Several contracts were awarded for the streamlining of network infrastructure at the Head Office, the continuation of the process of replacing over 300 obsolete workstations across the organisation, and an imminent upgrade to the Wide Area Network (WAN) infrastructure. The goal is to achieve a 98% computer penetration corporation-wide within the next 2 years. Notebook Computers have been issued to all members of management and a wide cross-section of professional staff to improve the levels of access to mobile computing resources as the need for field work increases. The infrastructural changes to the Wide Area Network are expected to improve throughput by providing a greater bandwidth for the support of core and non-core applications as well as the deployment of additional converged services such as Voice over IP (VoIP) and video communications. The infrastructural changes are critical to provide a stable foundation for the realisation of planned initiatives which require the new infrastructure. For the technical teams, investments in AutoCAD and GIS Licenses have placed the technical arm of the Corporation at the cutting edge of world trends as the Corporation standardises on technology that meets world standards. The derived functionality from these investments is expected to exceed current and projected software requirements for computer aided design (CAD) and spatial analysis. Output devices such as plotters and printers have been rationalised and upgraded across the organisation to ensure that the required outputs can be produced. The changes are timely and critical to support the deployment of new and upgraded solutions that align with the strategic business objectives of the corporation.



ANNUAL REPORT 2009 - 2010

Information Systems Department


ANNUAL REPORT 2009 - 2010

NATURAL RESOURCES MANAGEMENT AND ENVIRONMENTAL PLANNING The Natural Resources Management and Environmental Planning (NRMEP) Department is one of the newest Departments within the Corporation’s organizational structure. The current staff complement includes six (6) employees, a Director, Manager, Environmental Coordinator and three (3) Environmental Officers. Prior to this, staff with responsibility for environmental management for the Corporation was subsumed within the Urban and Regional Planning Department and within the former Hellshire Environmental Management Members of the Natural Resources Management and Environmental Planning (NRMEP) Team – l-r: Burchell Gilbert, Winston Stewart, Clifton Lewis and Phillip Seaton

Programme (HEMP). The Corporation however recognized the need for a fully functional dedicated Department for environmental management matters and therefore established the Department in November 2009.

During the period 2009-2010 the Department continued to fulfil its mandate by being actively involved Royan Gayle, Loretta Knibb, Sean Townsend, Sara Simpson, Damion Whyte, Danae Vacianna and Tamia Harper

in the environmental monitoring and management of the facilities and

attractions owned and operated by the Corporation including Dunn’s River Falls and Park, Reach Falls, Fort Clarence Beach and Two Sisters inter alia. Activities included conducting scheduled monthly and quarterly monitoring of these facilities and submitting reports to the regulatory agency at a cost of approximately J$ 2,000,000 to the Corporation. The Department also continued to ensure that environmental principles and concepts are taken into consideration during the development planning process and that projects being implemented by the Corporation were regularly monitored to ensure achivement of the Corporation sustainable development goals.

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During 2009/2010 the Department embarked on two (2) major projects which included the initiation of the process to establish three (3) Biosphere Reserves in Ocho Rios, Portland Bight and Caymanas Estate. The second initiative was

Ocho Rios Bay Beach, St. Ann

undertaking the pre-requisites to apply for Blue Flag Certification for three (3) of its beaches Long Bay 1, Ocho Rios Bay Beach and Bluefield’s Beach.

In addition the Department continued its outreach and environmental education programme which included commemoration of important environmental events, namely World Wetlands Day (February 2, 2010), International Biodiversity Day (May 22, 2009) and National Tree Planting Day (October 2, 2009), and included the launch of the 2009/2010 Hellshire Schools Environment Competition.

11

ANNUAL REPORT 2009 - 2010

Long Bay Beach Park, Hanover


ANNUAL REPORT 2009 - 2010

Projects Reports 2009-2010 During the financial year , the Corporation continued in the execution of projects currently on ground even as it sought to redirect resources to the creation of development plans for the five areas.

THE JAMAICA CONFERENCE CENTRE The review period April 09- March 2010 was a challenging but rewarding year for the Jamaica Conference Centre. The commitment of the management and staff to providing quality customer service was reflected in the verbal and written commendation from clients. Several major events were held, among them, the International Inter-City Intangible Cultural Cooperation Network (ICCN) hosted by the Mayor of Kingston which saw Mayors from countries such as Trinidad and Tobago, The Republic of Korea, New Zealand, Czech Republic and South Africa being represented. The hosting of the Private Sector Development Programme (PSDP) Seminar and Luncheon as well as the installation ceremony of the Custos of St. Andrew, and other events brought significant positive media attention to the Centre.

The operations at the Conference Centre were impacted by:

Ongoing refurbishing

Budgetary cuts which prevented the completion of some of the refurbishing works.

Upgrading of the kitchen equipment

Reduced staff complement due to the re-assignment of three team members to the UDC head

offices.

The refurbishing continued throughout most of financial year and resulted in limiting the number of bookings which could be accepted. Additionally, majority of the refurbishing works had to be conducted around existing bookings which presented its own challenges, exacerbated at times by some contractors not meeting expected timelines. The limited bookings hindered the revenue earning potential of the Centre. Although the management and staff welcomed the refurbishing of the Centre, it often times proved very challenging in coordinating activities between existing bookings, proposed bookings and contractual works. Nevertheless, the management and staff of the Centre continued to display a commitment to providing good quality service to clients.

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Agreement was entered into with caterers, From Thought to Finish, to provide food and beverage service for all events held at the Centre. This arrangement was predicated on the completion of the kitchen works. However, significant budgetary cuts impacted aspects of the proposed refurbishing works in regard to the kitchen. Consequently, the Centre has continued to operate with limited bookings in keeping with the capabilities of the facilities and equipment of the kitchen which has decreased the earning potential of the Centre.

The refurbishing exercise conducted during the review period included:

1. Re-carpeting of all

the Conference

and Caucus rooms

2. Repairs to Delegates

3. Installation of storm

Dining Room

shutter

4. Installation of

Aluminum doors

5. Termite treatment

6. Hard and soft landscaping

7. Repairs to Harbour Lounge

Flooring

Members of staff of the Jamaica Conference Centre – l-r: June Martin, Nicholette Wade, Doreen Blake, Shelly Byroo, Simone Dillon and Annmarie Dixon

8. Refurbishing of some furniture

Total revenue generated this year was $ 35,314,441, a significant increase compared to the previous period. This was due mainly to the continual rental earnings from the use of Caucus Rooms as Civil Court. In addition, Conference packages, where clients were able to make payment for meeting rooms and food and beverage costs in one package were reintroduced. The revenue information depicted in the following graphs include income from food and beverage.

13

ANNUAL REPORT 2009 - 2010

Subsequent to the 15th Session of the International Seabed Authority Meetings held in 2009, an Interim


13,000,000.00 12,000,000.00 11,000,000.00 10,000,000.00 9,000,000.00 8,000,000.00 7,000,000.00 6,000,000.00 5,000,000.00 4,000,000.00 3,000,000.00 2,000,000.00 1,000,000.00 0.00

2008 2009

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Month

Revenue by Quarters for the Financial Period 08/09 & 09/10 9,000,000.00 8,000,000.00 7,000,000.00 6,000,000.00 5,000,000.00 4,000,000.00 3,000,000.00 2,000,000.00 1,000,000.00 0.00

2009 - 10

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Revenue

ANNUAL REPORT 2009 - 2010

Revenue for the Period April 2008 - March 2010

Month

14


St James The development planning continued for Montego Bay, as the Corporation reviewed existing plans while engaging stakeholders’ input to advance the planning process. Simultaneously, work continued on the projects below:

Montego Bay Convention Centre During the period, work continued on the Montego Bay Convention Centre, in Rose Hall the result of an agreement between the governments of the People’s Republic of China and Jamaica. The project is being executed through the China Complete National Import Export Corporation. The convention centre on completion will position western Jamaica as a major convention facility, providing exhibition space, banquet

Prime Minister Bruce Golding (r), Chinese Vice-President Xi Jinping (c), and Ambassador of China to Jamaica, Chen Jinghua, break ground for the Montego Bay Convention Centre in February 2009.

facilities and meeting rooms, tapping into this component of the market that could not previously be serviced. Approximately US$45.4M is being spent on the project.

Montego Bay Sports Complex Work continued on the Montego Bay Sports Complex with the provision of a 7000 spectator seating stand, accommodating sanitary conveniences and administrative facilities. This phase of the work is being implemented at a cost of US$21M and will complement works completed during previous phases inclusive of all weather Mondo track and the football field. The Montego Bay Sports Complex will provide for the western end of the island, a much needed sporting facility.

15

ANNUAL REPORT 2009 - 2010

Regional Reports


ANNUAL REPORT 2009 - 2010

Work being completed on St. William Grant Park

Old Hospital Park Works commenced on the Old Hospital Park on Gloucester Avenue, with the stated objective of providing a green space for residents as well as visitors to the city of Montego Bay. The project is being funded by the Tourism Enhancement Fund (TEF) and will include hard and soft landscaping and sanitary facilities.

Downtown Kingston and Port Royal The development area of Downtown Kingston and Port Royal was the focus of a multi stakeholder planning group, as efforts were made to incorporate all entities involved in Downtown at the The Downtown Kingston Municipal Transport Centre

planning table. Discrete projects were however still being advanced.

St William Grant Park Refurbishing of the St. William Grant Park was completed during the review period and handed back to the Kingston and St Andrew Corporation (KSAC), which hosted its December 2009 Tree Lighting event in the park. During the project, administrative and sanitary facilities were upgraded and the centerpiece fountain redesigned. Landscaping was also carried out at the park.

Urban Transport Centre The Transport Centre, located at Water Lane in downtown Kingston was completed at the end of the financial year by the UDC through contractors, Jatlin Construction and Associates Construction of the complementary

16


financial year, had not kept pace with the bus park as had been the intent. A public education programme was undertaken by the UDC and its partners, the KSAC and the Transport Authority of Jamaica regarding the changes consequent on the construction of the bus park.

Simon Bolivar Cultural Centre North Parade already known for the historic Ward Theatre, will also house the Simon Bolivar Cultural Centre, construction for which commenced during the review year. The project which is funded by the governments of the Bolivarian Republic of Venezuela and Jamaica, will see the realization of a 350 seat multi-cultural centre. The Simon Bolivar Cultural Centre is expected to commemorate the stay of the Venezuelan National Hero on Princess Street in Downtown.

St Catherine Caymanas Estate Planning continued for the 4332 hectare Caymanas Estate during the financial year. Designated a UDC area in April 2009, the components of the

Hellshire Glades Phase II, St. Catherine

plan will include housing solutions, a mega sporting facility, manufacturing, agro processing and the creative industries. Central to the development of the plan is the Caymanas economic zone which is expected to drive the redevelopment process.

Hellshire Glades II The 42 unit Hellshire Glades Phase 2 was completed during the year under a contract valued at $185M. This project complements the phase 1 development of 166 units, previously done through the West Indies Home Contractors Limited.

Halfmoon Bay Sewer Line The Corporation is also engaged in planning for and scheduling infrastructure works in the Hellshire area. To this end, repair works valued at approximately $854,000 was undertaken on the Halfmoon Bay Sewer Line .,

17

ANNUAL REPORT 2009 - 2010

commercial facility, which was not being undertaken by the UDC, construction of which, at the end of the


ANNUAL REPORT 2009 - 2010

Emancipation Square, Spanish Town The historic Emancipation Square came in for attention during the financial year, as the UDC through its Social Intervention Department (SID) undertook the stabilization of several of the structures around the square. This included the Old Kings House and the Court House, with the intent of making the structures physically able to undergo restoration works. The Social Intervention Department was established after the winding up of the previous Lift Up Jamaica Programme, but utilizes the same methodology in undertaking projects for the social advancement of communities.

GC Foster College Construction commenced on facilities for the G C Foster College of Physical Education, with additional changing rooms and sanitary facilities and seating for some 1400 spectators. The work was carried out by the Engineering Regiment of the Jamaica Defence Force. Upgrading to the football field will be undertaken in the new financial year.

Portland Reach Falls- Phase 1 Upgrading of the Reach Falls Attraction in Portland continued with completion of a car park. Construction of a two storey administrative building, ticket and security office, craft hut, food and beverage hut, nurse’s station, souvenir shop, sanitary conveniences and waste treatment and disposal system also continued during the period. The attraction remained operational during the upgrading receiving visitors from Wednesday to Sunday weekly.

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The Corporation’s mandate to make development happen is seen in a holistic manner and therefore focus was also placed on activities geared towards public education and capacity building of the beneficiaries in the various areas of operation. The bi-annual Green Expo was one such event, where the UDC showcased its environmental stewardship. Parenting seminars and Reading Readiness Workshops were also undertaken in the various project areas. In the case of the latter, the participating teachers in Portland reported an improvement in the reading levels of the students as the strategies shared in the UDC sponsored workshops were utilized in the classrooms.

Green Expo 2009

ANNUAL REPORT 2009 - 2010

Community Outreach

Hellshire Summer Fun

Hellshire Enviro Fair

Green Grotto Enviro Schools Competition Labour Day Project at Hellshire Glades

Fireworks on the Waterfront

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ANNUAL REPORT 2009 - 2010

OCHO RIOS COMMERCIAL CENTRE LIMITED Ocho Rios Commercial Centre Limited (ORCC), a wholly owned subsidiary of the UDC), owns and operates the Ocean Village Shopping Centre. The complex became operational in 1974 to complement its resort and residential properties within the environs of Ocho Rios.

The complex consists of four (4) blocks measuring 73,034 square feet and encompasses ten (10) offices and seventy six (76) shops which offer a variety of amenities. Its competitors are Beecham Plaza, Island Plaza, Island Village, Soni’s Plaza, The Harbour Shops and Taj Mahal. It should be noted that Soni’s Plaza, The Harbour Shops and Taj Mahal cater primarily to non-resident visitors.

The organisation’s core functions are to provide effective and efficient maintenance services to the building, grounds and gardens. This is in addition to the rental of all the lettable spaces and the timely collection of rental and maintenance fees.

Based on the nature of the operation, two sets of accounting records are kept namely the Maintenance Charged Account- for which transactions directly related to the tenants, for example: garbage service collection are accounted for and the Administrative Account that reports the rental and other incomes and its associated expenditures such as parent company management fee.

The ORCC complex is slated for development under the UDC’s 2008- 2030 Ocho Rios Re- Development Plan.

RUNAWAY BAY WATER COMPANY LTD. The Runaway Bay Water Company Ltd. is a wholly owned subsidiary of the Urban Development Corporation. During the Financial year April 2009 to March 2010, the Company had nineteen full time employees, a Manager assisted by four admin staff to carry out the Commercial Office functions, a System Supervisor and thirteen System Operators who manned the two Well Plant, around the clock to monitor quality and to extract, treat and distribute 2.31Million m3 of potable water. 1.76Million m3 or 79.28% of this production was sold wholesale to the National Water Commission (NWC) for re-distribution to their customers in communities around the Runaway Bay area and the remainder was distributed directly by the company to its 326 domestic and 62 commercial customers in the Cardiff Hall sub-division of Runaway Bay.

20


twenty four hours per day, seven days per week meeting all the standards stipulated for potable water by the Jamaican Government and monitored by the various statutory regulatory agencies.

The company was able to cope with increases in inflation, electricity and the depreciation of the Jamaican dollar by the monthly adjustment of the Price Adjustment Mechanism (PAM) granted by the Office of Utility Regulations (OUR). The accumulated PAM was rolled into the rates on July 1, 2009, as approved by the (OUR). Based on the unaudited Financials, the Company generated Gross Sales Revenue of J$114.5M an increase of J$35.18M or 44.25% over the previous year with an after taxation profit of J$18.6M which was J$30.4M better than the previous year. Also a charge of $24M management fees was paid to its parent, the UDC.

ST. ANN DEVELOPMENT COMPANY LIMITED OVERVIEW The St. Ann Development Company Limited (SADCO) was established in 1967 under the name St. Ann Redevelopment Company which was amended in 1997 to reflect the present company name. The original mandate of the company has changed somewhat over the years, with the main focus of operation how to manage and oversee the day to day operations of all attractions and properties owned by the Urban Development Corporation in St. Ann . The following is a list of the main entities managed:

• Dunn’s River Falls & Park

• Green Grotto Caves and Attraction

• Ocho Rios Bay Beach

• Turtle River Park

• Roaring River Estate

• Ocho Rios Craft Market

• Pineapple Place Craft Market

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ANNUAL REPORT 2009 - 2010

Through out the year the company accomplished its mandate to supply potable water to all its customers


ANNUAL REPORT 2009 - 2010

• Laughing Water

• Undeveloped Lands

The main corporate objective pursued by SADCO for the 2009/2010 Financial Year, was the restructuring of its organizational structure and human resources complement to include a Marketing , Landscaping , Maintenance and Training departments. The restructuring was considered vital to effect efficient day to day operations of all entities and to maximize the potential of revenue centres.

Dunn’s River Falls & Park Dunn’s River is possibly the most visited attraction in the Caribbean region. This unique attraction offers a magnificent setting with lush flora and a spectacular cascading waterfall which has created one of the most challenging adventure attractions by way of a climb up the falls. With the continued appeal of this attraction, it is necessary to offer first class service facilities while securing the integrity of the natural environment. Among the critical projects earmarked for implementation are:

• Expansion & Upgrading of Sewage Treatment System

• Beach Replenishment

• Electronic ticketing and Access Control System

The management of SADCO utilised existing structures on the property to fit the needs of the operation by

• Refurbishing the old Ticket Office to create a Customer Service

Centre

Dunn’s River Falls, St. Ann

• Establishing the central parking area as a landscaped shopping

courtyard

• Establishing the lower parking area for additional locker solutions and photo/video services

• Refurbishing existing building on the beach to offer snacks and

beverages

• Refurbishing existing building at tunnel level to offer sundry items

• Installing uniform signage throughout the property

• Refurbishing of existing bathroom facilities throughout the property

The implementation of a full Landscape Department has allowed for major landscaping projects to be undertaken.

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The Green Grotto attraction has unlimited potential for generating new revenue for which SADCO feels can only be realized in the short term by divestment to an established interest, capable of marketing this unique attraction. Significant capital projects were undertaken at the Green Grotto between 2004-2007. However, other areas critical to the offering of a more complete product and which would enhance the revenue potential of the attraction are still to be addressed. Activities engaged in during the year include:

a) Significant increase in tour counts for the Green Grotto Caves & Dunn’s River Falls Combo

package tour over the previous year, capitalising on the closer proximity of the attraction to the

Falmouth pier.

b) Operation of Logo Shop with Green Grotto souvenir items for sale to guests.

c) Continued offering of affordable packaged tours for educational groups from the primary to

tertiary levels of the education system.

d) Hosting of travel agents through the provision of familiarisation tours as recommended by the

Jamaica Tourist Board

Recognition by Earth Check, leading certification and benchmarking organisation, as an Industry

e)

Star Performer as a result of exceeding best practice standards in our annual Benchmarking.

TURTLE RIVER PARK The Turtle River Park is truly the centrepiece of Ocho Rios. The area is always beautifully landscaped and offers a peaceful and relaxing environment for the town of Ocho Rios. SADCO is proposing the addition of a jogging and exercise trail on the outer perimeter of the park to attract fitness enthusiasts. SADCO is also proposing the acquisition of the lot on the north western side Turtle River Park, St. Ann

23

ANNUAL REPORT 2009 - 2010

GREEN GROTTO CAVES


ANNUAL REPORT 2009 - 2010

of the park for the addition of a small amusement park for children which could include a miniature golf circuit. The park is growing in popularity as a venue for special events and this additional revenue along with other existing and planned revenue centres is needed to offset the cost of maintaining this green space. Events hosted during the year included a Seafood Festival and the annual Tree Lighting ceremony.

CRAFT MARKETS The UDC is presently working on the outline of an Artisan Village for the property at Shaw Park South which would consolidate and incorporate all the existing markets being managed by SADCO. This is in keeping with the Ministry of Tourism’s plan to implement an Artisan Village concept in all the major tourism centres.

ROARING RIVER ESTATE Management of the Roaring River Estate continued during the financial year. The property is over 1,100 acres and much of this is watershed area. SADCO has proposed the refurbishing of the great house on the property to create a tour which will be marketed primarily to the cruise ship market as a “Taste of Old Jamaica” with a traditional plantation tea house offering a taste of Jamaica’s indigenous fruits and spices. The successful implementation of which will diversify the attractions revenue stream and defray the significant cost of maintaining the great house.

24


AS AT MARCH 31, 2010

• ACKENDOWN NEWTOWN DEVELOPMENT COMPANY LIMITED

• BLOODY BAY HOTEL DEVELOPMENT LIMITED

• CAYMANAS DEVELOPMENT COMPANY LIMITED

• CENTRAL WASTEWATER TREATMENT COMPANY LIMITED

• HELLSHIRE MARBLE LIMITED

• KINGSTON WATERFRONT REDEVELOPMENT COMPANY LIMITED

• KINGSTON WATERFRONT HOTEL COMPANY LIMITED

• LILLIPUT DEVELOPMENT CORPORATION LIMITED

• MONTEGO FREEPORT LIMITED

• MONTEGO BEACH (1975) LIMITED

• MONTEGO SHOPPING CENTRE LIMITED

• NATIONAL HOTELS AND PROPERTIES LIMITED

• OCHO RIOS COMMERCIAL CENTRE LIMITED

• PEGASUS HOTELS OF JAMAICA LIMITED

• PORTMORE COMMERCIAL DEVELOPMENT COMPANY LIMITED

• PORTMORE NEWTOWN DEVELOPMENT COMPANY LIMITED

• PORT ROYAL DEVELOPMENT COMPANY LIMITED

• ROSE HALL RESORT LIMITED

• RUNAWAY BAY WATER COMPANY LIMITED

• RUTLAND POINT BEACH RESORTS LIMITED

• ST. ANN DEVELOPMENT COMPANY LIMITED

• SEACASTLES LIMITED

• SEASIDE AT ROSE HALL DEVELOPMENTS LIMITED

• URBAN MAINTENANCE (1977) LIMITED

25

ANNUAL REPORT 2009 - 2010

URBAN DEVELOPMENT CORPORATION SUBSIDIARIES & ASSOCIATE COMPANIES


ANNUAL REPORT 2009 - 2010

URBAN DEVELOPMENT CORPORATION SUBSIDIARIES & ASSOCIATE COMPANIES DIRECTORS AS AT MARCH 31, 2010 Urban Development Corporation

Muna Issa

Wayne Chen - Chairman

John Stuart Fisher

Audrey Marks - Deputy Chairman

Thomas Tavares-Finson

Joy Douglas - General Manager

Yvette Sibble

Robert Russell

Ann-Marie Rhoden

Michael Subratie

Daniella Gentles

Sancia Templer

Marlene McLean - Company Secretary

Michael Ammar Jr Tom Tavares-Finson

Caymanas Development Company Limited

Zachary Harding

Cleo Taylor - Chairman

Sally Porteous

Joy Douglas

Daniella Gentles

Patrick Stanigar

Lennox Elvy

Dahlia Kelly

Dahlia Kelly

Anthony Hyde

Desmond Young

David Mais

Cleo Taylor

Paul Lalor

Ann-Marie Rhoden

William Mahfood Robert Woodstock Desmond Young

Ackendown Newtown Development Company Limited

Central Wastewater Treatment

Joseph M. Matalon - Chairman

Company Limited

Ann Marie Rhoden

Lennox Elvy - Chairman

Milverton Reynolds

Joy Douglas

Wayne Chen

Howard Mitchell

Wentworth Charles

Earl Samuels

Wilfred Baghaloo

Everton Hunter

Sagicor Life Jamaica Limited - Secretariat

Akiva Schiff Marlene McLean - Company Secretary

Bloody Bay Hotel Development Limited John J. Issa - Chairman

26


Montego Freeport Limited

(winding up in progress)

John Gourzong - Chairman

Reginald Carl Chantrielle

Barrington Baugh

Winston Hayden

Dale Sinclair

Raymond Wright

Methelina Scarlett-Jones

Avris Pamela Whittingham

Robert Russell

Norman Patrick Saulter

Michael Subratie

Richard Clarke

Richard Clarke

Yvette Sibble

Melissa Chang Marlene McLean - Company Secretary

Kingston Waterfront Redevelopment Company Limited (dormant)

National Hotels and Properties Limited

Michael Ammar Jr

Tim Scarlett

Francis Kennedy

Lennox Elvy Michael Subratie

Kingston Waterfront Hotel Company

Joy Douglas

Limited (dormant)

Yvette Sibble

Michael Ammar Jr Francis Kennedy

Ocho Rios Commercial Centre Limited

Joy Douglas

Junior Haughton - Chairman Martin Lyn

Lilliput Development Corporation Limited

Richard Clarke

(dormant) Winston Dear

Pegasus Hotels of Jamaica Limited

Chryseis Reynolds

Hon John J. Issa - Chairman Rev Denzil Barnes

Montego Beach (1975) Limited

Christopher Bovell

(dormant)

Alston Douglas

Wayne Chen

Joy Douglas

Joy Douglas

Desmond Young Michael Subratie Robert Russell Daniella Gentles Dahlia Kelly Marlene McLean - Company Secretary

27

ANNUAL REPORT 2009 - 2010

Hellshire Marble Limited


ANNUAL REPORT 2009 - 2010

Portmore Commercial Development

Runaway Bay Water Company Limited

Company Limited

Dwight Clacken - Chairman

Desmond Young

Peter Morais

Sancia Templer

Chryseis Reynolds

Lennox Elvy

Ann Marie Rhoden

Daniella Gentles

Joy Douglas

Barrington Chisholm

Veronica Bennett-Warmington (Alternate)

Keith Smith Lloyd Davis

Rutland Point Beach Resort Limited

Audrey Deer-Williams

(dormant)

Ludlow Bowie

Shalman Scott Robert Russell

Portmore New Town Development

Michael Subratie

Company Limited (dormant)

Sally Porteous

Desmond Young

Yvette Sibble

Sancia Templer Lennox Elvy

St. Ann Development Company Limited

Richard Clarke

Junior Haughton - Chairman Laura Heron - General Manager

Port Royal Development Company Limited

Nathan Morrison

Thomas Tavares-Finson

Patrick Drake

Daniella Gentles

Delroy Giscombe

Robert Russell

Derrick Chang

Joy Douglas

Carlton Cole

Martin Lyn

Desmond Morgan

Carrole A.M. Guntley

Alfred Lee

Edison Galbraith

Zachary Harding

Robert Stephens

Marcia Scott-Golding

Michael Campbell

Richard Clarke

Lois Sherwood

Seacastles Limited (dormant)

Donovan Perkins

Shalman Scott Robert Russell Chryseis Reynolds

28


Finance Treasury & Investment

Limited

Audrey Marks - Chairman

Wayne Chen

Lennox Elvy - Deputy Chairman

Daniella Gentles

Michael Subratie

Robert Russell

Veronica Bennett-Warmington

Joy Douglas

Sancia Templer

Don C. Stansberry Michele Rollins

Human Resource Management

Peter Williams

Thomas Tavares-Finson - Chairman Dahlia Kelly

Urban Maintenance (1977) Limited (ceased trading)

Information Technology

William Masterton

Lennox Elvy - Chairman

Francis Kennedy

Zachary Harding

Desmond Young

Planning & Development

Richard Clarke

Wayne Chen - Chairman

URBAN DEVELOPMENT CORPORATION

Desmond Young

BOARD COMMITTEES

Zachary Harding

Audit

Robert Russell

Wayne Chen - Chairman

Audrey Marks

Ann-Marie Rhoden

Sancia Templer

Francis Kennedy

Sally Porteous

Lennox Elvy

Michael Ammar Jr

Triff Snape

Francis Kennedy Michael Subratie Joy Douglas

Contracts Award Thomas Tavares-Finson - Chairman Desmond Young

Public Relations & Marketing

Daniella Gentles

Zachary Harding - Chairman

Wentworth Charles

Robert Russell Michael Ammar Jr Dahlia Kelly

29

ANNUAL REPORT 2009 - 2010

Seaside at Rose Hall Developments


ANNUAL REPORT 2009 - 2010

Montego Bay Advisory Board Robert Russell - Chairman George Thomas Godfrey Dyer Noel Donaldson Wyley Sweeney Cecil Davis Merrick Fray Patrick Fletcher John Gourzong Methelina Scarlettt-Jones Adrian Grant Anthony Pearson Norman Hall Karl Jarrett Homer Davis

Negril Advisory Board Shalman Scott - Chairman Eric Clarke Linus Aruliah Cosmo Brown Roy Hutchinson Carey Wallace Patricia Sinclair-Stair Opal Beharie Joan Smalling Russell Hammond

30


FINANCIAL YEAR APRIL 1, 2009 – MARCH 31, 2010 Position of Senior Executive

Salary $

Gratuity or Performance Incentive $

Travelling Allowance or Value of Assigned Motor Vehicle $

Pension or Other Other Retirement Allowances Benefits ($)

General Manager 1 *

Vacation Pay

1,670,643.44

General Manager 2** 8,558,707.32

Notice pay & Redundancy Payments s 8,920,400.16

Non-Cash Benefits ($)

-

608,919.88

Total ($)

10,591,043.60 9,167,627.20

DGM- Legal Division

7,417,882.24

824,268.00

DGM-Finance & Administration

6,404,566.52

748,931.56

DGM-Economic Development and Corporate Relations

2,561,826.60

277,045.63

DGM- Corporate Securities and Facilities Management

6,990,597.03

824,268.00

DGM-Development Planning and Management

4,043,440.38

199,419.67

DGM- HRM

7,272,505.02

824,268.00

8,096,773.02

Company Secretary

6,806,048.29

842,096.99

7,648,145.28

Total

50,055,573.40

-

4,540,297.85***

8,242,150.24

-

7,153,498.08 2,838,872.23

1,754.00

1,754.00

166,415.27

2,445,978.59

1,754,294.31

10,674,694.47

7,814,865.03

6,165,323.63

-

67,718,298.31

*Note: This represents redundacy payments for the former General Manager. **Note: This represents current general manager compensation package. ***Motor vehicle cost of $4,540, was included in Administrative and General Expenses (Page 4) in the Financial Statement.

31

ANNUAL REPORT 2009 - 2010

SENIOR EXECUTIVE COMPENSATION


ANNUAL REPORT 2009 - 2010

DIRECTORS’ COMPENSATION FINANCIAL YEAR APRIL 1, 2009 – MARCH 31, 2010

Position of Director

Fees ($)

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

All Other Compensation including NonCash Benefits as applicable ($)

Total ($)

Chairman

494,368

N/A

N/A

N/A

494,368

Deputy Chairman

216,755

N/A

N/A

N/A

216,755

Director

190,911

N/A

N/A

N/A

190,911

Director

429,342

N/A

N/A

N/A

429,342

Director

182,574

N/A

N/A

N/A

182,574

Director

240,098

N/A

N/A

N/A

240,098

Director

231,761

N/A

N/A

N/A

231,761

Director

133,388

N/A

N/A

N/A

133,388

Director

170,069

N/A

N/A

N/A

170,069

Director

195,913

N/A

N/A

N/A

195,913

Director

225,092

N/A

N/A

N/A

225,092

Director

237,597

N/A

N/A

N/A

237,597

Director

215,921

N/A

N/A

N/A

215,921

Director

193,412

N/A

N/A

N/A

193,412

Director

289,285

N/A

N/A

N/A

289,285

TOTAL

3,646,486

3,646,486

* Directors Fees of $4,676M on page 33 of the Financial (22b) include amounts for the UDC Directors above as well as for those of related companies. **Compensation not reflected for Executive members.

32


FINANCIAL YEAR APRIL 1, 2009 – MARCH 31, 2010

Position of Director

Fees ($)

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

All Other Compensation including NonCash Benefits as applicable ($)

Total ($)

Chairman

35,264

N/A

N/A

N/A

35,264

Director

83,351

N/A

N/A

N/A

83,351

Director

58,773

N/A

N/A

N/A

58,773

Director

87,091

N/A

N/A

N/A

87,091

Director

66,788

N/A

N/A

N/A

66,788

Director

32,058

N/A

N/A

N/A

32,058

Director

157,619

N/A

N/A

N/A

157,619

Director

51,827

N/A

N/A

N/A

51,827

Director

63,582

N/A

N/A

N/A

63,582

Director

63,047

N/A

N/A

N/A

63,047

Director

56.102

N/A

N/A

N/A

56.102

TOTAL

755,501

Amounts included in the total emolument for Directors $4,676,267 in the Audited Financials.

33

755,501

ANNUAL REPORT 2009 - 2010

DIRECTORS (ST. ANN DEVELOPMENT COMPANY) COMPENSATION


URBAN DEVELOPMENT CORPORATION FINANCIAL STATEMENTS MARCH 31, 2010


KPMG

RC. Sox 76 kinQsten jamaica, 11V Telephone Fax

Chartered Accountants The Victoria Mutual Building 6 Duke Street Kingston Jamaica, W.I.

e-tvlail

+1 (876) 922-6640 +1 (876) 922-7198 +1 (876) 922-4500 firmmailgikpma.corn jrn

INDEPENDENT AUDITORS' REPORT To the Members of URBAN DEVELOPMENT CORPORATION Report on the Non-consolidated Financial Statements We have audited the non-consolidated financial statements of Urban Development Corporation ("the corporation"), set out on pages 3 to 44, which comprise the statement of financial position as at March 31, 2010, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and consistently applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

KPMG, a jemaie. Qartnershp and a membe, fifm of the KPMG network of member finns ethkated mu: KPMG Imernat.onal CooperatNe ,"KPMG internal:one: ), a Sv.ss entJt.y

, ndeper,dem

E

14 lone: Tarun Hande Pazr:ck A tr., Painc,a Lnroy J Marsr.II

Cyr,. L Lamence Raw Tre ,er Remforcl Nor ,,ar Moe , Cnernaers


PMG To the Members of URBAN DEVELOPMENT CORPORATION

Report on the Non-consolidated Financial Statements, continued Opinion In our opinion, the non-consolidated financial statements give a true and fair view of the financial position of the corporation as at March 31, 2010, and of its financial performance, changes in equity and cash flows for the year then ended in accordance with International Financial Reporting Standards. Comparative figures The non-consolidated financial statements of the corporation as of and for the year ended March 31, 2009, were audited by another firm of chartered accountants who issued an unqualified audit opinion dated March 17, 2010. Certain accounting treatments applied in those financial statements were not consistent with the requirements of International Financial Reporting Standards and therefore have been adjusted and the comparative figures in the financial statements for the year ended March 31, 2010, have been restated accordingly, as described in note 29. The restated comparatives have not been audited by the predecessor auditors. Our audit procedures were limited to providing assurance on the opening balances for the purpose of expressing our opinion on the financial statements as of and for the year ended March 31, 2010.

Ke MG,, Chartered Accountants Kingston, Jamaica December 14, 2011


URBAN DEVELOPMENT CORPORATION

Statement of Non-Consolidated Financial Position Year ended March 31, 2010 Notes ASSETS

NON-CURRENT ASSETS Property, plant and equipment Investment properties Interests in subsidiaries and associates Due from related parties Investments in joint ventures Retirement benefit asset Deferred taxation CURRENT ASSETS Taxation recoverable Inventory of land and development projects Accounts receivable Cash and cash equivalents

3 4 5 6 7 8 17

9 10 11

TOTAL ASSETS

2010

2009*

$'000

$'000

1,514,759 23,489,861 229,018 332,447 1,220,530 461,539

1,404,552 18,599,703 229,018 419,761 1,138,055 14,733

27,248,154

21,805,822

59,273 969,060 203,258

30,855 1,145,035 402,424

718,018

1,356,138

1,949,609

2,934,452

29 197 7

24,740 274

222,788 5,219,990 325,718 21,006,557

222,788 5,181,080 325,718 16,899,195

26,775,053

22,628,781

426,192 211,256 319,346

424,265 212,100

EQUITY AND LIABILITIES

GOVERNMENT EQUITY Capital contributions Capital reserve General reserve Revenue reserve Advances to the Government ofJamaica NON-CURRENT LIABILITIES Due to related parties Provision for future infrastructure cost on land sold Deferred taxation Long-term loan CURRENT LIABILITIES Due to regional companies Accounts payable and other current liabilities Short-term loan

12 13 14 15

6 16 17 20

18 19 20

TOTAL EQUITY AND LIABILITIES

874,637 1,831,431

636,365

37,395 553,884

15,698 817,773 641,657

591,279

1,475,128

29,197,763

24 740 274

The financial statements, on pages 3 to 44, were approved for issue by the Board of Directors on Decernher 14 2011, and signed on its behalf by: ,

Director *Restated (note 29) The accompanying notes form an integral part of the financial statements.

Director


4 URBAN DEVELOPMENT CORPORATION Statement of Non-Consolidated Comprehensive Income Year ended March 31, 2010

Revenue

Notes

2010 $’000

21

1,576,636

1,335,784

(1,508,713)

(2,060,006)

Administrative and general expenses Operating profit/(loss) Increase in fair value of investment properties

67,923 4

2009* $’000

( 724,222)

4,676,758

364,616

22,758 89,598

45,832 535,168 114,075

112,356

695,075

Income from investments: Foreign exchange gain, net Dividend income Interest income Net finance costs: Loan interest Bank charges and interest

( (

60,003) 2,318)

( (

35,587) 2,823)

(

62,321)

(

38,410)

Impairment losses

22(a)

( 434,246)

Profit before taxation

22(b)

4,360,470

Taxation charge

23

( 253,108)

Profit for the year

4,107,362

( 182,279) 114,780 (

51,785) 62,995

Other comprehensive income/(expense): Revaluation adjustments on land and buildings Deferred tax on revaluations Arising on disposals

*Restated (note 29) The accompanying notes form an integral part of the financial statements.

(

119,881 80,971) -

( 230,879) ( 13,850) ( 14,000)

38,910

( 258,729)

4,146,272

( 195,734)


5 URBAN DEVELOPMENT CORPORATION Statement of Non-Consolidated Changes in Equity Year ended March 31, 2010

Capital Capital General contributions reserve reserve $’000 $’000 $’000 (note 12) (note 13) Balances at March 31, 2008: As previously reported Prior year adjustments (note 29) As restated

Revenue reserve $’000 (note 14)

Advances to the Government of Jamaica

Total $’000

(note 15)

222,788 -

7,801,005 325,718 (2,341,986) -

15,442,670 1,374,320

(292,924) 23,499,257 292,924 ( 674,742)

222,788

5,459,019 325,718

16,816,990

-

22,824,515

1,078,070 ( 1,015,075)

-

1,078,070 ( 1,015,075)

Total comprehensive income/(expense): Profit for the year: As previously reported Prior year adjustments (note 29)

-

-

-

-

-

-

Other comprehensive income/(expense) Revaluation adjustments on land and buildings: As previously reported Prior year adjustments (note 29) -

1,125,564 (1,356,443)

-

-

-

1,125,564 ( 1,356,443)

As restated Deferred tax on revaluations Arising on disposals

-

( 230,879) ( 13,850) ( 14,000)

-

-

-

( ( (

230,879) 13,850) 14,000)

Total other comprehensive expense

-

( 258,729)

-

-

-

(

258,729)

-

(

-

As restated

Transfers Balances at March 31, 2009, as restated

222,788

19,210)

62,995

-

62,995

19,210

-

16,899,195

-

22,628,781

-

4,107,362

-

4,107,362

119,881 80,971)

-

-

-

38,910

-

-

-

38,910

21,006,557

-

26,775,053

5,181,080 325,718

-

Total comprehensive income/(expense): Profit for the year

-

Other comprehensive income/(expense): Revaluation of increase on land and building Deferred tax on revaluations Total other comprehensive income Balances at March 31, 2010

222,788

-

(

5,219,990 325,718

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

(

119,881 80,971)


6 URBAN DEVELOPMENT CORPORATION Statement of Non-Consolidated Cash Flows Year ended March 31, 2010 2010 $’000

2009* $’000

CASH FLOWS FROM OPERATING ACTIVITIES Profit for the year Adjustments for: Depreciation Gain on disposal of property, plant and equipment Retirement benefit asset Decrease in provision for future infrastructure costs on land sold Impairment losses Increase in fair value of investment properties Interest income Interest expense Taxation Net foreign exchange gain Dividend income Write offs

88,361 ( 66) ( 461,539) ( 844) 434,246 (4,676,758) ( 89,598) 62,321 253,108 ( 22,758) 32,551

Operating cash flows before movements in working capital

( 273,614)

( 383,500)

(

( 414,665) ( 22,315)

(Increase)/decrease in net current assets Accounts receivable Owed from/(to) regional companies Decrease/(increase) in inventory of land and development projects Accounts payable and other current liabilities Cash utilised in operations Interest paid Tax paid Net cash used by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Proceeds from sale of property, plant and equipment Interest received (Decrease)/increase in related party balances Dividends received Investments in joint ventures Proceeds on disposal of investment property Acquisition of investment property Net cash (used)/provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Loan proceeds, net Net cash provided by financing activities (Decrease)/increase in net cash and cash equivalents Net cash and cash equivalents at beginning of year Effects of foreign exchange rate charges NET CASH AND CASH EQUIVALENTS AT END OF YEAR (note 11)

*Restated (note 29)

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

4,107,362

38,686) 21,697

62,995 ( ( ( ( ( (

80,205 624) 255,757 16,250) 182,279 364,616) 114,075) 38,410 51,785 45,832) 535,168) 21,634

175,975 ( 263,889)

( (

( 378,517)

( 923,851)

( (

( (

2,318) 28,418)

14,290) 89,081) 2,823) 44,556)

( 409,253)

( 971,230)

( 247,865) 6,693 98,773 ( 116,328) ( 82,475) ( 83,400)

( 226,822) 58,515 107,191 104,119 535,168 ( 132,308) 40,450 -

( 424,602)

486,313

172,977

606,070

172,977

606,070

( 660,878) 1,356,138 22,758 718,018

121,153 1,189,153 45,832 1,356,138


7 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements Year ended March 31, 2010

1.

Corporate structure and principal activities The corporation is established under the Urban Development Act. Its main activity is to undertake urban renewal and development in specific areas designated by the Government of Jamaica. The registered office and principal place of business of the corporation is situated at 12 Ocean Boulevard, Kingston Mall, Kingston, Jamaica. The financial statements include the assets and liabilities and income and expenditure relating to the corporation’s activities managed on its behalf by the following companies:

! ! ! !

Urban Maintenance (1977) Limited Caymanas Development Company Limited St. Ann Development Company Limited Lilliput Development Corporation Limited

Urban Maintenance (1977) Limited terminated operations on April 30, 2009. All operations previously carried out by this company have been transferred to the corporation. 2.

Statement of compliance, basis of preparation and significant accounting policies (a)

Statement of compliance: The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations adopted by the International Accounting Standards Board. Consequently, where necessary, prior year comparatives have been reclassified or restated to conform to IFRS. An explanation of how the application of IFRS has affected the reported prior year financial reporting position and financial performance is provided in note 29. Certain new IFRS, and interpretations of and amendments to existing standards which were in issue, came into effect during the year ended March 31, 2010, as follows: !

IAS 1 (Revised) Presentation of Financial Statements, requires the presentation of all nonowners’ changes in equity either in a single statement of comprehensive income, or in an income statement and a statement of comprehensive income. The corporation has adopted a single statement of comprehensive income.

!

Amendments to IFRS 7 Financial Instruments: Disclosure, require enhanced disclosures over fair value measurement for financial instruments, specifically in relation to the inputs used in the valuation techniques and the uncertainty associated with such valuations; and improves disclosures over liquidity risk, to address current diversity in practice. Amendments to IFRS 7 were considered in the preparation of these financial statements, but had no material impact.

At the date of authorization of the financial statements, certain new standards, and amendments to and interpretations of existing standards, have been issued which are not yet effective and which the corporation has not early-adopted. The corporation has assessed the relevance of all such new standards, amendments and interpretations with respect to its operations and has determined that the following may be relevant to future financial statements:


8 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (a)

Statement of compliance (cont’d):

!

IAS 39 (Amendment), Financial Instruments: Recognition and Measurement (effective July 1, 2009). The amendment provided clarification that it is possible for there to be movements into and out of the fair value through profit or loss category where: -

A derivative commences or ceases to qualify as a hedging instrument in cash flow or net investment hedge.

-

Financial assets are reclassified following a change in policy by an insurance company in accordance with IFRS 4.

The definition of financial asset or financial liability at fair value through profit or loss as it relates to items that are held for trading is amended. This clarifies that a financial asset or liability that is part of a portfolio of financial instruments managed together with evidence of an actual recent pattern of short-term profit- taking is included in such a portfolio on initial recognition. The amendment also removes a segment as an example of what may be considered a party external to the reporting entity. When re-measuring the carrying amount of a debt instrument on cessation of fair value hedge accounting, the amendment clarifies that a revised effective interest rate (calculated at the date fair value hedge accounting ceases) is used.

!

IAS 24, Related Party Disclosure, revised (effective January 1, 2011) introduces changes to the related party disclosure requirements for government - related entities and amends the definition of a related party. The standard also expands the list of transactions that require disclosure.

!

IFRIC 17, Distribution of Non-Cash Assets to Owners (effective July 1, 2009) provides that a dividend payable should be recognized when appropriately authorized and no longer at the entity’s discretion. Where an owner has a choice of a dividend of a non-cash asset or cash, the dividend payable is estimated considering both the fair value and probability of the owners selecting each option. The dividend payable is measured at the fair value of the net assets to be distributed. The difference between fair value of the dividend paid and the carrying amount of the net assets distributed is recognized in profit or loss.

!

Disclosures – Transfer of Financial Assets (Amendments to IFRS 7) (effective July 1, 2011). The amendment requires disclosure of information that enable users of financial statements to understand the relationship between transferred financial assets that are not derecognized in their entirety and the associated liabilities and to evaluate the nature of and risks associated with the entity’s continuing involvement in these derecognized assets.

!

IFRIC 14, IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective January 1, 2011). It applies when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendments permit the entity to treat the benefit of such an early payment as an asset.

!

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective July 1, 2010). It addresses the accounting by the debtor in a debt for equity swap transaction and specifically how the entity should measure the equity instruments issued to extinguish a financial liability.


9 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (a)

Statement of compliance (cont’d):

!

IFRS 3 Business Combinations (effective July 1, 2010) is amended to state that contingent consideration arising in a business combination that had been accounted for in accordance with IFRS 3 (2004) that has been settled or otherwise resolved at the effective date of IFRS 3 (2008) continues to be accounted for in accordance with IFRS 3 (2004). IFRS 3 has also been amended to limit the accounting policy choice to measure non-controlling interests (NCI) upon initial recognition either at fair value or at the NCI’s proportionate share of the acquiree’s identifiable net assets to apply only to those instruments that give rise to a present ownership interest and entitles the holder to a share of net assets in the event of liquidation. IFRS 3 was also amended to provide guidance on unreplaced and voluntary replaced share-based payment awards.

!

IFRS 9, Financial Instruments (2010) introduces new requirements for classifying and measuring financial assets. The standard also amends some of the requirements of IFRS 7 Financial Instruments: Disclosures including added disclosures about investments in equity instruments designated as fair value through other comprehensive income. A revision to the standard (effective January 1, 2013) includes guidance on classification and measurement of financial liabilities designated at fair value through other comprehensive income and incorporates certain existing requirements of IAS 39 Financial Instruments: Recognition and Measurement on the recognition and de-recognition of financial assets and financial liabilities.

!

IFRS 11 Joint Arrangements and IAS 28 Investments in Associates and Joint Ventures (2011) (effective January 1, 2013) removes from IAS 31 Jointly Controlled Entities, those cases which although there is a separate vehicle, that separation is ineffective in certain ways. These arrangements are treated similarly to jointly controlled assets/operations and are now called joint operations. IFRS 11 also removes the choice of equity accounting or proportionate consolidation under IAS 31 and requires that the equity method be used.

!

IAS 1 Presentation of Financial Statements (effective January 1, 2011) is amended to state that for each component of equity a reconciliation from opening to closing balances is required to be presented in the statement of changes in equity, showing separately changes arising from items recognized in profit or loss, in other comprehensive income and from transactions with owners acting in their capacity as owners.

!

IAS 27 Consolidated and Separate Financial Statements (effective July 1, 2010) – The amendments added guidance about disposals of all or part of a foreign operation and about accounting for a loss of significant influence or joint control.

!

IFRS 10, Consolidated Financial Statements, (effective January 1, 2013), introduces a new approach to determining which investees should be consolidated. It was issued as part of a suite of consolidation and related standards, also replacing existing requirements for joint ventures (now joint arrangements) and making limited amendments in relation to associates. IFRS 10 supersedes IAS 27 Consolidated and Separate Financial Statements, and SIC-12, Consolidation – Special Purpose Entities, and provides a single model to be applied in the control analysis for all investees, including entities that currently are SPEs in the scope of SIC-12. An investor controls an investee when (i) it is exposed, or has rights, to variable returns from its involvement with the investee, (ii) has the ability to affect those returns through its power over the investee and (iii) there is a link between power and returns.


10 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (a)

Statement of compliance (cont’d):

!

IFRS 12, Disclosure of Interest in Other Entities (effective January 1, 2013), contains disclosure requirements for entities that have interests in subsidiaries, joint arrangements (ie joint operations or joint ventures), associates and/or unconsolidated structured entities. The disclosure requirements encompass risk exposures for the sponsor of such entities even if it no longer has any contractual involvement. These required disclosures aim to provide information to enable users to evaluate the nature of, and risks associated with an entity’s interests in other entities and the effects of those interests on the entity’s financial position, financial performance and cash flows. The corporation is required to understand what a structured entity is in the context of its operations; apply judgement in assessing whether it is ‘involved’ with a structured entity, which has the potential to broaden the transactions and relationships to which the disclosures may apply, particularly for those who sponsor, or perhaps even transact business with, but do not consolidate, structured entities; and assess the level of disclosure that it believes will be meaningful to users of the financial statements.

!

IFRS 13, Fair Value Measurement (effective January 1, 2013), defines fair value, establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements. It explains how to measure fair value and is applicable to assets, liabilities and an entity’s own equity instruments that, under other IFRSs, are required or permitted to be measured at fair value, or when disclosure of fair values is provided. It does not introduce new fair value measurements, nor does it eliminate the practicability exceptions to fair value measurements that currently exist in certain standards.

The corporation is assessing the impact of the above amendments, revisions, interpretations and new standards on its 2011-2014 financial statements. (b)

Basis of preparation: These non-consolidated financial statements are intended to show the affairs of the corporation as a stand-alone business. They are not intended to, and do not, show the consolidated financial position, results of operations, changes in equity and cash flows of the group. The corporation’s interests in the non-consolidated subsidiaries (note 5) are shown at cost, less impairment losses. Unless otherwise indicated, references to financial statements herein are to the non-consolidated financial statements. The financial statements are prepared on the historical cost basis, except for the revaluation of freehold lands, buildings and investment properties. The financial statements are presented in Jamaica dollars ($), which is the functional currency of the corporation.

(c)

Use of estimates and judgements: The preparation of the financial statements to conform to IFRS requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, contingent assets and contingent liabilities at the reporting date, and the profit or loss for the year then ended. Actual amounts could differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period of the revision and in future periods, where applicable.


11 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (c)

Use of estimates and judgements (cont’d): Judgements made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next financial year are discussed below: (i)

Allowance for impairment losses on receivables and investments in joint ventures: In determining amounts recorded for impairment losses in the financial statements, management makes judgements regarding indicators of impairment, that is, whether there are indicators that suggest there may be a measurable decrease in the estimated future cash flows from receivables and investments in joint ventures, for example, based on default and adverse economic conditions. Management makes estimates of the likely estimated future cash flows from impaired receivables and investments in joint ventures, as well as the timing of such cash flows.

(ii)

Fair value of property, plant and equipment and investment properties: In making its judgement, management’s best estimate of fair value is based on current prices of properties of similar nature, condition or location adjusted to reflect recent prices of similar properties in less active markets and changes in economic conditions since the dates of the transactions.

(iii)

Provision for future infrastructure cost on land sold: In making its judgement, management considers the detailed criteria for recognition of a provision set out in IAS 37. The provision is based on the proportionate amount of the following in relation to land sold and is determined as follows:

! ! ! ! (iv)

Estimates to complete contracts already commenced by the corporation. The estimated costs to carry out known infrastructure works for which contracts have not yet been initiated. Estimated costing takes into account labour and material prices. Allowances have been made as necessary for the likely effect of escalations due to interest costs, labour rates and material prices projected to estimated completion date.

Pension benefits: The amounts recognised for pension benefits are determined actuarially using several assumptions. The primary assumptions used in determining the amounts recognised include expected long-term return on plan assets and the discount rate used to determine the present value of estimated future cash flows required to settle the pension obligations. The expected return on plan assets considers the long-term returns, asset allocation and future estimates of long-term investment returns; the discount rate is determined based on the estimate of yield on long-term government securities that have maturity dates approximating the tenure of the corporation’s obligation; in the absence of such instruments in Jamaica, it has been necessary to estimate the rate by extrapolating from the longesttenure security on the market. Any changes in the foregoing assumptions will affect the amounts recorded in the financial statements for these obligations.

It is reasonably possible, based on existing knowledge, that outcomes within the next financial year that are different from assumptions and underlying estimates could require a material adjustment to the carrying amount reflected in the financial statements.


12 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (d)

Property, plant and equipment: Land and buildings held for the use in the production or supply of goods and services, or for administrative purposes are stated at their revalued amounts being the fair value at the date of revaluation less accumulated impairment losses, if any. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using the fair values at the reporting date. Any revaluation increase arising on the revaluation of such land and buildings is credited to other comprehensive income, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such land and buildings is charged to profit or loss to the extent that it exceeds the balance, if any, held in capital reserve relating to a previous revaluation of that asset. On a sale or retirement of a revalued property, the attributable revaluation surplus remaining in capital reserve is transferred directly to revenue reserve. Properties in the course of construction for production, rental or administrative purposes or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost includes acquisition costs, professional fees, and for qualifying assets borrowing costs capitalised in accordance with IAS 16. Depreciation for these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Furniture, fixtures, equipment and motor vehicles are stated at cost less accumulated depreciation and any impairment losses. The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the corporation and its cost can be measured reliably. The costs of day-to-day servicing of property, plant and equipment are recognised in profit or loss.

(e)

Depreciation and amortisation: No depreciation is charged on freehold land or capital work-in-progress. For assets other than land and capital work-in-progress, depreciation is charged so as to write off the costs or valuation of these assets over their estimated useful lives using the straight-line basis. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The following rates are used for depreciation of property, plant and equipment: Years Freehold buildings Leasehold improvements Motor vehicles Furniture, fixtures and equipment Sewerage treatment plant

10-60 3½ 5 5-15 10


13 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (f)

Investment properties: Investment properties, comprising properties held to earn rentals and land held for future capital appreciation, are recognised initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value. Gains and losses arising from changes in the fair value of investment properties are included in profit or loss. The fair value of the corporation’s investment properties is arrived at on the basis of revaluations carried out at the reporting date by both independent real estate valuators and qualified internal valuators.

(g)

Interests in subsidiaries and associates: A subsidiary is an enterprise controlled by the corporation. Control is achieved where the corporation has an interest of more than one half of the voting rights or otherwise has the power to govern the financial and operating policies of an investee enterprise so as to obtain benefits from its activities. An associate is an entity over which the corporation has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. Interests in subsidiaries and associates are initially recognised at cost. Thereafter, the carrying amount of such investments is reduced to recognise any impairment in the value of individual investments.

(h)

Investments in joint ventures: A joint venture is a contractual arrangement whereby the corporation and other parties undertake an economic activity that is subject to joint control, that is, when the strategic financial and operating policy decision relating to the activities require the unanimous consent of the parties sharing control. Where the corporation undertakes activities under joint venture arrangements directly, the share of jointly controlled assets and any liabilities incurred jointly with other venturers are recognized in the financial statements of the corporation and classified according to their nature. Liabilities and expenses incurred directly in respect of interests in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the corporation’s share of the output of jointly controlled assets, and its share of joint venture expenses, are recognized when it is probable that the economic benefits associated with the transactions will flow to/from the corporation and their amounts can be measured reliably. Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities. The corporation reports its interests in jointly controlled entities at cost less any recognized impairment loss.

(i)

Employment benefits: (i)

Retirement benefits: The corporation operates a defined benefit pension scheme administered by trustees the assets of which are held separately from those of the corporation. Pension assets and obligations included in these financial statements have been actuarially determined by a qualified independent actuary, appointed by management. The appointed actuary’s report outlines the scope of the valuation and the actuary’s opinion.


14 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (i)

Employment benefits (cont’d): (i)

Retirement benefits (cont’d): Actuarial valuations are conducted in accordance with IAS 19, and the financial statements reflect the corporation’s post-employment benefit assets and obligations as computed by the actuary. In carrying out their audit, the auditors rely on the work of the actuary and the actuary’s report. The corporation’s net obligation in respect of the defined benefit pension scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that value is discounted to determine the present value, and the fair value of scheme assets is deducted. To the extent that the obligation is less than the fair value of scheme assets, the asset recognised is restricted to the discounted value of future benefits available to the corporation. The discount rate applied is the yield at reporting date on long-term government instruments that have maturity dates approximating the term of the corporation’s obligation. The calculation is performed using the projected unit credit method. When the benefits of the plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits are vested immediately, the expense is recognised immediately in profit or loss. Cumulative actuarial gains or losses that exceed 10% of both the present value of the obligation and the fair value of plan assets are recognised in profit or loss over the expected average remaining working lives of the employees participating in the plan. Otherwise, actuarial gains or losses are not recognised.

(ii)

Leave entitlements: Employee entitlements to leave are recognised when they accrue to employees. A provision is made for the estimated liability for vacation leave as a result of services rendered by employees up to the reporting date.

(j)

Income taxes: Taxation on the profit or loss for the year comprises current and deferred tax. Taxation is recognised in profit or loss, except to the extent that it relates to items recognised directly in equity, in which case it is recognised in other comprehensive income. Current tax is the expected tax payable on the income for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is computed in full for temporary differences between the carrying amounts of assets and liabilities for financial reporting and taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the reporting date. A deferred tax liability is recognised for taxable temporary differences associated with investments in subsidiaries, except to the extent that the company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.


15 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (j)

Income taxes (cont’d): A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(k)

Inventory of land and development projects: Inventory of land and development, includes projects, unsold apartments, and is stated at the lower of cost and net realisable value. Cost comprises land acquisition, infrastructure works, construction costs, direct administrative expenses and interest charges during the interval between acquisition and construction. These costs are treated as inventory until disposal. The cost of land sales is determined based on the land area sold to the total land area available for sale. Net realisable value represents the estimated selling price less all the estimated costs to completion and costs to be incurred in marketing, selling and distribution. Net realisable value is obtained from valuations conducted by qualified internal valuators based on sample valuations supplied by independent valuators or using market values arising from recent real estate sales.

(l)

Accounts receivable: Trade and other receivables are stated at amortised cost less impairment losses.

(m)

Cash and cash equivalents: Cash and cash equivalents comprise cash and bank balances, short-term deposits and other monetary investments with maturities ranging between one and three months from the dates of acquisition.

(n)

Accounts payable and other current liabilities: Trade and other accounts payable are stated at amortised cost. A provision is recognised when the corporation or its subsidiaries have a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, a provision is determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the obligation.

(o)

Related parties: A party is related to the corporation, if: (i)

directly, or indirectly through one or more intermediaries, the party controls, is controlled by, or is under common control with, the corporation (this includes parents, subsidiaries and fellow subsidiaries); has an interest in the corporation that gives it significant influence over the corporation; or has joint control over the corporation;

(ii)

the party is an associate of the corporation;

(iii)

the party is a joint venture in which the corporation is a venturer;


16 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (o)

Related parties (cont’d): A party is related to the corporation, if (cont’d): (iv)

the party is a member of the key management personnel of the corporation or its parent;

(v)

the party is a close member of the family of any individual referred to in (i) or (iv);

(vi)

the party is the company that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or

(vii) the party is a post-employment benefit plan established for the benefit of employees of the corporation, or of any company that is a related party of the corporation. A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged. The corporation has a related party relationship with its directors, its subsidiaries, associated joint ventures and other related companies, other Government of Jamaica entities and affiliated parties controlled by its directors, senior officers, executives and the Government of Jamaica. “Key management personnel” represents certain senior officers of the corporation and the Government of Jamaica. (p)

Loans: Interest-bearing borrowings are recognised initially at cost. 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 borrowing to determine the effective interest.

(q)

Revenue recognition: (i)

Real estate trading income: A contract is recognised as a sale when significant risks and rewards of ownership have been transferred to the buyer. Cost of sales, including land, is computed on a first in, first out basis. Where the outcome of the contract cannot be reliably determined, no revenue is recognised. Expected losses on a contract, computed on the basis of contract revenue and directly attributable costs, are recognised immediately.

(ii)

Rental income: Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct cost incurred in negotiating and arranging an operating lease is added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. Rental income collected in advance is treated as deferred income and is amortized to profit or loss for the related period on a straight-line basis.

(iii)

Interest income: Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.


17 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (q)

Revenue recognition (cont’d): (iv)

Other revenue: This comprises ticket sales, project management fees, water and sewerage fees and is recognised on an accrual basis in accordance with the substance of the underlying contracts.

(r)

Expenses: (i)

Net finance costs: Net finance costs for non-financial service activities comprise interest payable on borrowings calculated using the effective interest method, interest income on funds invested, material bank charges and foreign exchange gains and losses recognised in profit or loss.

(ii)

Operating lease payments: Payments made under operating leases are recognised in profit or loss on a straight-line basis over the terms of the leases. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.

(s)

Foreign currencies: Transactions in foreign currencies are converted at the rates of exchange ruling at the dates of those transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Jamaica dollars at the rates of exchange ruling on that date. Gains and losses arising from fluctuations in exchange rates are recognised in profit or loss. Nonmonetary assets and liabilities denominated in foreign currencies are translated to Jamaica dollars at foreign exchange rates ruling at the dates the values were determined. For the purpose of the statement of cash flows, realised foreign currency gains and losses are treated as cash items and included in cash flows along with movements in the relevant balances.

(t)

Impairment: The carrying amounts of the corporation’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, an asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset, or group of operating assets, exceeds its recoverable amount. Impairment losses are recognised in profit or loss. When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss 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.


18 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 2.

Statement of compliance, basis of preparation and significant accounting policies (cont’d) (t)

Impairment (cont’d): (i)

Calculation of recoverable amounts: The recoverable amounts of the corporation’s loans and receivables are calculated as the present value of expected future cash flows, discounted at the original effective interest rate inherent in the asset. Receivables with a short duration are not discounted. The recoverable amount of other assets is the greater of their fair value less costs to sel`l 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 independent cash inflows, the recoverable amount is determined for the group of operating assets to which the asset belongs.

(ii)

Reversals of impairment: An impairment loss in respect of a financial asset 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.

(u)

Financial instruments: A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. For the purpose of these financial statements, financial assets have been determined to include accounts receivable, cash and cash equivalents and related party receivables. Similarly, financial liabilities include loans, accounts payable and other current liabilities and related party payables.

(v)

Determination of fair value: Fair value amounts represent estimates of the arm’s length consideration that would be currently agreed between knowledgeable, willing parties who are under no compulsion to act and is best evidenced by a quoted market price, if one exists. Some financial instruments lack an available trading market. These instruments are valued using present value or other generally accepted valuation techniques and the fair value shown may not necessarily be indicative of the amounts realisable in an immediate settlement of the instruments.


19 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010 3.

Property, plant and equipment

At cost or valuation: March 31, 2008 Additions Transfers to investment properties Revaluation Disposals March 31, 2009 Additions Transfers to investment properties Transfers, net Revaluation Disposals Write-offs

Freehold land $’000

Freehold buildings $’000

Leasehold improvements $’000

Motor vehicles $’000

Furniture fixtures and equipment $’000

1,201,037 172,979

432,193 -

54,192 -

38,259 17,387

191,542 32,321

( 174,379) ( 272,429) ( 69,000)

( 26,000) ( 14,313) -

-

( 7,833)

-

391,880 -

54,192 -

47,813 1,145

2,862 174,845 -

3,680 ( 1,402)

( 5,600) ( 171)

858,208 130,000 ( 130,000) ( 123,033) -

(

74) 223,789 16,935

( (

433 5,811) 2,433)

Sewerage treatment plant $’000

Capital work-inprogress $’000

Total $’000

36,533 -

23,851 4,135

1,977,607 226,822

-

-

( 200,379) ( 286,742) ( 76,907)

36,533 -

27,986 99,785

1,640,401 247,865

-

( 6,975) (31,215)

( 130,000) 51,812 ( 11,411) ( 35,221)

March 31, 2010

735,175

569,587

56,470

43,187

232,913

36,533

89,581

1,763,446

Classified as follows: At cost At valuation

735,175

569,587

56,470 -

43,187 -

232,913 -

36,533 -

89,581 -

458,684 1,304,762

735,175

569,587

56,470

43,187

232,913

36,533

89,581

1,763,446

Depreciation: March 31, 2008 Charge for the year Eliminated on revaluation Eliminated on disposals

-

55,863 ( 55,863) -

25,827 5,438 682

28,075 5,118 ( 5,016)

138,597 11,085 -

23,342 2,701 -

-

215,841 80,205 ( 55,863) ( 4,334)

March 31, 2009 Charge for the year Eliminated on revaluation Eliminated on disposals Write-offs

-

68,069 ( 68,069) -

31,947 5,210 -

28,177 5,684 ( 4,525) ( 171)

149,682 6,697 ( 259) ( 2,499)

26,043 2,701 -

-

235,849 88,361 ( 68,069) ( 4,784) ( 2,670)

March 31, 2010

-

-

37,157

29,165

153,621

28,744

-

Net book values: March 31, 2010

735,175

569,587

19,313

14,022

79,292

7,789

89,581

1,514,759

March 31, 2009

858,208

391,880

22,245

19,636

74,107

10,490

27,986

1,404,552

248,687


20 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

4.

5.

Investment properties Freehold land $’000

Freehold buildings $’000

Total $’000

March 31, 2008 Transfers from property, plant and equipment Disposals Increase in fair value

16,191,874 146,379 ( 23,700) 33,246

1,883,284 54,000 ( 16,750) 331,370

18,075,158 200,379 ( 40,450) 364,616

March 31, 2009 Additions Transfers from property, plant and equipment Increase in fair value

16,347,799 83,400 130,000 3,886,850

2,251,904 789,908

18,599,703 83,400 130,000 4,676,758

March 31, 2010

20,448,049

3,041,812

23,489,861

(a)

Freehold land includes land held for public purposes or retained for future development.

(b)

Freehold buildings comprise commercial, office and residential buildings held for long-term rental and not occupied by the corporation.

(c)

During the year ended March 31, 2010, certain investment properties had a change of use which resulted in a significant increase in the value of these properties based on the revised value in use.

(d)

Property rental income earned by the corporation from its investment properties, all of which were leased under operating leases, aggregated $252 million (2009: $206 million). Direct operating expenses arising in the investment properties during the period aggregated $266 million (2009: $181 million).

Interests in subsidiaries and associates

Interests in subsidiaries (a) Interests in associates (b) Investments in other companies (c)

(a)

2010 $’000

2009 $’000

119,255 109,763 -

119,255 109,763 -

229,018

229,018

2010 $’000

2009 $’000

109,696 5,985 3,547 21 1 1 1 1 1 1

109,696 5,985 3,547 21 1 1 1 1 1 1

119,255

119,255

Interests in subsidiaries:

Shares at cost: National Hotels and Properties Limited Montego Freeport Limited Ocho Rios Commercial Centre Limited Runaway Bay Water Company Limited Portmore Newtown Development Company Limited Urban Maintenance (1977) Limited Caymanas Development Company Limited Lilliput Development Corporation Limited Seacastles Limited Rutland Point Beach Resorts Limited


21 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

5.

Interest in subsidiaries and associates (cont’d) (b) Interests in associates:

Shares and loans, at cost: Hellshire Marble Limited Portmore Commercial Development Company Limited Bloody Bay Hotel Development Limited Cost of investments Less: Impairment loss

2010 $’000

2009 $’000

12,000 65,923 43,840

12,000 65,923 43,840

121,763 ( 12,000)

121,763 ( 12,000)

109,763

109,763

2010 $’000

2009 $’000

25 109,890 (109,915)

25 109,890 (109,915)

-

-

(c) Investments in other companies: Shares at cost: Kingston Restoration Company Limited Rose Hall Resorts Limited Less: Impairment loss

(d) Details of subsidiaries are as follows:

Name of subsidiary

Country of incorporation (or registration) and operation

Ownership interest %

Principal activity

National Hotels and Properties Limited and its subsidiaries (i)

Jamaica

100

Management of subsidiaries, leasing and hotel operations

Montego Freeport Limited

Jamaica

82

Property owners and Managers

Ocho Rios Commercial Centre Limited

Jamaica

100

Leasing of commercial properties

Runaway Bay Water Company Limited

Jamaica

100

Supply of water

Portmore Newtown Development Company Limited Jamaica

100

Project management in the construction of roads and buildings

Urban Maintenance (1977) Limited

Jamaica

100

Management and maintenance services

Caymanas Development Company Limited

Jamaica

100

Operation of golf course and management of agricultural and horticultural projects


22 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

5.

Interest in subsidiaries and associates (cont’d) (d) Details of subsidiaries are as follows (cont’d):

Name of subsidiary

Country of incorporation (or registration) and operation

Ownership interest %

Principal activity

Lilliput Development Corporation Limited

Jamaica

100

Project management in housing development and infrastructure

Seacastles Limited

Jamaica

100

Construction and rental

Rutland Point Beach Resorts Limited

Jamaica

100

Construction and rental

(i)

Subsidiaries of National Hotels and Properties Limited are as follows:

! ! ! ! ! ! ! ! !

Kingston Waterfront Hotel Company Limited Mallards Reef Hotel Limited Pegasus Hotels of Jamaica Limited Point Hotels Limited Rose Hall Hotels Limited Jamaica Hotel and Resorts Limited Seacastles Resorts Limited Montego Beach (1975) Limited Hotel Corporation of Jamaica Limited

(e) Details of associates are as follows:

Name of associate

Country of incorporation (or registration) and operation

Ownership interest %

Principal activity

Hellshire Marble Limited

Jamaica

40

Non-trading

Portmore Commercial Development Company Limited

Jamaica

49

Operation of shopping and commercial centre

Bloody Bay Hotel Development Limited

Jamaica

50

Hotel operation


23 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

6.

Due from/to related parties

(a)

2010 $’000

2009 $’000

46,090 95,882 126,140 24,163 1,505 2,146 32,021 36,954 50,620

37,377 85,189 117,299 19,607 8,133 1,221 892 1,554 36,126 49,388

415,521 61,188

356,786 13,554

476,709

370,340

(370,164)

(188,000)

106,545

182,340

40,410 303,551

112,298 220,149

343,961 (118,059)

332,447 ( 95,026)

225,902

237,421

14,154 56

13,782 56

14,210 ( 14,210)

13,838 ( 13,838)

-

-

332,447

419,761

Advances from subsidiaries: Runaway Bay Water Company Limited National Hotels and Properties Limited

19,323 406,869

424,265

Total due to related parties

426,192

424,265

Due from related parties: Advances to subsidiaries: Caymanas Development Company Limited Caymanas Golf and Country Club Urban Maintenance (1977) Limited Ocho Rios Commercial Centre Limited Runaway Bay Water Company Limited Portmore Newtown Development Company Limited Lilliput Development Corporation Limited Kingston Waterfront Hotel Company Limited Seacastles Limited Rutland Point Beach Resorts Limited Long-term loans regarding Caymanas Golf and Country Club Less: impairment Long-term loans to associates: Hellshire Marble Limited Bloody Bay Hotel Development Limited Less: impairment Other advances to associates: Hellshire Marble Limited Bloody Bay Hotel Development Limited Less: impairment Total due from related parties

(b)

Due to related parties:


24 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

7.

Investments in joint ventures 2010 $’000 Ackendown Newtown Development Company Limited (a): Stated capital Less: Impairment loss

497,828 497,828 ( 412,077) ( 412,077)

Loans Port Royal Development Company Limited (b) Less: Impairment loss Seaside at Rosehall Developments Limited (c): Initial investment Loans receivable

(a)

2009 $’000

(

85,751 813,590

85,751 732,043

899,341

817,794

18,137 18,137) (

18,137 18,137)

-

-

287,226 33,963

287,226 33,035

321,189

320,261

1,220,530

1,138,055

The joint venture was incorporated for the purpose of constructing a 360 room key hotel under the corporation’s South West Coast Development Plan (for the parish of Westmoreland). Investment in Ackendown Newton Development Company Limited (Ackendown) is based on the Heads of Agreement among the three participants to the joint venture. The other participants are National Investment Bank of Jamaica Limited and Gorstew Limited. Once shares are fully allotted to all parties, the corporation’s ownership interest would have been 37.45%. On the basis of the market value of the major asset of Ackendown, a recently constructed hotel property, as determined by independent valuators, it was concluded that impairment of the investment in the joint venture had occurred. The corporation recorded an impairment loss against the carrying amount of its investment in the joint venture in the year ended March 2008 by writing down its value by the same percentage that the impairment loss in the joint venture bears to the carrying value of stated capital held. The asset was not revalued during the years ended March 31, 2009 and 2010. No further impairment is considered appropriate for Ackendown in 2010 as the Government has undertaken to transfer lands to the corporation valued at US$25 million sufficient to settle the corporation’s interest in the joint venture.

(b)

This comprises a direct 8.34% equity investment in Port Royal Development Company Limited by the corporation. In addition, the corporation received J$83.292 million, the equivalent of US$2.2 million from the Government of Jamaica which it advanced to Port Royal Development Company Limited on account of purchase of shares in that entity. The shares are held by the corporation in trust for the Accountant General.

(c)

Investment in Seaside at Rose Hall Developments Limited is based on the Heads of Agreement between the corporation and Rose Hall Developments Limited in which the corporation has a shareholding of 60%. The joint venture was incorporated for the purpose of developing 29 acres of land at Rose Hall, St. James.


25 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

8.

Retirement benefit asset

Present value of funded obligations of defined benefit pension plan Fair value of plan assets

2010 $’000

2009 $’000

( 799,193) 1,321,078

( 483,076) 1,187,554

Net assets Unrecognised net actuarial gains Asset not recognised due to limitation in economic benefits Asset recognised in the statement of financial position (a)

(b)

(c)

521,885 (

60,346) 461,539

704,478 ( 284,075) ( 420,403) -

Movements in funded obligations: 2010 $’000

2009 $’000

Balance at beginning of year Current service costs Interest costs Actuarial (losses)/gains Benefits paid Settlement Purchase of pension increase

( 483,076) ( 39,946) ( 79,843) ( 277,948) 17,556 93,248 ( 29,184)

( 511,780) ( 47,817) ( 72,118) 138,959 6,910 2,770 -

Balance at end of year

( 799,193)

( 483,076)

2010 $’000

2009 $’000

Balance at beginning of year Amounts charged to profit or loss Contributions

444,358 17,181

255,757 ( 268,876) 13,119

Balance at end of year

461,539

-

Movements in the net assets in the year were as follows:

Movements in plan assets:

Fair value of plan assets at beginning of year Contributions paid Expected return on plan assets Benefits paid Actuarial losses/(gains) Settlement Fair value of plan assets at end of year

2010 $’000

2009 $’000

1,187,554 48,662 114,085 ( 21,979) 86,004 ( 93,248) 1,321,078

1,071,628 43,308 103,534 ( 6,910) ( 21,236) ( 2,770) 1,187,554


26 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

8.

Retirement benefit asset (cont’d) (d)

Plan assets consist of the following: 2010 $’000 Equity fund Fixed income fund Mortgage and real estate

(e)

53,432 1,008,295 259,351

47,132 876,164 264,258

1,321,078

1,187,554

2010 $’000

2009 $’000

8,465 79,843 ( 114,085) ( 31,785) 33,607

17,628 72,118 ( 103,534) ( 4,147) -

Net (expense)/credit recognised in profit or loss:

Current service cost - employer Interest costs Expected return on plan assets Recognised actuarial losses Past service cost and purchase of pension increases (Decrease)/increase in income due to limitation Total included in employee benefit expense

( 420,403)

286,811

( 444,358)

268,876

Actual return on plan assets (f)

2009 $’000

200,089

82,298

Principal actuarial assumptions at the reporting date (expressed as weighted averages):

Discount rate Expected return on plan assets Future salary increases Future pension increases

2010

2009

11.50% 9.50% 9.00% 5.00%

16.00% 9.50% 11.00% 5.00%

(g)

As at March 31, 2010, the fair value of the plan assets of $1,321 million (2009: $1,187.5 million), exceeded the present value of the obligation by 65% (2009:146%).

(h)

Historical information: 2010 $’000 Present value of the defined benefit obligations Fair value of plan assets Surplus Experience adjustments arising on obligations Experience adjustments arising on plan assets

( 799,193) 1,321,078

2009 $’000

( 483,076) ( 511,780) 1,187,554 1,071,627

521,885 277,948 (

86,004)

2008 $’000

704,478

559,847

2007 $’000

2006 $’000

(438,497) 969,488

(300,902) 810,422

530,991

509,520

( 138,959)

3,609

( 41,483)

( 12,892)

(

6,036)

( 60,596)

( 69,972)

21,236) (


27 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

9.

Inventory of land and development projects

At beginning of year Additions Adjustments At end of year

2010 $’000

2009 $’000

1,145,035 ( 175,975)

1,130,745 14,290 -

969,060

1,145,035

Inventory of land and development projects primarily comprises land which is currently being developed as well as housing units available for sale. 10.

Accounts receivable

Trade accounts receivable Real estate sales receivable

2010 $’000

2009* $’000

461,597 330,801

381,534 263,139

792,398 ( 745,054)

Less: Allowance for doubtful debts Amounts advanced on specific projects Prepaid expenses and other current assets Less: Allowance for doubtful debts

644,673 ( 632,037)

47,344

12,636

43,988 533,696

13,289 682,609

577,684

695,898

( 421,770)

( 306,110)

155,914

389,788

203,258

402,424

Movements in allowance for doubtful debts: 2010

2009

Trade $’000

Other receivables $’000

Trade $’000

Other receivables $’000

Balance at beginning of year Increase in impairment allowance recognised in profit or loss

632,037

306,110

551,958

263,326

113,017

115,660

80,079

42,784

Balance at end of the year

745,054

421,770

632,037

306,110

2010 $’000

2009 $’000

43,785 111,152 590,117

98,066 533,971

745,054

632,037

Ageing of impaired trade receivables:

61 – 90 days 91 – 120 days 120 days

Impairment represents long outstanding trade and other receivables for which recoverability is considered doubtful.


28 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

11.

Cash and cash equivalents 2010 $’000 Cash at bank and short-term deposits Bank overdraft (unsecured)

805,808 ( 87,790)

2009 $’000 (

718,018

12.

1,407,553 51,415) 1,356,138

(i)

At March 31, 2010, interest rates on bank deposits range from 1% to 6% (2009: 3.5% to 6.25%) for United States dollars and 6.5% to 13.75% (2009: 7.0% to 18.65%) for investments in Jamaica dollars.

(ii)

Bank overdraft balances resulted from unpresented cheques.

Capital reserve (a) This comprises: Surplus on revaluation of property, plant and equipment: In prior years In current year Land and building Deferred tax Loss on disposal

(

2010 $’000

2009 $’000

5,941,169

6,199,898

119,881 80,971) -

( 230,879) ( 13,850) ( 14,000)

5,980,079

5,941,169

Deduct: Transfer to revenue reserve in respect of exchange losses on foreign currency loans utilized for erecting and/or acquiring the assets revalued in prior years

(

Transfer to revenue reserve in respect of assets sold in prior years

( 201,237)

( 201,237)

Transfer to revenue reserve in respect of gains realised through depreciation charges against income: In prior years In current year

( 540,983) -

( 521,773) ( 19,210)

( 540,983)

( 540,983)

5,219,990

5,181,080

2010 $’000

2009 $’000

17,869)

(

17,869)

(b) The net transfer to revenue reserve is made up as follows:

Depreciation charges against income: The corporation 13.

-

19,210

General reserve During 1998 the board of directors of the corporation made a decision to establish a reserve account for the purpose of funding projects approved by the Government of Jamaica from time to time. The interest earned on a fixed deposit, which was established from the proceeds of the sale of a hotel property, was transferred to a general reserve.


29 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

14.

Revenue reserve Accounted for in the books of: The corporation comprising: Increase in fair value of investment properties Net foreign exchange gains Other profits/(losses), net

2010 $’000

2009* $’000

13,578,925 408,273 7,018,098

8,902,167 385,515 7,610,252

21,005,296

16,897,934

1,261

1,261

21,006,557

16,899,195

2010 $’000

2009 $’000

93,674 199,250

93,674 199,250

292,924 (292,924)

292,924 (292,924)

-

-

Its associates: Impairment on advances

15.

Advances to the Government of Jamaica This comprises:

Advances to the Government of Jamaica (a) Real estate receivables (b) Less: Impairment loss provision

The above amounts are on account of distributions to the Government and arose from: (a) Hotel divestment proceeds transferred to the Government of Jamaica. (b) Amounts receivable from the sale of real estate to the Government of Jamaica including interest accrued of $57 million. 16.

Provision for future infrastructure cost on land sold 2010 $’000 At beginning of year Reduction in provision At end of year

(

2009 $’000

212,100 844)

228,350 ( 16,250)

211,256

212,100


30 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

17.

Deferred taxation

Deferred tax liabilities Deferred tax assets Net position

2010 $’000

2009 $’000

1,026,895 ( 707,549)

524,621 (539,354)

319,346

( 14,733)

Deferred tax balances are attributable to temporary differences arising between financial statement and tax accounting. (a) Deferred tax liabilities:

2008 $’000 Revaluation of investment properties Revaluation surplus-Buildings Retirement benefit asset Interest receivable

Recognised in other Recognised in comprehensive profit or loss income $’000

2009 $’000

Recognised in other Recognised in comprehensive profit or loss income $’000 $’000

2010 $’000

295,080 100,954 85,253 4,983

107,459 ( 85,253) 2,295

13,850 -

402,539 114,804 7,278

270,479 153,846 ( 3,022)

80,971 -

673,018 195,775 153,846 4,256

486,270

24,501

13,850

524,621

421,303

80,971

1,026,895

2008 $’000

Recognised in profit or loss $’000

2009 $’000

408,344 12,734 143,404

( 28,014) 2,886 -

380,330 15,620 143,404

19,969 20,705 126,964 557

400,299 36,325 126,964 143,961

564,482

( 25,128)

539,354

168,195

707,549

(b) Deferred tax assets:

Depreciation charges in excess of capital allowances Accounts payable Tax losses Other

(c) Deferred tax is calculated on all temporary differences under the liability method using the enacted tax rate of 33!%.

Recognised in profit or loss 2010 $’000 $’000


31 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

18.

Due from/(to) regional companies Ministry Paper dated February 27, 1968 stated that the regional companies shown at (a) and (b) below were incorporated to initiate primary development in their respective areas pending the establishment of the Group by Act of Parliament. It is intended that these companies should operate as wholly-owned regional agents of the corporation. As at March 31, 2010, the shares in the regional companies had not been transferred to the corporation, and their financial statements are not consolidated into those of the corporation. At that date, the accumulated deficit of Kingston Waterfront Redevelopment Company Limited aggregated $3,513 million (2009: $3,513 million) and in St. Ann Development Company Limited, the net surplus aggregated $87 million (2009: $69 million). The regional companies are: (a) Kingston Waterfront Redevelopment Company Limited. (b) St. Ann Development Company Limited

19.

Accounts payable and other current liabilities

Amounts to be disbursed on specific projects Contract payables and retentions Deposits on sale of real estate Accruals Others

2010 $’000

2009 $’000

31,191 264,599 44,046 214,048

460,716 32,790 120,267 8,882 195,118

553,884

817,773

The corporation’s trade payable for the most part do not have an average credit period, based on the nature of the transactions. Amounts are disbursed to contractors on specific projects once a certificate of completion is submitted and the percentage of completion is verified. Retention amounts deducted are generally held for a period of six (6) months. No interest is charged on these amounts. Contractors’ levy of 2% of gross amount paid to contractor are deducted and remitted to the tax collectorate. Penalty of 25% per annum of the levy based on the number of days outstanding is applicable if amounts are not remitted on the 14th day of the following month. No interest is charged on other trade payable balances. The corporation has financial risk management policies in place to ensure that all payables are paid within the specified time frame (where applicable).


32 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

20.

Loan

Development Bank of Jamaica (principal) Accrued interest

2010 $’000

2009 $’000

814,634

606,070

60,003

35,587

874,637

641,657

In the prior year, the corporation obtained from the Development Bank of Jamaica, a line of credit in the amount of $1,000 million of which $814 million (2009: $606 million) has been drawn down as at the reporting date. The loan carries a variable rate of interest of 7.75% per annum. During the year, the repayment dates by which both principal and interest are rescheduled to be repaid was amended to June 2012. The loan is secured by duly executed promissory notes together with specific securities as follows: (a) Hypothecation of shares in companies to be divested (Bloody Bay Development Limited and Pegasus Hotels of Jamaica Limited in the first instance) valued at approximately J$2,500 million. (b) Assignment of additional security (including first mortgage on lands assets) to maintain a security coverage loan ration of 1.6:1. (c) First mortgage on property known as “Room on the Beach” located in St. Ann and registered at Volume 1104 Folio 890 and Volume 1220 Folio 833 of the Register Book of Titles. 21.

Operating revenue The corporation’s revenue arises materially from project and other management fees, ticket sales, real estate sales and lease of properties.

22.

Disclosure of expenses/(income) (a) Impairment losses: These arise on account of:

Accounts receivable Due from related parties

2010 $’000

2009 $’000

228,677 205,569

115,980 66,299

434,246

182,279


33 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

22.

Disclosure of expenses/(income) (cont’d) (b) Profit before taxation is stated after charging/(crediting):

Audit fees Depreciation Directors fees Net foreign exchange gains Employee expenses (see also note 25) Management fees-related parties Gain on disposal of property, plant & equipment Interest expenses 23.

2010 $’000

2009 $’000

13,311 88,361 4,676 ( 22,758) 456,725 (175,444) ( 66) 62,321

13,040 80,205 3,638 ( 45,832) 882,478 (191,112) ( 624) 38,410

Taxation (a) Taxation represents profit for the year adjusted for tax purposes and materially represents income tax @ 33!"#$%&'()*+*,-$./0$1&22&3*,-4 2010 $’000 Current tax expense: Current year charge

2009 $’000

-

2,156

253,108

49,629

253,108

51,785

2010

2009

Profit before taxation

4,360,470

114,780

Computed "expected" tax expense at statutory rates Tax effect of differences between profit for financial statements and tax reporting purposes on: Fair value of gains on investment properties Other items non-deductible for tax purposes

1,453,490

38,260

(1,288,440) 88,058

( 14,079) 27,604

Deferred taxation: Origination and reversal of other temporary differences

(b) Reconciliation of tax charge:

Actual tax charge

253,108

51,785

(c) Taxation losses, subject to agreement with Taxpayer Administration Jamaica, available for relief against future taxable profits, amount to approximately $380 million (2009: $Nil) for the corporation. If unutilised, these can be carried forward indefinitely.

24.

Related party transactions Material transactions with related parties comprised: (i) Subsidiaries: Advances receivable Advance payable Loans

2010 $’000

2009 $’000

45,357 (426,192) 61,188

168,786 (424,265) 13,554

(319,647)

(241,925)


34 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

24.

Related parties transactions (cont’d) (ii)

Associates:

Loans (iii)

2010 $’000

2009 $’000

225,902

237,421

Key management: The remuneration of directors and other members of key management (not disclosed elsewhere) during the year was as follows: 2010 2009 $’000 $’000 Short term benefits

63,178

51,821

In addition to the above, the corporation performed certain administrative services for the following subsidiaries for which fees were charged but not collected, as follows.

Runaway Bay Water Company Limited Urban Maintenance (1977) Limited Ocho Rios Commercial Centre Limited National Hotels and Properties Limited

25.

2009 $’000

24,000 73 7,000 27,808

24,000 948 25,500

58,881

50,448

2010 $’000

2009 $’000

63,178 757,627 (444,358) 80,278

51,821 490,867 268,876 70,914

456,725

882,478

Employee expenses Staff costs incurred during the year in respect of employees were: Senior executives emoluments Salaries and wages Pension contributions Statutory contributions

26.

2010 $’000

Financial instruments (a)

Financial risk management: The corporation has exposure to the following risks from the use of financial instruments:

! ! !

credit risk liquidity risk market risk

This note presents information about the corporation’s exposure to each of the above risks, the corporation’s objectives, policies and processes for measuring and managing risk, and the corporation’s management of capital.


35 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

26.

Financial instruments (cont’d) (a)

Financial risk management (cont’d): The corporation has financial risk management policies which are directed by its Board of Directors. These policies set out the corporation’s overall business strategies and its risk management philosophy. The financial risk management programme seeks to minimize potential adverse effects of financial performance of the corporation. The Board of Directors provides principles for overall financial risk management and policies covering specific areas, such as market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and other price risk), credit risk and liquidity risk. Periodic reviews are undertaken to ensure that the policy guidelines are complied with. The corporation’s activities expose it to a variety of financial risks, including the effects of changes in foreign currency exchange rates and interest rates. There has been no change during the year to the corporation’s exposure to these financial risks or the manner in which it manages and measures the risk. The corporation does not hold or issue derivative financial instruments. The following table sets out the financial instruments as at the reporting date: 2010 $’000

2009 $’000

Financial assets: Loans and receivables (including cash and bank balances)

1,253,723

2,178,323

Financial liabilities: Other liabilities

1,892,108

1,899,393

(i)

Credit risk: Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The corporation’s principal financial assets are cash and bank balances and trade receivables. Management of credit risk The credit risk relating to cash and bank balances is mitigated by the maintenance of deposits only with reputable financial institutions with minimal risk of default. The corporation’s credit risk is primarily attributable to its trade receivable, since amounts advanced on specific projects are receivable from funds received from the Government of Jamaica and mobilization advances are receivable from amounts payable to contractors. Trade receivables presented in the statement of financial position are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The corporation’s risk regarding advances to specific projects and mobilization advances are limited because the corporation’s primary customers are government-owned companies. In determining the recoverability of other trade receivables, the corporation considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the corporation believes that there is no further credit provision required in excess of the allowance for doubtful debts.


36 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

26.

Financial instruments (cont’d) (a)

Financial risk management (cont’d): (i)

Credit risk (cont’d): Management of credit risk (cont’d) The average credit period on the sale of lands or rentals is 30 days. Interest at a rate of 20% per annum is charged on outstanding amounts effective on the date payment was due. The corporation has fully provided for all receivables 91 days and over, because historical experience is such that receivables that are past due 91 days and beyond are generally not recoverable. Based on the nature of the corporation's business no credit checks are performed for individuals purchasing houses/land. Maximum exposure to credit risk The corporation’s maximum exposure to credit risk at year end was therefore as follows:

Trade receivables Cash and bank balances

2010 $’000

2009 $’000

47,344 718,018

12,636 1,356,138

765,362

1,368,774

Ageing of past due but not impaired trade receivables: Included in the corporation’s trade receivable balance are debtors with a carrying amount of $20.7 million (2009: $32.2 million), which are past due at the reporting date for which the corporation has not provided as there has not been significant change in credit quality and the amounts are still considered recoverable. The corporation does not hold any collateral over these balances. The average age of these receivables is 61 days (2009: 61 days). 2010 $’000 31 – 60 days 61 – 90 days

(ii)

2009 $’000

4,949 15,791

16,222 16,036

20,740

32,258

Market risk: Market risk is the risk that changes in market prices, such as foreign exchange rates, and interest rates will affect the corporation’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

! Foreign currency risk: Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The corporation is exposed to foreign currency risk as a result of transactions that are denominated in a currency other than the Jamaica dollar. The primary currency giving rise to such exposure is the United States dollar.


37 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

26.

Financial instruments (cont’d) (a)

Financial risk management (cont’d): (ii)

Market risk (cont’d):

! Foreign currency risk (cont’d): Management of foreign currency risk The corporation manages foreign currency risk by ensuring that the exposure in foreign assets and liabilities is kept to an acceptable level by monitoring currency positions. Management further manages this risk by maximising foreign currency earnings and holding foreign currency balances. 2010 US$ $’000 Total and net foreign currency asset

971

2009 J$ $’000

86,379

US$ $’000

J$ $’000

2,867

252,021

Foreign currency sensitivity A 5% revaluation/devaluation (2009: 2% revaluation or a 10% devaluation) of the US$ against the Jamaica dollar would have increased/(decreased) profit for the year by $4,318,967 (2009: $5,037,000 for a 2% revaluation or $25,187,000 for a 10% devaluation). This analysis assumes that all other variables, in particular interest rates, remain constant. Exchange rates for the US dollar in terms of the Jamaica dollar were as follows: At December 14, 2011: At March 31, 2010: At March 31, 2009:

86.89 88.96 87.95

! Interest rate risk: Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The corporation takes on exposure to the effects of fluctuations in the prevailing levels of market interest rate on its financial position and cash flows. Interest margins may increase as a result of such changes but may reduce or create losses in the event that unexpected movements arise. Management of interest rate risk The corporation is exposed to interest rate risk through borrowings and deposits held at fixed and variable rates. The corporation manages these risks by ensuring that an appropriate mix is maintained. Additionally, the risk position is evaluated regularly.


38 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

26.

Financial instruments (cont’d) (a)

Financial risk management (cont’d): (ii)

Market risk (cont’d):

! Interest rate risk (cont’d): Management of interest rate risk (cont’d) The corporation’s exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note. Within 1 month $’000

1 to 3 months $’000

2010 3 to 12 months $’000

1 to 5 years $’000

Non-interest bearing $’000

Total $’000

Financial assets Receivables Due from related parties Cash and bank

-

-

-

-

203,258

203,258

-

709,844

-

-

332,447 8,174

332,447 718,018

Total

-

709,844

-

-

543,879

1,253,723

1 to 5 years $’000

Non-interest bearing $’000

Total $’000

Within 1 month $’000 Financial liabilities Accounts payable Long-term loan Due to related parties Due to regional companies

1 to 3 months $’000

2010 3 to 12 months $’000

-

-

-

874,637

553,884 -

553,884 874,637

-

-

-

-

426,192

426,192

-

-

-

-

37,395

37,395

Total

-

-

-

874,637

1,017,471

1,892,108

Interest sensitivity gap

-

709,844

-

Cumulative interest sensitivity gap

-

709,844

709,844

(874,637) ( 473,592) ( 638,385)

(164,793) ( 638,385)

-


39 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

26.

Financial instruments (cont’d) (a)

Financial risk management (cont’d): (ii)

Market risk (cont’d):

! Interest rate risk(cont’d): Management of interest rate risk (cont’d) Within 1 month $’000

2009 3 to 12 months $’000

1 to 3 months $’000

1 to 5 years $’000

Non-interest bearing $’000

-

-

402,424

402,424

Total $’000

Financial assets Receivables Due from related parties Cash and bank

-

1,345,183

-

-

419,761 10,955

419,761 1,356,138

Total

-

1,345,183

-

-

833,140

2,178,323

-

Financial liabilities Accounts payable Short-term loan Due to related parties Due to regional companies

-

-

-

641,657

-

817,773 -

817,773 641,657

-

-

-

-

424,265

424,265

-

-

-

-

15,698

15,698

Total

-

-

641,657

-

1,257,736

1,899,393

Interest sensitivity gap

-

1,345,183

(641,657)

-

( 424,596)

Cumulative interest sensitivity gap

-

1,345,183

703,526

703,526

278,930

278,930

-

Average effective yields by the earlier of the contractual repricing or maturity dates: Immediately rate sensitive % Cash and cash equivalents Long-term loan

Immediately rate sensitive %

Cash and cash equivalents Short-term loan

-

Within 3 months % 8 Within 3 months % 9.94 -

2010 3 to 12 months % 2009 3 to 12 months % 7.75

1 to 5 years % 7.75 1 to 5 years % -

Average % 8 7.75

Average % 9.94 7.75


40 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

26.

Financial instruments (cont’d) (a)

Financial risk management (cont’d): (ii)

Market risk (cont’d):

! Interest rate risk(cont’d): Interest rate sensitivity The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. A 5% increase or 5% decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates. If interest rates had been 5% higher or 5% lower (2009: 5% higher and 8% lower) and all variables were held constant, the corporation’s profit for the year ended March 31, 2010 would be increased/decreased by approximately $7.6 million (2009: increase/decrease by $36.268 million and $58.029 million respectively). This is mainly attributable to the corporation’s exposure to interest rate risk on its bank deposits and loan. (iii)

Liquidity risk: Liquidity risk, also referred to as funding risk, is the risk that the corporation is unable to meet its payment obligations associated with its financial liabilities when they fall due. Prudent liquidity risk management implies maintaining sufficient cash balances to meet the corporation’s monthly operating needs. Management of liquidity risk The corporation’s liquidity management process includes: (a) Monitoring future cash flows and liquidity regularly. This incorporates an assessment of expected cash flows through forecasting on a monthly basis; and (b) Preparation of an annual budget which is reviewed and approved by the Board of Directors. The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interestbearing liabilities as they mature, are important factors in assessing the liquidity of the corporation and its exposure to changes in interest rates and exchange rates. Undiscounted cash flows of financial/liabilities The maturity profile of the corporation’s financial liabilities at year end based on contractual undiscounted payments was as follows:

Interest bearing Non-interest bearing

Less than 1 month $’000

1 to 3 months $’000

-

591,279

-

591,279

2010 3 to 12 months $’000

1 to 5 years $’000

Total $’000

-

874,637 426,192

874,637 1,017,471

-

1,300,829

1,892,108


41 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

26.

Financial instruments (cont’d) (a)

Financial risk management (cont’d): (iii)

Liquidity risk (cont’d): Undiscounted cash flows of financial/liabilities (cont’d) Less than 1 month $’000 Interest bearing Non-interest bearing

(b)

1 to 3 months $’000

2009 3 to 12 months $’000

1 to 5 years $’000

Total $’000

-

833,471

641,657 -

424,265

641,657 1,257,736

-

833,471

641,657

424,265

1,899,393

Fair value disclosures: The fair values of cash and short-term investments, accounts receivable, short-term loan, accounts payable and other current liabilities, and due from/to related companies are assumed to approximate to their carrying value, due to their short-term nature or the ability to obtain set-offs in the amounts disclosed. The corporation had no financial instruments which were carried at fair value.

(c)

Capital management: Management objectives when managing capital are to safeguard the corporation’s ability to continue as a going concern in order to provide returns for the corporation’s stakeholders and to maintain an optimal capital structure to reduce the cost of capital. There were no changes to the corporation’s approach to capital management during the year.

27.

28.

Commitments and contingencies (a)

At March 31, 2010, management estimates aggregate cost of $4,171 million (2009: $645 million) to complete approved and initiated projects.

(b)

The corporation is contingently liable in respect of legal claims arising in the ordinary course of business. These claims are at various stages of conclusion. To the extent that recommendations have been made by the attorneys, adequate provision has been made in these financial statements for these contingencies. Where the outcome cannot be reliably estimated, or where the corporation is confident in its defence, no provision is made in the financial statements.

Operating lease arrangements Property rental income earned during the year by the corporation, aggregated $252 million (2009: $206 million).


42 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

28.

Operating lease arrangements (cont’d) At the reporting date, the corporation had contracted with tenants for the following future minimum lease payments receivable as follows:

Within one year In the second and third years

29.

2010 $’000

2009 $’000

207,630 471,357

273,646 362,514

678,987

636,160

Prior year adjustments Certain accounting treatments in previous years were not consistent with those required under IFRS and have been corrected in the current year [see note 2(a)]. The following adjustments are, therefore, treated as prior year adjustments with reclassifications made, as necessary, and the comparative figures have been restated accordingly. (i)

Certain property, plant and equipment, investment properties, intangible assets and inventory of land and development projects were incorrectly accounted for in prior years. Necessary adjustments have been made in this respect.

(ii)

Balances representing advances to subsidiaries in relation to an investment in an associated company, Bloody Bay Hotel Development Limited, were incorrectly accounted for and reported in the previous year. Necessary adjustments have been made in this respect. Also, amounts due to/from related parties were reclassified and, consequently, interest in subsidiaries and associates has been restated.

(iii)

In previous years, the corporation’s investment in a joint venture, Port Royal Development Company Limited, was not accounted for in accordance with IFRS. Necessary adjustments have been made in this respect.

(iv)

Certain accounts receivable, taxation recoverable and advances to the Government of Jamaica balances were incorrectly accounted for in the previous year. Necessary adjustments have been made in this respect.

(v)

In previous years, the corporation’s deferred taxation was incorrectly accounted for. Necessary adjustments have been made in this respect.


43 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

29.

Prior year adjustments (cont’d) The detailed impact of the above adjustments is tabulated below: 2009 As previously reported

Notes

Prior year adjustment

$’000

$’000

As restated

previously reported

2008 As Prior year adjustment

$’000

$’000

$’000

As restated $’000

ASSETS Non-current assets: Property, plant and equipment (i) 8,464,380 Investment properties (i) 11,923,783 Intangible assets (i) 79,639 Interests in subsidiaries and associates (ii) 587,970 Due from related parties (ii) Investments in joint ventures (iii) 1,156,192 Retirement benefit asset Deferred taxation (v) 22,211,964 Current assets: Taxation recoverable Inventory of land and development projects Accounts receivable Cash and cash equivalents

(iv)

56,000

(i) (iv)

TOTAL ASSETS

(7,059,828) 1,404,552 6,675,920 18,599,703 ( 79,639) ( 358,952) 419,761 ( 18,137) 14,733

229,018 419,761 1,138,055 14,733

( 406,142) 21,805,822 (

7,464,469 (5,703,385) 1,761,084 10,962,388 7,112,770 18,075,158 71,362 ( 71,362) -

25,145)

30,855

2,736,724 1,155,331 1,377,971

(1,591,689) ( 752,907) ( 21,833)

5,326,026

(2,391,574)

750,297 ( 443,193) 80,945 1,023,884 ( 18,137) 255,757 78,212

307,104 80,945 1,005,747 255,757 78,212

20,528,157 1,035,850 21,564,007 13,600 (

3,511)

10,089

1,145,035 402,424 1,356,138

2,372,180 (1,241,435) 733,140 ( 629,402) 1,204,102 ( 14,949)

1,130,745 103,738 1,189,153

2,934,452

4,323,022 (1,889,297)

2,433,725

27,537,990

(2,797,716) 24,740,274

24,851,179 ( 853,447) 23,997,732

222,788 8,818,110 325,718 16,539,950

222,788 (3,637,030) 5,181,080 325,718 359,245 16,899,195

222,788 222,788 7,801,005 (2,341,986) 5,459,019 325,718 325,718 15,442,670 1,374,320 16,816,990

EQUITY AND LIABILITIES Government equity: Capital contributions Capital reserve General reserve Revenue reserve Advances to the Government of Jamaica

(i)

(iv) (

292,924)

25,613,642 Non-current liabilities Due to related parties Provision for future infrastructure cost on land sold Deferred taxation (v) Current liabilities: Due to regional companies Accounts payable and other current liabilities Short-term loan TOTAL EQUITY AND LIABILITIES

292,924

-

(2,984,861) 22,628,781

-

(

292,924)

292,924

-

23,499,257 ( 674,742) 22,824,515

424,265

424,265

212,100 237,120 (

237,120)

212,100 -

228,350 178,705 ( 178,705)

228,350 -

449,220

187,145

636,365

407,055 ( 178,705)

228,350

15,698

-

15,698

38,013

-

38,013

817,773 641,657

-

817,773 641,657

906,854 -

-

906,854 -

1,475,128

-

1,475,128

944,867

-

944,867

27,537,990

(2,797,716) 24,740,274

-

-

-

24,851,179 ( 853,447) 23,997,732


44 URBAN DEVELOPMENT CORPORATION Notes to the Non-Consolidated Financial Statements (Continued) Year ended March 31, 2010

29.

Prior year adjustments (cont’d) The detailed impact of the above adjustments is tabulated below (cont’d):

Notes

Revenue Administrative and general expenses Increase in fair value of inventory properties Income from investments Net finance costs Impairment losses

(iv) (i) ( iv)

As previously reported

2009 Prior year adjustment or reclassification

As restated

$’000

$’000

$’000

1,359,484 (1,730,523)

( 23,700) ( 329,483)

1,335,784 (2,060,006)

777,766 695,075 ( 38,410) -

( 413,150) ( 182,279)

364,616 695,075 ( 38,410) ( 182,279)

1,063,392

( 948,612)

Profit before taxation Taxation

(v)

14,678

Profit for the year Other comprehensive income/(expense): Revaluation adjustments on land and buildings Deferred tax on revaluations Arising on disposal

(i) (v)

( (

(

66,463)

114,780 (

51,785)

1,078,070

(1,015,075)

62,995

1,125,564 75,249) 14,000)

(1,356,443) 61,399 -

(230,879) ( 13,850) ( 14,000)

1,036,315

(1,295,044)

(258,729)


Annreport09 10