Annual Report
2012-2013
Head Office 13 Caledonia Avenue P.O. Box 413 Kingston 5, Jamaica. Tel: (876) 968-7522-4 968-7536-9 968-2215 906-8233 Fax: (876) 929-5908 Email: info@hajl.gov.jm Website: www.hajl.gov.jm Facebook: www.facebook.com/HousingAgencyofJamaica Twitter: @HousingAgencyJA
MISSION STATEMENT “To contribute to the improved quality of life of all Jamaicans through social transformation by facilitating and providing quality, affordable shelter solutions with security of tenure�.
CORE VALUES
This will be accomplished by: A committed, caring, dedicated and competent team with excellence, innovation, the use of appropriate technology and through strategic partnerships with communities and other stakeholders
I care, together we care Integrity Care Accountability Respect Excellence Together we care and we commit to carrying out our functions in such a manner that creates a culture of Excellence
ANNUAL REPORT 2012-2013
CONTENTS CORPORATE PROFILE ............................................................................................................................................. 3 BOARD OF DIRECTORS’ REPORT............................................................................................................................. 5 MANAGING DIRECTOR’S MESSAGE ........................................................................................................................ 7 OUR BOARD OF DIRECTORS ................................................................................................................................... 8 CORPORATE GOVERANCE .................................................................................................................................... 10 BUILDING JAMAICA…. ONE COMMUNITY AT A TIME ........................................................................................... 15 OUR MANAGEMENT TEAM .................................................................................................................................. 19 CORPORATE STRATEGY ........................................................................................................................................ 20 FIVE YEAR FINANCIAL HIGHLIGHTS ...................................................................................................................... 21 REVIEW OF OPERATIONS ..................................................................................................................................... 22 STRATEGIC OBJECTIVES, TARGETS & ACHIEVEMENTS .......................................................................................... 27 EXECUTIVE COMPENSATION ................................................................................................................................ 28 PROJECTIONS OF KEY FINANCIAL & OPERATIONS MEASURES FOR 2013/2014..................................................... 29 PICTORIAL HIGHLIGHTS ........................................................................................................................................ 30 FINANCIAL STATEMENTS ..................................................................................................................................... 32
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ANNUAL REPORT 2012-2013
CORPORATE PROFILE •
Housing Agency of Jamaica Limited (HAJL) which was incorporated on April 30, 1998, as the National Housing Development Corporation Limited (NHDC), was formed through the merger of Caribbean Housing Finance Corporation Limited, the National Housing Corporation Limited and Operation PRIDE. The entity changed its name from the National Housing Development Corporation Limited to Housing Agency of Jamaica Limited in September 2008.
•
HAJ is a wholly owned government entity and falls under the portfolio of the Ministry of Transport, Works and Housing and is governed by a Board of Directors and headed by a Managing Director.
•
HAJ’s main activities are those of property development and construction of low and medium cost housing.
•
HAJ manages a substantial mortgage portfolio consisting primarily of Greater Portmore mortgages.
•
HAJ’s functions are discharged within two (2) broad divisions, namely Technical Services and Corporate Services. The Technical Services Division contains the core functional areas of Engineering and Design, Project Development & Procurement and Project Implementation Departments. The Corporate Services Division comprises the Finance and Information, Legal and Company Secretarial, Mortgage Administration and Public Relations and Community Development departments The Human Resources and Administration Department reports directly to the Managing Director. The Internal Audit Department reports directly to the Chairman of the Board.
•
The Agency currently operates from four (4) locations within Jamaica, with its head office located in Kingston at 13 Caledonia Avenue.
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Integrity
To act honestly and be reliable.
ANNUAL REPORT 2012-2013
BOARD OF DIRECTORS’ REPORT Project Starts and Deliveries: 2012/2013
Financial Overview
The financial results for fiscal year 2012/2013 show a Net Profit of $119.397M, down 0.003% from $119.892M in 2012. This is mainly attributable to the write-back of provision made for Operation PRIDE development projects of $204.41M.
During Fiscal Year 2012/2013, the Agency delivered 2,086 (1,365 Brownfield and 721 Greenfield) housing solutions, as compared to 2,457 in the previous year. The projected housing solutions starts of 3,374 did not materialize due the abandonment/deferment of a number of projects.
Jamaica Titling Programme
The titling programme which commenced in June 2012 aims to hand over 10,671 titles over 2 years to lot owners in Operation PRIDE Schemes who have paid the full (discounted) purchase price for their lots. To date, 1,029 titles have been transferred in 39 schemes.
GOJ/FFP Partnership for the construction of Wooden Houses
A facilitation agreement was entered into with the GOJ/HAJ, Food for the Poor (FFP) and the PetroCaribe Fund to construct 100 2-bedroom wooden units per month or approximately 1,200 units per year. This formal agreement was signed on August 21, 2012. Funding was made available for year 1 of the 5-year programme. However with the passage of Hurricane Sandy in October 2012, 500 units were assigned to the three parishes of St. Mary, St. Thomas and Portland, which had suffered the most severe damage. There was a rescoping of the programme as the distribution of units per constituency was reduced to at least 10 units due to the reallocation to Hurricane Sandy victims. It is expected that with the completion of the Sandy units, FFP will re-concentrate its effort on the regular units, now scheduled for completion in September 2013. Thereafter, construction of the second batch of 1200 units should commence at an average of 100 units per month.
MAUREEN WEBBER CHAIRMAN
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ANNUAL REPORT 2012-2013
As at March 31, 2013 a total of 379 houses had been completed in response to the Hurricane Sandy intervention; whilst 199 houses were completed in the regular programme. It is anticipated that the complement of the Sandy Intervention will be completed by May 2013.
•
Zinc Fence Removal/Replacement Project
Signed Memoranda of Understanding with potential investors for projects at Colbeck, St. Catherine, Grange Pen, St. James, Mosquito Cove/Hopewell Farm, Hanover and Shooters, St Catherine. Cabinet submissions seeking permission to negotiate with said investors were prepared and have been submitted.
New Business Model
This project is an initiative of the Government of Jamaica Emergency Employment Programme (JEEP) which aims to provide beautification and enhancement to the quality of lives of residents in inner-city communities while simultaneously providing employment opportunities.
A new Business Model has been designed for the Agency which is reflected in the Strategic Plan for 2013-2016 and will be executed on a phased basis. This model, when implemented, will allow the Agency to: 1. Focus on a more clearly defined market segment i.e. low-middle income 2. Increase revenue stream 3. Reduce overhead expenses
Communities included in the pilot of the project were Payne Land, Trench Town, Bedward Gardens, & Wildman Street; all inner city areas in the parishes of Kingston & St. Andrew and community members from each respective area engaged to provide the workforce (labourers, masons, steel fixers, carpenters and foremen) needs to implement the project. The general scope of the works involved the removal of existing zinc fences and replacing them with concrete blockwalls 1.8 meter high.
The first phase will focus on an organizational redesign thus providing the Agency with the capacity to fully execute its strategy. In the second phase, the Agency will fine-tune its product development, which will include developing a solution for low cost building systems. The new model has been approved by the Board of Directors and has been submitted to the Ministry of Finance and Planning for approval.
With a budget of $42M, as at March 31, 2013, total expenditure was $7.6M on works commenced in communities, Payne Land, Trench Town and the Success Basic School in Allman Town.
Projections for Fiscal Year 2013/2014 It is projected that a net profit of $136.028M will be realized and that housing solutions starts and deliveries will total 2,927 and 1,085 respectively.
Public Private Partnerships
The Agency recognizes that in order to meet its mandate, to provide large numbers of housing solutions, it will be necessary to enter into joint venture arrangements with private developers. In 2012/2013:• By way of Cabinet Decision No 35/12, dated October 8, 2012, the Agency obtained Cabinet Approval to negotiate with Malphrus International IBC for the construction of approximately 1,600 housing solutions at Bernard Lodge, St. Catherine.
Maureen Webber Chairman
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ANNUAL REPORT 2012-2013
MANAGING DIRECTOR’S MESSAGE
Like countless people across the globe, the Jamaican people are once again facing trying times. No growth or slow growth at best, devaluation, rising prices, an extended wage freeze, and high crime levels are features of the deep crisis faced by the society. HAJ staff have not remained unaffected by these hurdles and have been trying their best to cope. The Company in striving to fulfill its mandate to provide quality, affordable homes accessible to large numbers of Jamaicans, will need to take firm measures to contain its own costs, and rationalize its structures to remain a vibrant player in the competitive housing marketplace. This will undoubtedly involve some staff displacement, but is expected to produce a more efficient and viable Agency in the near future. JOSEPH A. SHOUCAIR MANAGING DIRECTOR
While building new housing solutions, we have also begun to put registered land titles in the hands of Jamaicans long resident on PRIDE lands, at steeply discounted prices. This title delivery programme will be intensified in the months ahead allowing hundreds of families to enjoy security of tenure and improve their lives. HAJ remains committed to providing much needed shelter solutions for the Jamaican people.
Joseph A. Shoucair Managing Director
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ANNUAL REPORT 2012-2013
OUR BOARD OF DIRECTORS
L-R: Karl Tucker, Maureen Webber (Chairman), Paul Williams, Dr. Lanie Oakley-Willams, Leonard Green, Errol Johnson, Vincent Haldane, Mario Mitchell Not Pictured: Joseph Shoucair (Managing Director)
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ANNUAL REPORT 2012-2013
OUR BOARD OF DIRECTORS (Cont’d.)
L-R: Cordinal Beckford, Desmond Malcolm, Nekeisha Lindsay, Philisha Lewis, Rev. Canon Major Dr. Sirrano Kitson, Denis Lawrence, Simone Morris-Rattray (Company Secretary), Kevin Taylor
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ANNUAL REPORT 2012-2013
CORPORATE GOVERNANCE The Board of Directors of HAJ, as representatives of the Government (shareholder), is committed to the achievement of business success and the enhancement of long-term value with the highest standards of integrity and ethics. By Cabinet Decision No.08/12 dated February 27, 2012, a new board consisting of fourteen (14) directors was appointed with effect for a period of three (3) years ending February 26, 2015.
Board Responsibility
The Corporate Governance Policy sets out principles relevant to the operation of the Board and delineates the functions of the Board and those of the management. The Board met eleven (11) times during the year. In addition to its regularly scheduled monthly meetings, the Board met in June to approve the Audited Financial Statements as prepared by the external auditors. During the year the Board fulfilled several of its key functions, including: • Approval of the three (3) year Corporate Strategic Plan • Approval of the 2012/2013 budget • Monitoring of executive management performance in the implementation and achievement of strategic objectives and financial performance
Board Composition
As at March 31, 2013, the Board comprised sixteen (16) non-executive directors in addition to the Managing Director.
Committees of the Board
Each Committee has its own charter, which has been approved by the Board and defines the respective committee’s roles and responsibilities.
Audit Committee
This Committee comprised five (5) Directors: Dr. Lanie Oakley-Williams (Chair), Philisha Lewis, Kevin Taylor, Denis Lawrence and Rev. Canon Major Dr. Sirrano Kitson. The Audit Committee met eight (8) times during the year. The Audit Committee undertook the following during the financial year under review: • Reviewed the Agency’s draft Financial Statements for year ended 31 March 2012 with management and Finance Committee prior to presentation to the Board. • Recommended to the Board of Directors that the Audited Financial Statements be included in the Agency’s Annual Report and KPMG be appointed independent auditors for 2012/2013. • Reviewed and approved the Internal Audit Department’s Work Plan and Performance targets for financial year ending 31 March 2013. • Examined and reviewed the internal audit findings and recommendations. • Reviewed internal audit reports and in some instances required implementation of the recommended policies and procedures or changes thereto. 10
ANNUAL REPORT 2012-2013
Finance Committee
Members of the Committee are: Denis Lawrence (Chair), Mario Mitchell, Paul Williams and Leonard Green. The Finance Committee met twelve (12) times during the year. The Committee undertook the following during the 2012/2013 financial year: • Ensured that the annual budget was presented to both the Ministry of Finance and Planning and the Ministry of Transport, Works and Housing on a timely basis • Ensured that the Annual Report for 2012 was submitted to the Ministry of Transport, Works and Housing on a timely basis in keeping with the Public Bodies (Management and Accountability) Act.
Strategic Planning & Organizational Structure Committee
During the 2012-2013 financial year, the Committee met six (6) times to review matters relating to the strategic plans of the Agency, its management structure and performance of the company’s executives to ensure that all objectives are met as well as matters relating to corporate governance. Members of the Committee are: Maureen Webber (Chair), Manley Nicholson and Errol Johnson.
Planning & Projects Committee
The Planning and Projects Committee provides strategic guidance for the planning and execution of the Agency’s portfolio of projects. The Committee comprised six (6) Directors: Paul Williams (Chair), Nekeisha Lindsay, Carl Tucker, Cordinal Beckford, Vincent Haldane and Desmond Malcolm and met twelve (12) times during the period. During financial year 2012-2013, the committee undertook the following: •
Endorsed the recommendations for the award of contracts, in order to facilitate completion of the remainder of the process to contract award. #
Project
DESCRIPTION
TYPE OF SOLUTIONS
1
Norwich, Portland
2
Mona Hills, St. Andrew
3
Property Management
4
Whitehall Phase 3
Rehabilitation of water supply infrastructure) Infrastructure works: roads, water supply, sewerage, drainage and electrical distribution systems To provide property management services under a 2-year contract Construction of houses
TOTAL
•
50 serviced lots
173 studios
CONTRACT VALUE
Status at March 31, 2013
$24,732,796.50
Contract awarded
$194,975,780.00
NCC endorsement received
$90,450,590.00
En-route to the Cabinet
$390,094,037.00
At Cabinet Office
$700,253,203.50
Endorsed and supported the execution of Memoranda of Understanding with a number of private entities primarily for the funding and construction of projects in partnership with the Agency. These projects were the subject of Submissions to the Cabinet seeking approval to 11
ANNUAL REPORT 2012-2013
•
negotiate with the prospective partners. They include projects at Colbeck, St. Catherine, Grange Pen, St. James, Mosquito Cove/Hopewell Farm, Hanover, Shooters Hill, St Catherine. Assisted in piloting the Bernard Lodge project in St. Catherine, another Public Private Partnership project, though the processes to complete negotiations and submission to Cabinet for contract award.
All these projects, in collaboration with the private sector are scheduled to commence during FY 2013/14 and 2014/2015.
New Appointments to the Board
Messrs Paul Williams and Denis Lawrence were appointed to the Board of Directors with effect from 18th April 2012.
Remuneration of Directors
Directors are paid on a ‘per meeting attended’ basis. The following table shows the total remuneration paid for the period under review: Position of Director
Fees ($)
Motor Vehicle Upkeep/Travelling or Value of Assignment of Motor Vehicle ($)
Chairman – Board of Directors Chairman – Finance Committee Chairman – Audit Committee
212,500.00 176,000.00 148,000.00
Chairman – Projects & Planning Committee Director Director Director
197,000.00 134,000.00 103,000.00 106,500.00
Director Director Director Director Director Director Director
75,000.00 85,500.00 121,500.00 108,000.00 67,000.00 132,000.00 118,500.00
Director Director
113,000.00 132,000.00
17,280.00 3,240.00
2,029,500.00
486,870.00
TOTAL
Honoraria ($)
All Other Compensation including Non-Cash Benefits as applicable 1 ($)
Total ($)
0F
212,500.00 203,197.05 148,000.00
27,197.05
121,080.00 71,820.00
123,014.80 154,375.88 123,014.80
320,014.80 409,455.88 297,834.80 106,500.00
49,170.00 5,700.00 29,640.00 102,060.00 86,880.00
Attendance at Board and Committee Meetings
124,170.00 85,500.00 127,200.00 137,640.00 314,057.88 339,663.95 118,500.00
144,997.88 120,783.95
130,280.00 135,240.00 693,384.36
3,209,754.36
There were ten (10) scheduled meetings and one (1) special sitting of the Board, making a total of eleven (11) meetings for the financial year ending March 31, 2013.
1
Accommodation
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ANNUAL REPORT 2012-2013
Details of attendance of Directors at meetings of the Board and its committees during the year are set out below: BOARD
AUDIT COMMITTEE
FINANCE COMMITTEE
11
9
12
Number of meetings for the year
Cordinal Beckford 10 Leonard Green 8 Vincent Haldane 8 Errol Johnson 8 Sirrano Kitson 8 6 Denis Lawrence▀ 10 6 Philisha Lewis 11 5 Nekeisha Lindsay 9 Desmond Malcolm 4 Mario Mitchell 11 Manley Nicholson 9 Lanie Oakley-Williams▀ 10 9 Kevin Taylor 10 8 Carl Tucker 11 Maureen Webber▀ 10 Paul Williams▀ 9 ** Committee Meetings are only attended by its members and invitees. ▀ - Board of Directors Chairman ▀ - Finance Committee Chairman ▀ - Audit Committee Chairman ▀ - Planning & Projects Committee Chairman
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STRATEGIC PLANNING & ORGANIZATIONAL STRUCTURE 6
PLANNING & PROJECTS COMMITTEE 12 10 1 11
9 2 12
9 4 1
10 5
1 9
6 2
11 2 12
Care
To demonstrate genuine interest or concern in the matters that affect customers, team members and other stakeholders.
ANNUAL REPORT 2012-2013
BUILDING JAMAICA‌. ONE COMMUNITY AT A TIME Title Delivery Ceremonies
Long-standing residents of 20 communities became proud, legal landowners as over 800 registered land titles were delivered to these beneficiaries, under a government title delivery programme undertaken by HAJ. These communities include: Oakglades, Mandella Terrrace and Calalloo Mews in St. Andrew, Retirement 1 & 2, Meadowsvale, Pitfour 3, Norwood and Flankers in St. James, Mammee Bay and Shaw Park Heights in St. Ann, Whitehall 1 and Llandilo 5 in Westmoreland and Hague, Trelawny.
Prime Minister, the Most Hon. Portia Simpson-Miller, ON, MP at the Oakglades, St. Andrew Titles Ceremony
Titling Ceremony held in Flankers/Norwood, St. James where over 80 persons received titles. Pictured in centre are: Minister without Portfolio (Housing), Hon. Dr. Morais Guy, MP and Dr. Horace Chang, MP
Over the years, many of these residents had built on lots not paid for in full, and lived in communities with incomplete or neglected infrastructure. Providing those beneficiaries with titles at significantly subsidized rates, underlined the government’s commitment to expand legitimate land ownership among low and lower-middle income Jamaicans, previously informal settlers. Title delivery ceremonies are scheduled to continue and thousands more families will benefit by finally becoming legal landowners.
Strengthening Community-Based Organizations
In building community capacity, HAJ’s Community Development Unit facilitated the integration of six (6) Provident/Benevolent Societies into the regulatory framework of the Department of Cooperative & Friendly Societies. This process has provided these communities (many of whose residents also received land titles) with legal, community-based organizations to represent their interests. Formation and strengthening of these representative bodies, empower communities to better position themselves to access developmental funding through submission of funding proposals to national and international funding agencies. This process will play a key role in gradually creating self-sustaining communities.
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ANNUAL REPORT 2012-2013
Jamaica 50 Parish Capital Décor Programme
The Agency was one of the major sponsors of the Jamaica 50 Décor Programme, one of the areas which made up the projects under the auspices of the JEEP Secretariat. Several teams, drawn primarily from Operation Pride communities, were organized to work on the Jamaica 50 decor programme in 11 parish capitals and Portmore. The decorations helped to heighten patriotism among Jamaicans who visited the parish capitals between August 1 – 6, 2012 and were maintained for the entire month. Additionally, persons were able to get short term employment to erect and later remove decorations. HAJ along with its parent Ministry and Jamaica Mortgage Bank organized a well-researched exhibition at the National Arena. Under the theme “Housing Jamaica over 50 years”, a number of housing solutions, designs and systems constructed by government over the decades from the 1960s to 2000s were highlighted, which the many visitors found both interesting and educational.
View of the Jubilee Village Housing Exhibition held at the National Arena
Jamaica Emergency Housing Programme (JEHP)
Construction of wooden houses by Food for the Poor under the JEHP began September 2012 and has already brought relief to over 700 needy families across the island, including victims of Hurricane Sandy. HAJ acts as Project Manager for the Programme under an Agreement signed last year by the FFP/GOJ/Minister of Transport, Works & Housing and HAJ. Beneficiaries are recommended by Members of Parliament, Ministers of Religion, and Community Groups who must ensure that the proper supporting documentation is provided. Final selection of beneficiaries is done by Food for the Poor, as the Agreement states, in accordance with FFP’s priority index system. The Programme is well on its way in the construction of the first batch of 1260 units encompassing all 63 constituencies, in its first year.
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ANNUAL REPORT 2012-2013
House constructed in Central St. Mary in response to Hurricane Sandy
House constructed in St. Elizabeth NW under Regular programme
House constructed in Western Portland in response to Hurricane Sandy
House constructed in St. Catherine under Regular programme
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South Central
Accountability
To accept responsibility for our actions that influence the lives of others.
ANNUAL REPORT 2012-2013
OUR MANAGEMENT TEAM
L-R: Donamarie Ashton (Snr. Manager, Mortgage Services), Dave Hylton (Snr. Manager, Project Implementation), Rosemarie Brown (Snr. Manager, Project Development & Procurement), Joan Sicard (Snr. Manager, Internal Audit), Roddy Brooks (Acting Snr. Manager, Engineering & Design), Thelma Wallace Cooke (Snr. Manager, Finance & Information), Gary Howell (Snr Manager, Sales Revenue), Helen Bloomfield (Snr Manager, Human Resources & Administration), Richard Jones (Snr Manager, Public Relations & Community Development) and Simone Morris-Rattray (Snr Manager, Legal Services & Corporate Secretariat) Not pictured: Joseph Shoucair (Managing Director)
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ANNUAL REPORT 2012-2013
CORPORATE STRATEGY Despite declining and uncertain economic conditions, there is a huge and growing unmet demand for low-income housing solutions. Market response to our housing solutions indicates that the Agency is competitive in price and quality. In consequence, the Agency has a great opportunity to pursue its core strategy, which is to “Dominate the market for low income housing at prices that meet market demand while enhancing corporate viability through other profitable projects”. As part of its strategy, the Agency has also set three overarching strategic objectives: Ensure and sustain organizational viability and growth in profitability Improve and maintain a team of highly skilled, committed and motivated staff Provide excellent customer service
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ANNUAL REPORT 2012-2013
FIVE YEAR FINANCIAL HIGHLIGHTS
Net Assets ($’000)
2009
2010
2011
2012
2013
136,958
314,865
2,273,815
2,393,707
2,513,216
(4,998)
177,832
334,452
119,784
119,397
(Loss)/Profit for the year ($’000)
Net Profit 400000 350000 300000 250000 200000 150000 100000 50000 0 -50000
Profit
2009 2010 2011 2012 2013
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ANNUAL REPORT 2012-2013
REVIEW OF OPERATIONS Financial Status
Net Operating Result for the financial year ended March 31, 2013 was a loss of $50.52M. However, Net Profit for the year was $119.39M. This was arrived at after the reversal of $204.41M in impairment adjustment to Operation PRIDE development projects. Total Operating Expenses (excluding fees and interest expense on loans) was $169.92M, which was $518.62M or 148% less than in 2012. This was due mainly to adjustment in the provision for impairment in respect of Operation PRIDE development projects of $702.44M. The Total Assets of the Agency was $12.09B at March 31, 2013. Cash and cash-equivalents were $114.84M.
Mortgage Portfolio
Housing Agency of Jamaica Limited’s mortgage portfolio comprised 8,583 mortgages with an asset value of $1.86B as at April 1, 2012. Included in the portfolio are loans managed by HAJL on behalf of its portfolio ministry. PORTFOLIO HAJL USAID Greater Portmore Refinance Ministry of Finance Ministry of Transport, Works and Housing Operation PRIDE Kingston Portworkers/JMB TABLE 1
242 1,708 4,573 32 489 1,214 293 32
PRINCIPAL BALANCE $ 114,194,241 231,550,194 1,247,925,154 31,761,431 32,168,174 26,063,361 177,624,043 679,750
MONTHLY INSTALLMENT $ 2,178,551 2,981,407 27,024,948 634,230 283,297 401,266 1,821,611 10,884
8,583
1,861,966,348
35,336,194
PRINCIPAL BALANCE $ 94,097,878 228,133,425 1,065,440,714 26,319,082 31,841,968 23,916,949 164,597,930 652,668 1,635,000,614
MONTHLY INSTALLMENT $ 1,944,103 2,940,195 26,300,585 570,618 279,380 367,961 1,688,936 10,516 34,102,294
# OF MORTGAGES
Summary of Mortgage Portfolio as at March 31, 2013 PORTFOLIO HAJL USAID Greater Portmore Refinance Ministry of Finance Ministry of Transport, Works and Housing Operation PRIDE Kingston Portworkers/JMB TABLE 2
# OF MORTGAGES 205 1,675 4,212 30 483 1,148 255 31 8,039
Tables 1 & 2 indicate that the number of accounts decreased by 544, moving from 8,583 at April 1, 2012 to 8,039 as at March 31, 2013. The principal balance also decreased by $226,965,734 for the same period. 22
ANNUAL REPORT 2012-2013
Summary of Mortgage Arrears for the period April 1, 2012 and April 1, 2013 PORTFOLIO HAJL USAID Greater Portmore Refinance Ministry of Finance Ministry of Transport, Works and Housing Operation PRIDE Kingston Portworkers/JMB TABLE 3
Arrears as at 01.04.12 $ 4,197,888 432,605,560 21,443,175 27,705,167 55,944,368 63,974,799 61,666,646 1,442,604 668,980,207
Arrears as at 01.04.13 $ 3,751,727 461,578,280 32,040,342 29,095,892 58,721,187 64,780,289 58,007,953 1,564,989 709,540,659
Variance $ 446,161 (28,972,720) (10,597,167) (1,390,725) (2,776,819) (805,490) 3,658,693 (122,385) (40,560,452)
With the exception of HAJL and Operation PRIDE, the above table reflects increasing arrears balances for the other six (6) schemes. The overall increase in arrears of $40,560,452 was due largely to the increased arrears in the USAID schemes.
Public Relations
In continuing the significant strides since its rebranding in 2008, the Agency introduced exciting new projects to improve its overall customer experience. Along with the rebuilding of the website to include more interactive features, HAJ has ramped up its social media efforts. In March 2013, a partnership was forged with Jamaica’s leading furniture and appliance mega-retailer, Courts Jamaica, to provide tasteful, top-quality furnishings for the model unit at The Hills of Boscobel development in St. Mary. This partnership with Courts Jamaica also extended to social media, where the Agency had established a presence, providing yet another avenue to actively and consistently connect with its current and potential customers.
Charmaine Walker (left), one of the two winners of HAJ’s ‘Tell-A-Friend’ Facebook competition, accepts a gift voucher courtesy of Courts Jamaica from Karen Smith, Branch Manager Courts Constant Spring
Tanya Speid-Hill (left), one of the two winners of HAJ’s ‘Tell-A-Friend’ Facebook competition, accepts a gift voucher courtesy of Courts Jamaica from Karen Smith, Branch Manager Courts Constant Spring
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ANNUAL REPORT 2012-2013
Sales Portfolio
SUMMARY OF SALES COLLECTIONS APRIL 1, 2012 – MARCH 31, 2013 PROJECTS WESTMEADE WILLOWS STADIUM GARDENS 3 COUNTRY CLUB 2 HILLS OF BOSCOBEL WHITEHALL 3 BOURKESFIELD RETIREMENT 2 GREEN POND WHITEHALL 2 OAKGLADES BARRETT HALL LILIPUT BOSCOBEL (BROWNFIELD) PORTMORE VILLAS 2B EDEN PARK WENTWORTH OTHER SCHEMES
TOTAL COLLECTED ($) 758,060,573 409,091,770 519,257,022 140,462,814 88,052,522 20,102,130 17,099,904 12,031,769 18,645,204 12,504,000 12,265,836 5,790,318 5,513,000 5,300,770 3,014,517 1,295,000 95,694,808
TOTAL
2,124,181,957
2,124,181,957
1,542,531,350
The year-to-date sales collections reflect a variance of 59% below the budgeted amount of $5.1B, mainly attributable to projects being abandoned or deferred.
2012 2013
Sales Collection
INCREASE IN SALES COLLECTION ATTRIBUTABLE TO THE CLOSURE OF SALES IN WESTMEADE WILLOWS, COUNTRY CLUB 2 AND STADIUM GARDENS 3
A total of 745 titles were obtained in the period under review, increasing the number of titles obtained by the Agency as at 31 March 2013 to 22,513. SPLINTER TITLES OBTAINED FOR PERIOD 1 APRIL 2012 – 31 MARCH 2013 SCHEMES
# OF TITLES
LOCATION
Stadium Gardens Phase 3
50
St. Andrew
Hills of Boscobel
258
St. Mary
Whitehall 3 Norwood H Riverton Whitehouse Whitehall 1 TOTAL
179 150 28 4 76 745
Westmoreland St. James St. Andrew Westmoreland Westmoreland
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ANNUAL REPORT 2012-2013
Procurement Procedures
Housing Agency of Jamaica Limited continues to achieve high ratings for its compliance with the Government of Jamaica Procurement Policies and Procedures. The Agency has made a distinct effort in maintaining a level 1 compliance standard of 96% to 100%. This is also evident in the Procedures for Testing Compliance Audit, carried out by the external auditors annually.
Projects Portfolio HOUSING SOLUTIONS DELIVERED AS AT 31 MARCH 2013 PROJECT BELLE AIR 1 BELLE AIR 2 MT. EDGECOMBE 4 WESTMEADE WILLOWS WHITEHALL 3 HILLS OF BOSCOBEL STADIUM GARDENS 3 HAGUE TOTAL
# OF SOLUTIONS LOTS/UNITS 445 415 325 75 400 196 50 180
LOCATION ST. ANN ST. ANN ST. ANN ST. CATHERINE WESTMORELAND ST. MARY ST. ANDREW TRELAWNY
2,086
Completed Infrastructure works at Belle Air 1, St. Ann
2-bedroom detached houses at Westmeade Willows, St. Catherine
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ANNUAL REPORT 2012-2013
Summary of Projects at Pre-Implementation Stage Scheduled to Commence FY 2013-2014 PROJECT Bernard Lodge, St. Catherine
NO. OF SOLUTIONS 1,616
PLANNING & ENGINEERING DESIGNS Completed
Grange Pen, St. James
778
Completed
•
Colbeck, St. Catherine
200
Completed
•
Mosquito Cove/Hopewell, Hanover
150(approx)
Shooters Hill, St. Catherine
600 (Phase 1 approx.) 50 173
Preliminary commenced Preliminary commenced Completed Completed
Mona Hills, St. Andrew Whitehall 3 (housing), Westmoreland
2-bedroom townhouses at Stadium Gardens Phase 3, St. Andrew
REGULATORY APPROVALS • •
planning
Environmental Permit obtained Applications made for Subdivision and Building Approvals Application for Environmental Permit submitted Application for Environmental Permit submitted
planning • • •
Environmental Permit obtained Environmental Permit obtained Application made for Building Approval
Completed Infrastructure Works at Hague, Trelawny
2-bedroom detached houses at The Hills of Boscobel, St. Mary
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ANNUAL REPORT 2012-2013
STRATEGIC OBJECTIVES, TARGETS & ACHIEVEMENTS The following table represents the Strategic Objectives, Targets & Achievements for the period:
OBJECTIVES
2011/2012
2012/2013
TARGETS $1,320,992,120
ACHIEVEMENTS $465,505,000
TARGETS $1,136,466,764
ACHIEVEMENTS $181,545,000
Operating Profit
$291,394,512
$119,784,000
$159,423,493
$119,397,000
Cost Containment Ratio
1.4
1.34
N/A
N/A
Avg. Construction Cost per delivered solution: (Brownfield/Urban Renewal Lots)
$367,832
$310,597.96
N/A
N/A
Avg. Construction Cost per delivered solution: (Greenfield)
$1,233,000
$1,101,541.52
N/A
N/A
Manage the construction of wooden houses under the GOJ/FFP partnership Transfer splinter titles in each of the selected (32) Brownfield Projects under the Jamaica Titling Programme Housing Solutions – Starts
N/A
N/A
700
573
N/A
N/A
15
805
4,202
924
3,374
Nil
Housing Solutions – Delivered
4,094
2,457
2,215
2,086
Financial Surplus
2
1F
2
This figure represents a Cash Balance
27
ANNUAL REPORT 2012-2013
EXECUTIVE COMPENSATION During the financial year, the emoluments of the Agency’s Senior Executives were as follows
Position of Senior Executive
Managing Director Director, Technical Services Senior Manager , Finance & Information Senior Manager, Internal Audit Senior Manager, Mortgage Administration Senior Manager, Human Resources & Administration Senior Manager, Project Implementation Senior Manager, Project Development & Procurement Senior Manager, Legal Services & Company Secretariat Senior Manager, Engineering & Design Senior Manager, Public Relations & Community Development Senior Manager, Sales Revenue
Performance 3 Incentive ($)
Travelling Allowance or Value of Assignment of Motor Vehicle ($)
Pension or Other retirement 4 Benefits ($)
Other 5 Allowances ($)
NonCash Benefits ($)
Total ($)
8,144,544.00
244,336.32
162,620.00 6
6,205,561.01
47,000.00
None
14,804,061.33
2,769,673.35
-
513,731.36
1,774,890.86
-
None
5,058,295.57
4,104,600.00
667,259.00
945,850.00
2,293,111.07
47,000.00
None
8,057,820.07
4,104,600.00
492,552.00
945,850.00
1,535,293.23
47,000.00
None
7,125,295.23
3,354,720.40
260,484.31
945,850.00
334,827.15
574,525.43
None
5,470,407.29
3,967,780.05
413,743.68
913,326.16
1,801,641.67
47,000.00
None
7,164,849.56
4,104,600.00
164,184.00
945,850.00
1,433,328.07
47,000.00
None
6,694,962.07
4,104,600.00
266,799.00
945,850.00
1,391,070.09
47,000.00
None
6,755,319.09
4,104,600.00
410,460.00
945,850.00
1,619,044.38
47,000.00
None
7,126,954.38
3,459,967.13
254,169.45
940,502.69
2,867,719.09
244,337.10
None
7,766,695.46
4,104,600.00
318,106.50
945,850.00
2,095,716.80
47,000.00
None
7,511,273.30
3,907,258.35
414,577.89
945,850.00
199,683.08
47,000.00
None
5,514,369.32
Salary ($)
2F
5F
3
3F
4F
Maximum 15% of annual basic salary for Managing Director whereas Director & Senior Managers – maximum 35% of basic salary as applicable to all other employees 4 Managing Director, Director and Senior Managers being contract officers whose positions do not fall under the company’s pension scheme receive a gratuity of 25% on their compensation package; included also are Retroactive salary, Notice Pay (MD, Director, Technical Services & Snr Mgr Engineering & Design) 5 Clothing Allowance as well as Acting Allowance for two(2) Senior Management positions 6 Motor Vehicle provided for 10 months during the year for Managing Director
28
ANNUAL REPORT 2012-2013
PROJECTIONS OF KEY FINANCIAL & OPERATIONS MEASURES FOR 2013/2014 During Fiscal Year 2013/2014, it is projected that the Agency will deliver 1,085 completed housing solutions from five (5) schemes. Eighty percent (80%) of these projects will be funded by external sources with the remaining twenty percent (20%) from internal cash flows. Financing will be as follows: • • • •
Construction Loans from the National Housing Trust (NHT) - $312,075,0229.58 Grant from the Government of Jamaica for the Jamaica Economical Housing Project $1,454,000,000.00 Loan from NCB - $228,800,000 Completed Sales and Deposits - $2,310,687,325
It is projected that sales will be finalized on 328 solutions and deposits collected on 1,023 houses and lots. It is assumed that: Inflation will be 7.5% p.a. The Jamaican dollar will exchange at a rate of $92:1 to the US dollar The Jamaican dollar will exchange at a rate of $140:1 to the Pound sterling With the reduction in interest income from the mortgage portfolio, the Agency continues to focus on its product mix by increasing the output of Greenfield lots and housing solutions. It is therefore believed that this project mix will ensure growth in profitability while supporting the strategic plan.
Dividends for 2012/2013 No dividend payments were made during the period under review.
29
Respect
Giving due respect to all and maintaining the environment of teamwork and growth.
ANNUAL REPORT 2012-2013
PICTORIAL HIGHLIGHTS
Residents of Calalloo Mews, St. Andrew after receiving their land titles.
Minister without Portfolio (Housing) in the Ministry of Transport, Works & Housing, Hon. Dr. Morais Guy, MP presents a title to a homeowner at the Retirement 2, St. James Titles Ceremony. Looking on is: Richard Jones, Snr Manager, Public Relations & Community Development.
State Minister in the Ministry of Industry, Investment & Commerce, Hon. Sharon Ffolkes-Abrahams, MP, at the Retirement 2, St. James Titles Ceremony.
Minister of Transport, Works & Housing, Dr. the Hon. Omar Davies, MP presents keys to a homeowner at the Hague Settlement, Trelawny Keys Ceremony.
Minister of State in the Ministry of Tourism & Entertainment, Hon. Damion Crawford, MP presents a title to a homeowner at the St. Benedicts, St. Andrew Titles Ceremony. Looking on is Minister without Portfolio (Housing) in the Ministry of Transport, Works & Housing, Hon. Dr. Morais Guy, MP.
Minister of Finance & Planning, Dr. the Hon. Peter Phillips, MP presents a title to a homeowner at the Mandela Terrace, St. Andrew Titles Ceremony. Looking on is: Minister without Portfolio (Housing) in the Ministry of Transport, Works & Housing, Hon. Dr. Morais Guy, MP.
30
ANNUAL REPORT 2012-2013
Hon. Dr. Wykeham McNeil MP, Minister of Tourism & Entertainment at the Whitehall 1, Westmoreland Titles Ceremony.
Attorney General and Member of Parliament for Trelawny North, Hon. Patrick Atkinson at the Hague Settlement, Trelawny Keys Ceremony. In the background is His Worship the Mayor of Falmouth, Councillor Garth Wilkinson.
Members of Staff who participated in the 2013 Sagicor Sigma Corporate Run.
Visitors to the Jubilee Housing Exhibition at the National Arena during the Jamaica 50 Celebrations.
Wall at Real Success Basic School before restoration work under the Zinc Fence Programme.
Wall at Real Success Basic School after completion of restoration work.
31
ANNUAL REPORT 2012-2013
FINANCIAL STATEMENTS
Independent Auditors’ Report Statement of Financial Position Statement of Comprehensive Income Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements
32
1 3 4 5 6 8 - 42
Excellence
Giving the best service always and ensuring that the quality of what we do is measured by the satisfaction of those we serve.
4 HOUSING AGENCY OF JAMAICA LIMITED Statement of Comprehensive Income Year ended March 31, 2013 Note OPERATING REVENUE Lending and borrowing: Interest income from mortgages Interest income from other loans Fees and interest expense on loans
(
Net income from lending and borrowing
2013 $'000
2012 $'000
152,096 1,746
174,697 2,039
153,842 57,252) 96,590
Sale of houses and lots - greenfield Cost of sales
1,639,847 (1,448,008)
Net gain on sale of houses and lots
Net loss on sale of houses and lots
1,479,654 (1,163,370) 316,284
271,752 ( 748,790)
236,953 ( 266,873)
( 477,038)
(
Other income: Management fees for servicing loans Interest income from resale agreements Gain/(loss) on disposal of property, plant and equipment Foreign currency gains Sundry
12,708 9,958 910 114,514
Total other income
138,090
Net operating (loss)/revenue
(
OPERATING EXPENSES Administration and other expenses Maintenance of closed projects Impairment loss on mortgage loans and other receivables Impairment adjustment–Operation PRIDE development projects
( 493,971) ( 30,696) ( 7,853) 702,436
22
Total operating expenses
50,519)
169,916 23
OTHER COMPREHENSIVE INCOME Change in fair value of available-for-sale investments Total comprehensive income for the year
The accompanying notes form an integral part of the financial statements.
176,736 67,292) 109,444
191,839
Sale of houses and lots - brownfield Cost of sales
Profit for the year
(
29,920) 11,864 19,858
(
14) 377 40,598 72,683 468,491
( 514,227) ( 48,243) ( 1,044) 214,807 ( 348,707)
119,397
119,784
112
108
119,509
119,892
5 HOUSING AGENCY OF JAMAICA LIMITED Statement of Changes in Equity Year ended March 31, 2013
Balances at March 31, 2011
Share capital $'000 (Note 17)
Reserve fund $'000 (Note 18)
Capital reserve $'000 (Note 19)
-
629,159
1,286,429
-
-
-
-
-
-
-
-
-
-
629,159
-
-
-
-
-
-
-
-
-
-
629,159
1,286,429
Accumulated deficit $'000
Fair value reserve $’000
(1,313,256)
21
Contributed capital $'000 (Note 20)
Total $'000
1,671,462 2,273,815
Total comprehensive income for the year Profit for the year Other comprehensive income: Change in fair value of available-for-sale investments Total comprehensive income for the year Balances at March 31, 2012
1,286,429
119,784
119,784 (1,193,472)
-
-
119,784
108
-
108
108
-
119,892
129
1,671,462 2,393,707
Total comprehensive income for the year Profit for the year Other comprehensive income: Change in fair value of available-for-sale investments Total comprehensive income for the year Balances at March 31, 2013
119,397
119,397 (1,074,075)
The accompanying notes form an integral part of the financial statements.
-
-
119,397
112
-
112
112
-
119,509
241
1,671,462 2,513,216
6 HOUSING AGENCY OF JAMAICA LIMITED Statement of Cash Flows Year ended March 31, 2013 Note Cash Flows From Operating Activities Profit for the year Adjustments: Interest income Interest expense Depreciation 14 Amortisation 13 BOJ interest written -back (Gain)/loss on disposal of property, plant and equipment Provision for losses - Operation PRIDE development projects - Other receivables - Mortgage loans Operating loss before changes in other assets and other liabilities Other receivables Loans receivable Operation PRIDE development projects Other development projects in progress Jamaica Economical Housing projects in progress Taxation recoverable Trade and other payables Interest received Interest paid Taxation paid Net cash used by operating activities (page 7) Cash Flows From Investing Activities Resale agreements and quoted equities Land held for development Acquisition of intangible assets Acquisition of property, plant and equipment Proceeds from sale of properties, plant and equipment
13 14
Net cash provided/(used) by investing activities (page 7)
The accompanying notes form an integral part of the financial statements.
2013 $'000
2012 $'000
119,397
119,784
( 163,800) 57,252 5,401 5,270 ( 32,737) ( 910)
( 196,594) 67,292 6,475 5,109 14
( 702,436) 2,338 ( 10,189)
( 214,807) 256 ( 1,529)
( 720,414) 1,243,124 244,557 2,071,144 (1,434,939) (2,690,036) ( 2,713) ( 234,284) 156,219 ( 56,848)
-
( 214,000) (1,247,202) 217,725 ( 167,188) (1,135,291) ( 800,528) ( 5,865) 669,018 202,283 ( 91,870) ( 14,608)
(1,424,190)
(2,587,526)
162,292 360,193 ( 5,015) 1,813
(
519,283
4,800) 440,878 ( 1,601) ( 6,673) 427,804
7 HOUSING AGENCY OF JAMAICA LIMITED Statement of Cash Flows (Continued) Year ended March 31, 2013 2013 $'000 Cash Flows From Operating Activities (page 6) Cash Flows From Investing Activities (page 6) Cash Flows From Financing Activities Loans payable Deferred income Operation PRIDE deposits Net cash provided by financing activities Net decrease in cash and cash-equivalents
(1,424,190)
2012 $'000 (2,587,526)
519,283
427,804
( 575,909) 1,425,414 ( 66,586)
2,146,048 50,518 ( 41,309)
782,919
2,155,257
( 121,988)
(
4,465)
Cash and cash-equivalents at beginning of the year
236,827
241,292
Cash and cash-equivalents at end of the year
114,839
236,827
The accompanying notes form an integral part of the financial statements.
8 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 1.
The company Housing Agency of Jamaica Limited, formerly, The National Housing Development Corporation Limited (“company” or “NHDC”) is incorporated and domiciled in Jamaica. The company is wholly-owned by the Government of Jamaica through the Minister of Housing. Its registered office is located at 13 Caledonia Avenue, Kingston, Jamaica. Consequent upon a Cabinet decision, dated April 20, 1998, the operations of Caribbean Housing Finance Corporation Limited (CHFC), The National Housing Corporation Limited (NHC) and Operation PRIDE (Programme for Resettlement and Integrated Development Enterprises) were transferred to the company and merged on May 1, 1998, on which date the assets and liabilities of those entities were also taken over by the company (see note 19). The formal transfer of ownership to the company of loans receivable (note 7) and loans payable (note 16) is still in process and the financial statements have been presented on the basis of the merged operations of the entities. The main activities of the company comprise development, construction and sale of houses, lots and infrastructure and administering loans secured by first mortgages on freehold properties, performing administrative services on behalf of other mortgagees and property developers.
2.
Basis of preparation (a)
Statement of compliance: The financial statements as of and for the year ended March 31, 2013 (reporting date), are prepared in accordance with International Financial Reporting Standards (IFRS) and their interpretations issued by the International Accounting Standards Board (IASB), and comply with the provisions of the Jamaican Companies Act. New, revised and amended standards and interpretations that became effective during the year: Certain new standards, amendments to published standards and interpretations came into effect during the current financial year, none of which resulted in any change in accounting policies or in changes to the content or presentation of amounts or disclosures in these financial statements. New, revised and amended standards and interpretations not yet effective: Certain new, revised and amended standards and interpretations have been issued which are not yet effective and which the company has not early-adopted. The company has assessed the relevance of all such new standards, amendments and interpretations with respect to its operations and has determined that the following may have an effect on the financial statements.
9 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 2.
Basis of preparation (a)
Statement of compliance (continued): New, revised and amended standards and interpretations not yet effective (continued): •
IAS 1, Presentation of Financial Statements, was amended by the issue of a document entitled Presentation of Items of Other Comprehensive Income, effective for annual reporting periods beginning on or after July 1, 2012, to require a reporting entity to present separately the items of other comprehensive income (OCI) that may be reclassified to profit or loss in the future from those that would never be reclassified to profit or loss. Consequently, an entity that presents items of OCI before related tax effects will also have to allocate the aggregated tax amount between these sections. The existing option to present the profit or loss and other comprehensive income in two statements has not changed. The title of the statement has changed from ‘Statement of Comprehensive Income’ to ‘Statement of Profit or Loss and Other Comprehensive Income’. However, an entity is still allowed to use other titles. The company is assessing the impact that the amendments may have on its 2014 financial statements.
•
Amendments to IAS 32, Financial Instruments: Presentation, which is effective for annual reporting periods beginning on or after January 1, 2014, clarifies those conditions needed to meet the criteria specified for offsetting financial assets and liabilities. It requires the entity to prove that there is a legally enforceable right to set off the recognised amounts. Conditions such as whether the set off is contingent on a future event and the nature and right of set-off and laws applicable to the relationships between the parties involved should be examined. Additionally, to meet the criteria, an entity should intend to either settle on a net basis or to realise the asset and settle the liability simultaneously. The company is assessing the impact that this standard may have in its 2015 financial statements
•
IFRS 9, Financial Instruments, is effective for annual reporting periods beginning on or after January 1, 2015. The standard retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortised cost and fair value. It eliminates the existing IAS 39 categories of held to maturity, available-for-sale and loans and receivables. For an investment in an equity instrument which is not held for trading, the standard permits an irrevocable election, on initial recognition, to present all fair value changes from the investment in other comprehensive income. The standard includes guidance on classification and measurement of financial liabilities designated as at fair value through profit or loss and incorporates certain existing requirements of IAS 39 Financial Instruments: Recognition and Measurement on the recognition and de-recognition of financial assets and financial liabilities. The company is assessing the impact that the standard may have on its 2016 financial statements.
10 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 2.
Basis of preparation (continued) (a)
Statement of compliance (continued): New, revised and amended standards and interpretations not yet effective (continued):
(b)
•
IFRS 11, Joint Arrangements carves out from IAS 31, Jointly Controlled Entities, those cases in which, although there is a separate vehicle, separation is ineffective in certain ways. These arrangements are treated similarly to jointly controlled assets/operations under IAS 31 and are now called joint operations. The remaining arrangements in IAS 31, now called Joint Ventures, are stripped of the free choice of using the equity method or proportionate consolidation; they are now required to use the equity method. The application of the equity method is subject to two exemptions carried forward from IAS 28 (2008) and IAS 31. IFRS 11 is applicable for accounting periods beginning on or after January 1, 2013. The company is assessing the impact the standard may have on its 2014 financial statements.
•
IFRS 13 Fair Value Measurement defines fair value, establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements. It explains how to measure fair value and is applicable to assets, liabilities and an entity’s own equity instruments that, under other IFRS, are required or permitted to be measured at fair value or when disclosure of fair values is provided. It does not introduce new fair value measurements, nor does it eliminate the practicability exceptions to fair value measurements that currently exist in certain standards. The standard is effective for annual reporting periods beginning on or after January 1, 2013. The company is assessing the impact that this standard may have in its 2014 financial statements.
Basis of measurement: The financial statements are prepared on the historical cost basis, except for available-forsale investments which are carried at fair value.
(c)
Functional and presentation currency: The financial statements are presented in Jamaica dollars which is the functional currency of the company.
(d)
Use of estimates and judgements: Judgements made by management in the application of IFRS that may have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next financial year relate to the following: (i)
Property, plant and equipment The residual values and the useful life of each asset are reviewed at each financial year-end, and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate. The useful life of an asset is defined in terms of the asset’s expected utility to the company.
11 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 2.
Basis of preparation (continued) (d)
Use of estimates and judgements (continued): (ii)
Loans receivable In determining amounts recorded for impairment of loan losses in the financial statements, management makes judgements regarding indicators of impairment, that is, whether there are indicators that suggest there may be a measurable decrease in the estimated future cash flows from loans, for example, repayment default and adverse economic conditions. Management also makes estimates of the likely estimated future cash flows from impaired loans, as well as the timing of such cash flows. Historical loss experience is applied where indicators of impairment are not observable on individual significant loans and loans portfolio with similar characteristics, such as credit risks.
(iii) Operation Pride and other development projects The recoverability of project costs is determined principally on the basis of expected recovery from sale of lots and housing units. An estimate is made of expected sales price based on the location of projects and current market prices. Where management expects that a project will not be completed, the cost is fully written off. Judgement is exercised in estimating the likelihood of completion of projects, and as the expected sales proceeds are subjective, these may change from one financial period to the next. It is reasonably probable, based on existing knowledge, that outcomes within the next financial year that are different from these assumptions could require a material adjustment to the carrying amounts reflected in the financial statements. (e)
Going concern: The preparation of the financial statements in accordance with IFRS assumes that the company will continue operations for the foreseeable future. This means, in part, that the statements of comprehensive income and financial position assume no intention or necessity to liquidate or curtail the scale of operations. This is commonly referred to as the going concern basis. Although the company reported a profit for the year, it has an accumulated deficit of $1,074,075,000 as at March 31, 2013 (2012: $1,193,472,000). Nevertheless, having regard to Government’s commitment to the delivery of housing solutions and its implied guarantee to ensure the continuation of the company, as well as anticipated future funding, management believes that the going concern basis continues to be appropriate in the preparation of the financial statements.
12 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 3.
Significant accounting policies (a)
Cash and cash-equivalents: Cash and cash-equivalents comprise cash and bank balances (including interest-bearing deposits), collections held in trust for mortgagors and property developers, and other monetary investments with original maturities of three months or less, are readily convertible to known amounts of cash, are subject to insignificant risk of change in value, and are held for the purpose of meeting short-term commitments. Bank overdrafts that are repayable on demand and form an integral part of the company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
(b)
Resale agreements: Resale agreements (reverse repos), represent purchase of securities by the company under agreements to resell them on specified dates at specified prices. The company, on paying cash to the counterparty, sometimes takes possession of the underlying securities, although title is not formally transferred, unless that counterparty fails to repurchase the securities on the date specified, or to honour other conditions. Under collaterialised resale agreements, the company obtains securities on terms which permit it to repledge or resell them to others. Resale agreements, are accounted for as short-term collateralised lending, are classified as loans and receivables and carried in the statement of financial position at amortised cost. The difference between the purchase and resale consideration is recognised on the accrual basis over the period of the transaction using the effective interest method and is included in interest income.
(c)
Trade and other receivables: Trade and other receivables are stated at amortised cost, less impairment losses [note 3(n)].
(d)
Trade and other payables: Trade and other payables are stated at amortised cost.
(e)
Property, plant and equipment: Items of property, plant and equipment are stated at cost, or valuation, less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item, if it is probable that the future economic benefits embodied in the part will flow to the company and its cost can be reliably measured.
13 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 3.
Significant accounting policies (continued) (f)
Depreciation and amortisation: Depreciation and amortisation are charged on the straight-line method at annual rates to write down each part of an item of property, plant and equipment to its estimated residual value at the end of its expected useful life. The estimated useful lives are as follows:Freehold buildings Computers Office furniture and fixtures Motor vehicles Equipment
40 years 3 - 5 years 5 - 10 years 3 - 4 years 5 - 10 years
The depreciation method, useful lives and residual values are reassessed at each reporting date. (g)
Intangible assets: Intangible assets, comprising software, is stated at cost less accumulated amortisation and impairment losses. The expected useful life of software is three (3) years.
(h)
Revenue recognition: (i)
Income from the sale of properties is recognised when full sale consideration has been received or reasonably expected to be received and on execution of transfer or, on receipt of a firm undertaking by a financial institution on behalf of the purchasers, whichever is earlier. The sale of a housing unit is recorded when significant risks and rewards of ownership have been transferred to the buyer. Cost of sales, including land is computed on a first in, first out basis.
(ii) Interest income is recognised in profit or loss for all interest bearing instruments on the accrual basis, using the effective yield method. Where collection of interest is considered doubtful, or payment is outstanding for more than 90 days, interest is taken into account on the cash basis. IFRS requires that when collection of loans becomes doubtful, such loans should be written down to their recoverable amounts after which interest income is to be recognised based on the rate of interest that was used to discount the future cash flows for the purpose of measuring the recoverable amount. However, such amounts as would have been determined under IFRS are not considered significant. (iii) Income from joint ventures is recognised upon completion of the projects.
14 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 3.
Significant accounting policies (continued) (i)
Operation PRIDE development projects: Operation PRIDE development projects consist principally of expenditure related to infrastructure development, involving land provided by the Government of Jamaica for Operation PRIDE projects. Before the take-over of the projects by the company, monies were advanced to the Industrial and Provident Societies for expenditure on the projects. Project costs are recovered from the sale of lots at prices determined by the company. Project costs are kept under review by the company, and, should it become reasonably certain that a project will not come to fruition, or project costs will be in excess of amounts considered recoverable from subsequent sale of serviced lots to customers, a provision for loss is made and transferred, together with administration, interest and other costs relating to loans specifically acquired to fund Operation PRIDE projects, against the Operation PRIDE Fund to the extent available.
(j)
Other development projects in progress: Other development projects in progress consist of costs incurred to date on various housing projects and are recognised at cost, less provision for impairment. Costs include the cost of land, construction material, labour and an appropriate proportion of overhead costs.
(k)
Foreign currencies: Foreign currency balances at the reporting date are translated at the rates of exchange ruling on that date. Transactions in foreign currencies are converted at the rates of exchange ruling at the dates of those transactions. In respect of United States Agency for International Development (USAID) and Commonwealth Development Corporation (CDC) loans, the company is indemnified by the Ministry of Finance & the Public Service against losses due to fluctuations in the rates of exchange. Any such losses, net of gains, are shown as receivable. Other gains and losses arising from fluctuations in exchange rates are included in profit or loss.
(l)
Loans and allowances for impairment losses: Loans are stated net of allowances for credit losses. Loans are initially recognised at cost, which is the cash given to originate the loan including any transaction costs, and are subsequently measured at amortised cost, using the effective interest method.
15 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 3.
Significant accounting policies (continued) (l)
Loans and allowances for impairment losses (continued): An allowance for loan impairment is established, if there is objective evidence that the company will not be able to collect all amounts due according to the original contractual terms of the loan. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of expected future cash flows, discounted at the original effective interest rate of the loan. A loan is classified as impaired when, in management’s opinion, taking into account all relevant factors, including prevailing and anticipated business and economic conditions and collateral held, there has been deterioration in credit quality to the extent that there is no longer reasonable assurance of timely collection of the full amount of the principal and interest. The impairment assessment is done on a collective basis, based on the location of schemes. No provision is made on certain loans which are funded by USAID as the Government of Jamaica has provided a guarantee to the company in respect of the collection of these loans.
(m)
Investments: Investments are classified as available-for-sale and are stated at fair value, with any resultant gain or loss being recognised in other comprehensive income, except for impairment losses. When these investments are derecognised, the cumulative gain or loss previously recognised in other comprehensive income is recognised in profit or loss. Where these investments are interest bearing, interest calculated using the effective interest method is recognised in profit or loss. Management determines the appropriate classification of investments at the time of purchase. The fair value of investments is based on their quoted market bid price at the reporting date. Where a quoted market price is not available, the fair value of the instrument is estimated using acceptable pricing models or discounted cash flow techniques.
(n)
Impairment: The carrying amounts of the company’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, an asset’s recoverable amount is estimated at each reporting date. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. When a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income and there is objective evidence that the asset is impaired, the cumulative loss that has been recognised in other comprehensive income is recognised in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss.
16 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 3.
Significant accounting policies (continued) (n)
Impairment (continued): (i)
Calculation of recoverable amount: The recoverable amount of the company’s loans and receivables is calculated as the present value of expected future cash flows, discounted at the original effective interest rate inherent in the asset. Receivables with a short duration are not discounted. The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss in respect of loans and receivables and securities is reversed, if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised. For all other assets, an impairment loss is reversed, if there has been a change in the estimate used to determine the recoverable amount.
(ii)
Reversals of impairment: An impairment loss in respect of an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss. If the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss shall be reversed, with the amount of the reversal recognised in profit or loss. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, if no impairment loss had been recognised.
(o)
Taxation: Income tax on the profit or loss for the year comprises current and deferred tax. Taxation is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income, in which case it is recognised in other comprehensive income. Current tax is the expected tax payable on the income for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
17 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 3.
Significant accounting policies (continued) (o)
Taxation (continued): Deferred tax is computed using the liability method, providing for all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(p)
Employee benefits: Employee benefits comprise all forms of consideration given by the company in exchange for service rendered by employees. These include current or short-term benefits such as salaries, NIS contributions paid, annual vacation leave, sick leave, education cost reimbursements, and non-monetary benefits, such as medical care and housing; postemployment benefits, such as pensions and medical care and termination benefits. (i)
General benefits: Employee benefits that are earned as a result of past or current service are recognised in the following manner: Short-term employee benefits are recognised as a liability, net of payments made, and charged as expense. The expected cost of vacation leave that accumulates is recognised when the employee becomes entitled to the leave. Post-retirement benefits are accounted for as described in (ii) below. Other long-term benefits, including termination benefits, which arise when either (1) the employer decides to terminate an employee’s employment before the normal retirement date, or (2) an employee decides to accept voluntary redundancy in exchange for termination benefits, are accrued as they are earned and charged as an expense, unless not considered material, in which case they are charged when they fall due.
(ii)
Post-retirement benefits: The company participates in a defined-contribution pension scheme (see note 28), the assets of which are held separately from those of the company. Obligations for contributions are recognised as an expense in profit or loss when due.
(q)
Land held for development: Land held for development includes land which has been contributed by the Government, in the form of capital, for housing development projects. The value of these lands have been determined by professional property valuators and have been initially recognised at their fair values. The reserve arising on valuation is recognised as contributed capital (note 20). Subsequent expenditure incurred are recognised at cost.
18 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 3.
Significant accounting policies (continued) (r)
Related parties: A related party is a person or entity that is related to the company (“reporting entity”, that is, the company). a) A person or a close member of that person’s family is related to the company if that person: i)
has control or joint control over the company;
ii)
has significant influence over the company; or
iii) is a member of the key management personnel of the company. b) An entity is related to the company if any of the following conditions applies: i)
The entity and the company are members of the same company (which means that each parent, subsidiary and fellow subsidiary is related to the others).
ii)
One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
iii) Both entities are joint ventures of the same third party. iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. v)
The entity is a post-employment benefit plan for the benefit of employees of either the company or an entity related to the company.
vi) The entity is controlled, or jointly controlled by a person identified in (a). vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged. (s)
Interest bearing borrowings: Interest-bearing borrowings are recognised initially at fair value, less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost, with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on the effective interest basis.
(t)
Deferred credit: Grant funding received to finance certain development projects is shown as “Deferred Credit” in the statement of financial position and an equivalent amount transferred to profit or loss, when the related project expenses are recognised in profit or loss.
19 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 4.
Cash and cash-equivalents
Collections held in trust for mortgagors and property developers Other cash and bank balances
2013 $'000
2012 $'000
108 114,731
108 236,719
114,839
236,827
In the previous year, $135,194,000 was held in escrow, as security for certain loans payable [see note 16(o)]. 5.
Resale agreements At March 31, 2013, the fair value of underlying securities for resale agreements was $71,464,000 (2012: $264,727,000).
6.
Other receivables 2013 $'000 National Housing Trust (NHT) Amounts due from sale of properties Interest receivable Staff loans and advances Other accounts receivable and advances Jamaica Economical Housing projects – mobilisation fees (note 10) Inventory (stationery and supplies) Provision for impairment: National Housing Trust Interest receivable Amounts due from sale of properties Other accounts receivable and advances
2012 $'000
40,099 214,366 11,257 2,273 25,795
40,099 514,108 12,793 2,539 16,696
2,080
952,215 -
293,790
1,538,450
( 40,099) ( 9,890) ( 17,511) ( 3,218)
( ( ( (
40,099) 10,391) 16,630) 1,260)
( 70,718)
(
68,380)
223,072
1,470,070
2013 $'000
2012 $'000
At beginning of the year Charge for the year Recoveries net
68,380 2,338 -
72,376 256 ( 4,252)
At the end of the year
70,718
68,380
The movement in the provision for impairment is as follows:
20 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 7.
Loans receivable The formalities of the transfer to the company of ownership of some loans receivable are still in process (see note 1). Loans receivable comprise: 2012 2013 $'000 $'000 Residential mortgage loans [see (a) below]: Principal 1,379,155 1,616,555 67,697 Interest 76,814 1,455,969
1,684,252
Staff loans: 5% residential mortgages 5% other loans
18,357 13,281
19,087 19,240
Less: Staff loan re-measurement
31,638 4,021)
38,327 10,972)
Other long-term loans [see (b) below] Infrastructure development loan [see (c) below]
Provision for loan losses: Residential mortgage loans Interest receivable Other long-term loans Infrastructure development loan
(a)
(
(
27,617
27,355
25,501 170,650
32,920 170,650
196,151
203,570
1,679,737
1,915,177
( 94,627) ( 128,608) ( 9,537) ( 62,706)
( 104,637) ( 61,040) ( 11,382) ( 128,608)
( 295,478)
( 305,667)
1,384,259 1,609,510 The residential mortgage loans, secured by first mortgages on houses, are as follows: 2012 2013 $'000 $'000 4% Thirty and forty year loans 132,630 142,690 10, 13 & 15% Twenty year loans 52,664 61,340 13% Twenty-five year loans [see (i) below] 561,878 639,391 11½% Twenty-five year loans 5,320 8,329 7½% Twenty year loans [see (ii) below] 416 416 18% Twenty to twenty-five year loans 96 101 7% Twenty-five year loans 219,914 270,341 6-10% Thirty year loans [see (iii) below] 33,360 34,101 6-10% Twenty to twenty-five year loans 5,385 5,437 19% Twenty-five year loans 1,137 1,773 10, 10½ & 15% Twenty-five year loans 359,372 445,446 10% Ten year loans 598 712 10%, 12% Twenty-five year loans 6,385 6,478 1,379,155
1,616,555
21 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 7.
Loans receivable (continued) (a)
The residential mortgage loans, secured by first mortgages on houses, are as follows (cont’d): (i)
In 2010, the Government of Jamaica assumed responsibility for the notes payable under the USAID Housing Guarantee Programme and the corresponding mortgage loans were written-off.
(ii)
The 7½% twenty-year loans are repayable in pounds sterling £2,811 (2012: £3,051).
(iii) The Government of Jamaica has guaranteed the reimbursement to the company of any losses suffered as a result of failure of mortgagors under the Basic Shelter Programme to repay their loans. No provision for loan losses has, therefore, been made for amounts below $15,000,000 (2012: $15,000,000) as recovery is expected from the Government of Jamaica. (b)
Other long-term loans bear interest at 10% and 13% per annum, and are repayable from the date of disbursement in equal payments over twenty-five years.
(c)
This represents two unsecured loans that were provided to do infrastructure development and are repayable on completion of projects. One loan bears interest at a floating rate of 2% above the average Treasury Bill rate, adjusted every 90 days, and the other loan bears interest at 20% per annum.
(d)
Loans receivable are due for collection from the reporting date as follows:
Within 3 months Over 3 months to 1 year Over 1 year to 3 years Thereafter
(e)
2013 $'000
2012 $'000
322,222 170,953 53,613 1,136,970
309,772 147,548 453,477 1,015,352
1,683,758
1,926,149
The credit quality of loans receivable as at the reporting date was as follows:
Not past due Past due 0-30 days Past due 31-60 days Past due 61-90 days Over 90 days
2013 $’000
2012 $’000
1,306,278 8,479 11,167 32,423 325,411
1,552,415 4,151 6,774 72,551 290,258
1,683,758
1,926,149
22 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 7.
Loans receivable (continued) (e)
The credit quality of loans receivable as at the reporting date was as follows (continued): An estimate of the fair value of the collateral held against past due loans has not been determined. Based on past experience, the company believes that no impairment allowance is necessary in respect of loans receivable not past due, as these are adequately secured by prime properties.
(f)
Provision for losses on loans: 2013 $'000 At beginning of the year Provision made during the year Amounts written back At end of the year
8.
2012 $'000
305,667 1,898 ( 12,087)
305,750 1,447 ( 1,530)
295,478
305,667
Operation PRIDE development projects Operation PRIDE development projects are stated net of a provision for impairment of $1,342,361,000 [2012: $2,044,797,000] (see note 22).
9.
Other development projects in progress
Lilliput Phase I, II & Flankers projects [see (i) below] Lilliput Phase III [see (i) below] Flankers project [see (ii) below] Dump – Trelawny [see (iii) below] Westmeade Willows I [see (iv) below] Boscobel 2 [see (v) below] Country Club 2 [see (vi) below] Stadium 3 [see (vii) below] Whitehall (see (viii) below Frazers & Ebony View [see ix below] Other development costs [see x below]
2013 $'000
2012 $'000
101,329 891,375 36,329 9,434 2,129,754 28,659 136,072
137,766 115,451 18,834 93,878 555,044 273,737 358,097 223,339 28,659 93,208
3,332,952
1,898,013
23 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 9.
10.
Other development projects in progress (continued) (i)
Lilliput Phase I, II and III projects were closed during the year. Flankers has been reclassified as a brownfield project and included in Operation PRIDE development projects. These developments are being financed by grants provided by the Tourism Enhancement Fund (note 21).
(ii)
The Flankers development has been reclassified as a brownfield project and included in Operation PRIDE Development projects. It is being financed by grants from the Government of Jamaica (note 21).
(iii)
This project was reclassified as a brownfield development. It was financed by grants from the Urban Development Corporation (note 21).
(iv)
This development is being financed by a 5% loan from National Housing Trust and is secured by the housing units being constructed. The loan will be repaid from the sale of these units.
(v)
The development is being financed by a 9% loan from National Housing Trust and is secured by the housing units being constructed. The loan will be repaid from the sale of these units.
(vi)
The development was financed by a 8.57% loan from National Commercial Bank Limited and was secured by the housing units being constructed. The loan was repaid from the sale of these units during the year.
(vii)
The development is being financed by a 9% loan from the National Housing Trust and is secured by the lots and housing solutions being constructed. The loan will be repaid from the sale of the lots and solutions.
(viii)
The development is being financed by a 9% loan from National Housing Trust and is secured by the housing units being constructed. The loan will be repaid from the sale of these units.
(ix)
This represents cost incurred to date on developments under joint venture arrangements.
(x)
This represents developments by the company at Porto Bello 2, Grange Pen, Greater Retirement, Bernard Lodge, Shooters, Eden Park II, West Albion 2, Mona, Portmore Villa 2B and Bourkesfield.
Jamaica Economical Housing projects in progress
Balance beginning of year Transfer from Operation Pride projects Costs incurred during the year Mobilisation fees (note 6)
2013 $'000 800,528 2,690,036 -
Balance at end of year
3,490,564
2012 $'000 415,251 1,337,492 ( 952,215) 800,528
24 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 10.
Jamaica Economical Housing projects in progress (continued) The following projects, which previously commenced under Operation PRIDE are now being financed under the Chinese Cluster programme:
Belle Air 1, 2, & 3 Mount Edgecombe 4 & 5 Luana Gardens
2013 $'000
2012 $'000
2,692,789 342,505 455,270
566,222 155,203 79,103
3,490,564
800,528
The developments are being funded by grants from the Government of Jamaica from proceeds of a loan obtained from the Export Import Bank of China (see note 21). 11.
Investment
2013 $'000
2012 $'000
86
294
2013 $'000
2012 $'000
1,851,036
2,291,914
66,753 ( 426,946)
( 174,880) 151,316 ( 7,314) ( 410,000)
Balance at end of the year
1,490,843
1,851,036
Broken down as: Lands held for development [see (a) below] Development costs [see (b) below] Jointly controlled operations-in-progress [see (c) below]
1,308,925 37,998 143,920
1,696,294 11,737 143,005
1,490,843
1,851,036
Available for sale: Quoted equity 12.
Land held for development
Balance at beginning of the year Land and development costs transferred to development projects-in-progress Development costs incurred Land sold without further development Land transferred without cost as project subsidy
(a)
This represents lands acquired through the Ministry of Housing and with Tourism Enhancement Funds as well as and lands contributed by the Government of Jamaica for the development of housing projects (see note 20).
(b)
This represents pre-construction costs of development of lands held for that purpose.
25 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 12.
Land held for development (continued) (c)
This represents amounts advanced in respect of Bushy Park 2, Luana 2 & Porto Bello 2 which are being developed under joint controlled operations and includes lands costing $91,500,000. For these projects, surpluses or losses are shared 50:50. The joint ventures for the Bushy Park 2 and Luana 2 developments is with the National Housing Trust, while that for the Porto Bello 2 development is with Seal Investments Limited.
Titles to all land held for development are registered in the name of Minister of Housing and are held on behalf of the company. 13.
Intangible asset
Cost: March 31, 2011 Additions March 31, 2012 and March 31, 2013
Software $’000 22,760 1,601 24,361
Amortisation: March 31, 2011 Charge for the year
12,905 5,109
March 31, 2012 Charge for the year March 31, 2013
18,014 5,270 23,284
Net book value: March 31, 2013
1,077
March 31, 2012
6,347
March 31, 2011
9,855
26 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 14.
Property, plant and equipment Office Freehold furniture land and and Motor buildings Computers fixtures vehicles $'000 $'000 $'000 $'000 At cost or deemed cost: March 31, 2011 Additions Disposals Adjustment
Equipment $'000
Total $'000
54,598 2
10,393 3,942 ( 39) -
9,925 202 ( 264) ( 2)
10,212 -
10,921 2,529 23
96,049 6,673 ( 303) 23
54,600
14,296
9,861
10,212
13,473
102,442
1,491 -
2,841 -
497 -
56,091
17,137
10,358
6,000
13,210
102,796
21,139 903 22
7,775 1,805 ( 39) -
7,905 812 ( 250) 11
5,300 1,532 -
7,225 1,423 ( 10)
49,344 6,475 ( 289) 23
22,064
9,541
8,478
6,832
8,638
55,553
928 -
1,035 -
564 -
1,670 472)
5,401 ( 3,758)
March 31, 2013
22,992
10,576
9,042
4,750
9,836
57,196
Net book values: March 31, 2013
33,099
6,561
1,316
1,250
3,374
45,600
March 31, 2012
32,536
4,755
1,383
3,380
4,835
46,889
March 31, 2011
33,459
2,618
2,020
4,912
3,696
46,705
March 31, 2012 Additions Disposals March 31, 2013 Depreciation: March 31, 2011 Charge for the year Eliminated on disposals Adjustment March 31, 2012 Charge for the year Eliminated on disposals
( 4,212)
1,204 ( 3,286)
186 449)
(
(
(
5,015 4,661)
Freehold land and buildings include land costing $12,455,000 (2012: $12,455,000). A revaluation of certain of the company’s furniture and fixtures by Baird and Henderson Valuators Limited in November 2005 resulted in adjustments to the carrying value of these assets which has been deemed as the assets’ cost.
27 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 15.
Trade and other payables
Interest payable Sale deposits on other development projects Other payables
16.
2013 $'000
2012 $'000
8,931 120,881 1,037,906
41,264 387,782 1,005,289
1,167,718
1,434,335
Loans payable The formalities of the transfer to the company of ownership of some loans payable are still in process (see note 1). Loans payable comprise:
Ministry of Housing and Water 4 - 8% [see note (a) below] Loan - Ministry of Finance and the Public Service [see note (b) below] National Housing Trust: 5% loan [see note (c) below] 8% loan [see note (d) below] 3% loan [see note (e) below] 3% loan [see note (f) below] 3% loan [see note (g) below] 8% loan [see note (h) below] 9% loan [see note (i) below] 9% loan [see note (j) below] 5% loan [see note (k) below] 9% loan [see note (l) below] 5% loan repayable by 2016 [see note (m) below] Ministry of Finance and the Public Service [see note (n) below] 8.57% National Commercial Bank (NCB) loan [see note (o) below] JN Finance Limited [see note (p) below] PanCaribbean Finance Limited [see note (q) below] Alliance Finance Limited [see note (r) below] Accountant General [see note (s) below]
2013 $'000
2012 $'000
188
188
100
100
489,785 41,717 41,757 310,722 325,820 7,208 135,741 426,183 63,118 663,070 230 7,930 14,059 107,777 2,635,405
*Restated (see note 21)
533,337 49,623 51,377 384,467 383,357 12,085 188,141 185,142 441,594 262,625 314 - * 596,278 14,909 107,777 3,211,314
28 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 16.
Loans payable (continued)
Comprising - current and past due portions - long-term portions
2013 $'000
2012 $'000
1,502,157 1,133,248
671,186 2,540,128
2,635,405
3,211,314
(a)
The loans were secured by mortgages and the repayment period has not yet been specified but this had been assumed to be over the twenty five-year life of the related mortgages which ended in 2010.
(b)
The loan is repayable to the Ministry of Finance and the Public Service. The interest rate and other repayment terms the loan have not yet been determined.
(c)
This loan relates to the construction of the Greater Portmore Project (GPP). The principal amount of the loan together with deferred interest of 3% per annum was rolled over into a twenty five-year loan on which interest accrues at 5% per annum. Repayment is on a monthly basis.
(d)
This loan relates to the construction of 279 units in the GPP in a joint venture with NHT. The principal amount of the loan which is secured by mortgages on those units, is repayable over fifteen years, with interest payable monthly.
(e)
This loan is guaranteed by the Government of Jamaica and the repayment period was extended to 15 years commencing May 2002 and ending in 2017.
(f)
This loan is secured by a letter of undertaking from the Ministry of Finance and the Public Service as well as GPP and Operation PRIDE mortgages. The loan was obtained specifically to fund Operation PRIDE projects and is due for repayment in 2018.
(g)
This loan is secured by $1.405 billion GPP mortgages and the repayment period was extended to 20 years commencing August 2002 and ending in 2022.
(h)
This revolving loan, secured by the deposit of splinter titles for the Whitehall 11 and Eden Park land developments, was specifically obtained to fund new Operation PRIDE projects. The loan is being repaid from sales proceeds.
(i)
This loan is secured by first legal mortgage over the project lands and was obtained to finance the Stadium Gardens Phase 3 development project. The interest rate is 9% per annum and the loan will be repaid from sales proceeds.
(j)
This loan is secured by first legal mortgage over certain project lands and was obtained to finance the Whitehall 3 development project. The interest rate is 9% per annum and the loan will be repaid from sales proceeds.
29 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 16.
17.
Loans payable (continued) (k)
This loan is secured by first legal mortgage over certain project lands and was obtained to finance the Westmeade development project. The interest rate is 5% per annum and the loan will be repaid from sales proceeds.
(l)
This loan is secured by first legal mortgage over certain project lands and was obtained to finance the Hills of Boscobel development project. The interest rate is 9% per annum and the loan will be repaid from sales proceeds.
(m)
The loan is repaid in quarterly instalments and will be fully repaid by March 2016.
(n)
This loan has been reclassified to deferred credit as it represents grant funding by the Government of Jamaica (GOJ). This amount is originally borrowed by the GOJ from the Export Import Bank of China.
(o)
This represents refinancing of the Country Club 2 loan by NCB. The loan bore interest at 8.57% per annum. The loan is secured by a legal mortgage over project lands and a lien over an escrow bank account (see note 4). The loan was repaid during the year.
(p)
This loan represented insurance premium financing which was repaid during the year.
(q)
This represents insurance premium financing for fire and allied perils on the mortgage business, as well as the company’s fixed assets. The loan bears interest at 5.1% per annum and is repayable April 2013.
(r)
This represents insurance premium financing for mortgage creditor life insurance. The loan bears interest at 4.8% per annum and is repayable November 2013.
(s)
This represents amounts paid on the company’s behalf by the Accountant General on the Commonwealth Development Corporation loan. The loan is interest-free and has no fixed repayment terms.
Share capital
Authorised, issued and fully paid: 200 ordinary shares at no par value
2013 $'000
2012 $'000
-
-
*
*Actual amount is $200; it is shown as $Nil due to rounding. 18.
Reserve fund Pursuant to Article 98 of the company’s Articles of Association, the company transfers to reserve fund a percentage of profits after tax, if any, each year. The percentage to be transferred is determined at the discretion of the directors and has been set at Nil% (2012: Nil %).
30 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 18.
Reserve fund (continued) The reserve fund may only be utilized for the purposes set out in the Articles, namely, meeting contingencies, repairing or maintaining any work connected with the business of the company, equalizing dividends and making distributions by way of special dividends or bonus. It may also be used for other purposes for which the profits of the company may lawfully be applied.
19.
Capital reserve This comprises the net surplus of the book values of assets over liabilities arising on the transfer and merger of the operations of the entities mentioned in note 1 and adjustments arising from revaluation of certain property, plant and equipment.
20.
Contributed capital This represents the value of lands contributed by the Government of Jamaica for housing developments (see note 12).
21.
Deferred credit TEF $'000 Balances at beginning of the year Funds received during the year Projects closed during the year Balances at end of the year
Balance at beginning of the year Funds received during the year Grange Pen transferred to Public Private Partnership (PPP) (see note 12) Land transferred (see note 12) Balance at end of the year as restated Jamaica Economical Housing Projects Restated balances at end of year
GOJ $'000
2013
UDC $'000
Total $'000
457,249 55,677 (144,171)
1,589,965 1,557,304 ( 146,019)
89,152 102,623 -
2,136,366 1,715,604 ( 290,190)
368,755
3,001,250
191,775
3,561,780
TEF $'000
GOJ $'000
641,902 225,347 (150,000) (260,000) 457,249
2012
UDC $'000
Total $'000
113,869 146,019
89,152
755,771 460,518
259,888
89,152
( 150,000) ( 260,000) 806,289
-
1,330,077
-
1,330,077 *
457,249
1,589,965
89,152
2,136,366 *
Deferred credit grant funding received from the Tourism Enhancement Fund (TEF), Government of Jamaica (GOJ) and Urban Development Corporation (UDC) to assist in the funding of certain ‘brownfield’ projects [see notes 9(i) (ii) and (iii) and note 10]. *Restated [see below].
31 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 21.
Deferred credit (continued) The Government of Jamaica entered into a Framework Agreement for the provision of Government interest subsidised concession are loan from China. The proceeds of this loan is being given to the company for the development of housing solutions under the Chinese Cluster project. The amounts drawn down in the prior year were previously recognised as loan payable (see note 16). These funds actually represent government grants to the company and have now been reclassified to deferred credit and the comparative figure restated accordingly during the current year.
22.
Impairment adjustment - Operation PRIDE development projects This represents an adjustment to reflect a reduction in the provision for impairment in respect of Operation PRIDE projects (note 8).
23.
Profit for the year Profit for the year is arrived at after charging:
Directors' emoluments [note 26]: Fees Director’s travel Management remuneration [included in staff costs (note 25)] Auditors' remuneration Depreciation and amortisation 24.
2013 $'000
2012 $'000
2,029 486 14,722 7,755 10,671
1,489 271 11,199 6,208 11,584
Taxation Taxation losses, subject to agreement by the Commissioner General, Tax Administration Jamaica, available for set-off against future taxable profits, amount to approximately $4,262,450,000 (2012: $4,379,194,000) as at the reporting date. Deferred tax asset of $1,420,817,000 (2012: $1,459,702,000) in respect of taxation losses has not been recognised, as management does not expect that in the foreseeable future sufficient future taxable profits will be available against which the asset will be utilised.
25.
Staff costs and numbers The average number of persons employed full-time during the year was 121 (2012: 119). The costs for these employees were as follows:
Salaries Redundancy Statutory contributions Pension scheme contributions (note 28) Training and development Staff welfare Gratuity and incentive Other benefits
2013 $'000 223,486 764 30,628 18,909 1,797 1,759 23,929 54,631
2012 $'000 222,465 5,162 25,049 15,405 1,883 3,490 52,994 45,616
355,903
372,064
32 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 26.
Related party balances and transactions The statement of financial position includes the following balances with related parties in the ordinary course of business:
Trade and other receivables: National Housing Trust Ministry of Water and Housing Jamaica Mortgage Bank
2013 $'000
2012 $'000
40,099 10,444 154
40,099 4,036 23
Loans receivable: Director Ministry of Finance & Planning
1,382 7
1,646 7
Operation PRIDE development project Ministry of Transport, Works & Housing
266,104
-
Other development project costs: Ministry of Water and Housing Tourism Enhancement Fund Urban Development Corporation Government of Jamaica
28,659 137,757 200,112 18,834
28,659 253,217 93,878 18,834
385,362
394,588
Taxation recoverable: Inland Revenue Trade and other payables: Inland Revenue National Housing Trust Ministry of Water and Housing Bay Farm National Housing Trust National Land Agency Loans payable: Ministry of Water and Housing Ministry of Finance & Public Service National Housing Trust Accountant General
8,578
-
9,101 1,494 124,314 527 10,000
11,423 1,484 160,722 3 10,000
188 2,505,350 107,777
188 1,330,078 2,492,061 107,777
33 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 26.
Related party balances and transactions (continued) The statement of comprehensive income includes the following income and expenses incurred in transactions with related parties in the ordinary course of business:
Fees and interest expense on loans: National Housing Trust Management fees for servicing loans: Ministry of Water and Housing
2013 $'000
2012 $'000
515,603
62,456
12,708
11,864
The company's directors and two senior executives are referred to as "key management" personnel. Key management personnel compensation for the year is as follows: 2012 2013 $'000 $'000 Directors' fees and remuneration (note 23) Director’s travel Other key management personnel - short-term employee benefits included in staff costs (note 25)
27.
16,833 486
12,688 271
13,117
14,018
30,436
26,977
Financial risk management (a)
Overview The company has exposure to the following risks from its use of financial instruments and its operations: • • • •
credit risk liquidity risk market risk operational risk
This note presents information about the company’s exposure to each of the above risks, the company’s objectives, policies and processes for measuring and managing risk, and the company’s management of capital. Further quantitative disclosures are included throughout the financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the company’s risk management framework. The company’s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The Board, through its various committees, is responsible for monitoring compliance with the company’s risk management policies and procedures, and for reviewing the adequacy of the risk management framework in relation to the risks faced by the company. All committees report regularly to the Board on their activities. Assistance is received in these functions from Internal Audit which undertakes periodic reviews of risk management controls and procedures.
34 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 27.
Financial risk management (continued) (b)
Credit risk: Credit risk is the risk of financial loss to the company, if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises primarily from the company’s lending activities and deposits with other financial institutions. There is also credit risk exposure in respect of off-balance sheet financial instruments, such as loan commitments and guarantees, which expose the company to similar risks as loans and are managed in the same manner. Balances arising from these activities include loans receivable, trade and other receivables cash and cash-equivalents and resale agreements. (i)
Loans receivable: The management of credit risk in respect of loans is executed by the management of the company. The management of credit risk, particularly, as it relates to managing delinquent loans is delegated to the Finance Committee. Management is responsible for formulating credit policies, reviewing and assessing credit risk and limiting concentration of exposure to counterparties. Lending activity is confined to either ‘brown-field’ or ‘green-field’ loans. ‘Brown-field’ loans are those in schemes which are heavily squatted and in volatile areas, while ‘green-field’ loans are not. Collateral and other credit enhancements held against financial assets The company holds collateral against credits to borrowers, primarily, in the form of mortgage interest over property. Estimates of fair values are based on value of collateral assessed at the time of borrowing and are generally not updated except when credits to borrowers are individually assessed as impaired. Collateral generally is not held over balances with banks or brokers/dealers, except when securities are held under resale agreements. Collateral is generally not held against investment securities, and no such collateral was held at the reporting date. The fair value of collateral held against resale agreements is included at note 5. The fair value of collateral held against loans to borrowers is not readily available. Impaired loans Impaired loans are loans for which the company determines that it is probable that it will be unable to collect all principal and interest due according to the contractual terms of the loans. Past due but not impaired loans These are loans where contractual interest or principal payments are past due but the company believes that impairment is not appropriate based on the quality and value of security available or the stage of collection of amounts owed to the company.
35 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 27.
Financial risk management (continued) (b)
Credit risk (continued): (i)
Loans receivable (continued): Loans with renegotiated terms Loans with renegotiated terms are loans that have been restructured due to deterioration in the borrowers’ financial position and where the company has made concessions that it would not otherwise consider. Once the loan is restructured, it is classified and monitored. The company has no renegotiated loans. Allowances for impairment The company establishes an allowance for impairment that represents its estimate of incurred losses in its loan portfolio. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loan loss allowance established on a portfolio basis in respect of losses that have been incurred but have not been identified on loans subject to individual assessment for impairment. Write-off policy The company writes off a loan (and any related allowances for impairment) when it determines that the loans are uncollectible. This determination is usually made after considering information such as changes in the borrower’s financial position, or that proceeds from collateral will not be sufficient to pay back the entire exposure.
(ii)
Cash and cash equivalents and resale agreements: The company limits its exposure to credit risk by investing only in liquid assets with counterparties that have high credit ratings. Cash and cash equivalents and resale agreements are held with reputable financial institutions. Therefore, management does not expect any counterparty to fail to meet its obligations. Collateral is held for all resale agreements.
(iii) Exposure to credit risk: The company’s exposure to credit risk is geographically concentrated based on the location of the properties held as securities against mortgage loans, as follows:
Green-field projects Brown-field projects
2013 $’000
2012 $’000
1,238,329 145,930
1,461,387 148,123
1,384,259
1,609,510
36 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 27.
Financial risk management (continued) (b)
Credit risk (continued): (iii) Exposure to credit risk (continued): The carrying amount of financial assets recorded in the financial statements (net of impairment losses), represents the company’s maximum exposure to credit risk, without taking account of the value of any collateral held. There has been no change to the company’s exposure to credit risk or the manner in which it measures and manages the risk.
(c)
Liquidity risk: Liquidity risk is the risk that the company will not be able to meet its financial liabilities as they fall due. The company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due under both normal or stressed conditions, without incurring unacceptable losses or risking damage to its reputation. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the availability of funding through an adequate amount of committed facilities. The following table presents the undiscounted contractual maturities of financial liabilities, including interest payments, on the basis of their earliest possible contractual maturity. 1 to 3 months $’000
3 to 12 months $’000
2013 Over 12 months $’000
Contractual cash flows $’000
Carrying amount $’000
Trade and other payables 282,598 Loans payable 377,276
384,143 1,125,138
500,977 1,132,991
1,167,718 2,635,405
1,167,718 2,635,405
659,874
1,509,281
1,633,968
3,803,123
3,803,123
1 to 3 months $’000
3 to 12 months $’000
Trade and other payables 565,604 Loans payable 372,138
403,487 738,339
465,244 2,100,837
1,434,335 3,211,314
1,434,335 3,211,314
937,742
1,141,826
2,566,081
4,645,649
4,645,649
2012 Over 12 Contractual months cash flows $’000 $’000
Carrying amount $’000
There has been no change during the year to the company’s exposure to liquidity risk or the manner in which it measures and manages the risk.
37 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 27.
Financial risk management (continued) (d)
Market risk: Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Market risk exposures are measured using sensitivity analysis. (i)
Currency risk Currency risk is the risk that the market value of, or the cash flows from, financial instruments will vary because of exchange rate fluctuations. The company is exposed to foreign currency risk due to fluctuations in exchange rates on transactions and balances that are denominated in currencies other than the Jamaica dollar. The company is primarily exposed to the United States (US$). The company’s exposure to foreign currency risk at the reporting date was as follows:
Cash and cash equivalents Resale agreements Foreign currency sensitivity analysis
2013 US$’000 44 155 199
2012 US$’000 31 31
A 1 percent (2012: 1 percent) strengthening of the value of the Jamaica dollar against the following currencies at March 31, 2013 would have increased/decreased profit or loss by the amounts shown below. The analysis assumes that all other variables, in particular, interest rates, remain constant. The analysis is performed on the same basis for 2012. 2013 $’000 151
2012 $’000 27
A 10 percent (2012: 1 percent) weakening of the value of the Jamaica dollar against the following currencies at March 31, 2013 would have increased/decreased profit or loss by the amounts shown below. The analysis assumes that all other variables, in particular, interest rates, remain constant. The analysis is performed on the same basis for 2012. 2012 2013 $’000 $’000 (1,513)
(27)
38 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 27.
Financial risk management (continued) (d)
Market risk (continued): (ii) Interest rate risk: Interest rate risk is the risk of loss from fluctuations in the future cash flows or fair values of financial instruments because of a change in market interest rates. It arises when there is a mismatch between interest-earning assets and interest-bearing liabilities, which are subject to interest rate adjustments, within a specified period. It can be reflected as a loss of future net interest income and/or a loss of current market values. Interest rate risk is managed by holding primarily fixed rate financial instruments. The following tables summarise the carrying amounts of financial assets and liabilities to arrive at the company’s interest rate gap based on the earlier of contractual repricing and maturity dates: 3 to 12 months $’000
2013 Over 12 months $’000
Cash and cash equivalents 114,839 Resale agreements 66,706 Trade and other receivables Investment Loans receivable -
-
1,384,259
223,072 86 -
114,839 66,706 223,072 86 1,384,259
Total financial assets
-
1,384,259
223,158
1,788,962
Within 3 months $’000
181,545
Non-rate sensitive $’000
Total $’000
Trade and other payables Loans payable
(377,276) (1,125,138) (1,132,991)
(1,167,718) -
(1,167,718) (2,635,405)
Total financial liabilities
(377,276) (1,125,138) (1,132,991)
(1,167,718)
(3,803,123)
Total interest rate gap
(195,731) (1,125,138)
( 944,560)
(2,014,163)
Cumulative gap
(195,731) (1,320,869) (1,069,601)
(2,014,161)
-
251,268
3 to 12 months $’000
2012 Over 12 months $’000
Non-rate sensitive $’000
Total $’000
Cash and cash equivalents 236,827 Resale agreements 228,678 Trade and other receivables Investment Loans receivable -
-
1,609,510
1,470,070 294 -
236,827 228,678 1,470,070 294 1,609,510
Total financial assets
-
1,609,510
1,470,364
3,545,379
Within 3 months $’000
465,505
Trade and other payables Loans payable ( 372,138)
(738,339) (2,100,837)
(1,434,335) -
(1,434,335) (3,211,314)
Total financial liabilities
(738,339) (2,100,837)
(1,434,335)
(4,645,649)
( 372,138)
Total interest rate gap
93,367
(738,339) ( 491,327)
Cumulative gap
93,367
(644,972) (1,136,299)
36,029 (1,100,270)
(1,100,270) -
39 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 27.
Financial risk management (continued) (d)
Market risk (continued): (ii)
Interest rate risk (continued): Average effective yields by the earlier of the contractual re-pricing and maturity dates.
Cash and cash equivalents Resale agreements Loans receivable Loans payable
2013 and 2012 Immediately Within 3 to 12 rate sensitive 3 months months % % %
Over 12 months %
3.00 - 9.00
4.00 - 12.00 3.00 - 9.00
1.00 - 3.00 4.50 - 6.50 3.00 - 8.00
3.00 - 9.00
Interest rate sensitivity analysis The company materially contracts for financial assets and liabilities at fixed rates for the duration of the term. It does not account for any fixed rate financial assets or liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss. (iii) Equity price risk: Equity price risk arises from available-for-sale equity securities held by the company. The primary goal of management is to maximise investment returns. The securities are listed on the Jamaica Stock Exchange. A 10% (2012: 10%) increase or decrease in quoted bid prices at the reporting date would increase or decrease, respectively, other comprehensive income by $8,600 (2012: $29,000). There has been no change during the year to the company’s exposure to market risks or the manner in which it measures and manages the risk. (e)
Capital management: The company’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue to provide benefits for stakeholders and to maintain a strong capital base to support the development of its business. The company defines its capital base as share capital, capital and other reserves and retained earnings. The company has no externally imposed capital requirements. There were no changes in the company’s approach to capital management during the year.
40 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 27.
Financial risk management (continued) (f)
Fair values: Fair value amounts represent estimates of the arm’s length consideration that would be currently agreed upon between knowledgeable, willing parties who are under no compulsion to act and is best evidenced by a quoted market price, if one exists. Many of the company’s financial instruments lack an available trading market and fair values shown may not necessarily be indicative of the amounts realisable in an immediate settlement of the instruments. The fair value of financial instruments shown on the statement of financial position are determined as indicated below. Determination of fair value: The fair values of cash and cash-equivalents, resale agreements, trade and other receivables, amounts due from the Ministry of Finance and the Public Service, and trade and other payables are assumed to approximate their carrying values, due to their shortterm nature. The fair values of loans receivable and Operation PRIDE development projects are assumed to be the costs incurred to date, less any provision for losses and impairment. The fair value of loans payable is assumed to approximate its carrying value, as no discounts or premiums on settlement are anticipated. The fair value of equity investment is its quoted bid price at the reporting date. The valuation method falls in the level 1 fair value hierarchy which is defined as quoted prices (unadjusted) in an active market for identical assets.
Available for sale financial assets
2013 $’000
2012 $’000
86
294
No other fair value hierarchy levels were used to determine fair value. (g)
Operational risk Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the company’s processes, personnel, technology and infrastructure, and from external factors other than financial risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. The company’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to its reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
41 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 27.
Financial risk management (continued) (g)
Operational risk (continued) The primary responsibility for the development and implementation of controls to identify operational risk is assigned to internal audit. This responsibility is supported by overall company standards for the management of operational risk in the following areas:
28.
•
requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified
•
requirements for appropriate segregation of duties, including the independent authorisation of transactions
•
requirements for the reconciliation and monitoring of transactions
•
compliance with regulatory and other legal requirements
•
documentation of controls and procedures
Employee benefit obligation The company provides for post-retirement pension benefits through a defined-contribution pension scheme, administered by a life assurance company. Employees of the company, who have satisfied certain minimum service requirements, are eligible to become members of the scheme. The scheme is funded by contributions from the company and employees in accordance with the rules of the scheme. Under this scheme, retirement benefits will comprise an annuity of such amount as may be purchased by the sum of the members’ and company’s contributions together with credited interest thereon, and, therefore, the company has no further liability to fund benefits. The company’s contribution for the year amounted to $18,909,000 [2012: $15,405,000] (note 25). The company, by exception, also provides post-retirement medical benefits to certain selected retirees. The company’s future obligations are considered by the directors to be insignificant and the amount recognised at the reporting date in respect of the post retirement medical benefits is $Nil (2012: $Nil).
42 HOUSING AGENCY OF JAMAICA LIMITED Notes to the Financial Statements March 31, 2013 29.
Contingencies As at the reporting date, the company was contingently liable in respect of the following: (a)
Various claims, disputes and legal proceedings, which occur as part of the normal course of business. Provision is made for such matters when, in the opinion of management and its professional advisors, it is probable that a payment will be made by the company and the amount can be reasonably estimated. In respect of claims asserted against the company which, according to the principles outlined above, have not been provided for, management is of the opinion that such claims are either without merit, can be successfully defended or will result in exposure to the company which is immaterial to both the financial position and financial performance.
(b)
A claim which has been filed against the company claiming damages of $13,537,765 for breach of contract. The company has filed a counter claim in the sum of $18,030,219 being the excess suffered in consequence of the claimant’s negligence.
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