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2018Annual Report

nis.grenada [email protected]

NATIONAL INSURANCE BOARD

12018 Annual Report

02 Mission, Vision, Core Values

03 Corporate Information

04 Board Of Directors

05 Investment Committee

06 Senior Management

07 Minister’s Message

08 Chairman’s Report

10 Director’s Report

15 Statistical Tables

20 Report of the Director of Audit

23 Independent Auditors’ Report

28 Statement Of Financial Position

29 Income And Expenditure Account

30 Statement Of Comprehensive Income

31 Statement Of Changes In Funds

32 Statement Of Cash Flows

33 Notes To The Financial Statements

74

75 Schedule Of General And Administrative Expenses

Table of Contents

2018 Annual Report2

Mission VisionCore Values

The National Insurance Scheme will be an exemplary social security institution providing sustainable coverage and being responsive to national and global challenges

Provide for the efficient payment of relevant benefits to contributors in a customer focused environment through effective collection of contributions and prudent management of funds with highly trained staff using innovative technology

» Sustainable» Good Governance» Prudent Management» Customer Focused» Confidentiality

Core Values

Vision

Mission

Our

Our

Our

32018 Annual Report

CORPORATEINFORMATION

REGISTERED OFFICEMelville Street, St. George’s

SUB-OFFICES- Cnr. Victoria & Jubilee Streets, Grenville, St. Andrew’s

- Main Street, Hillsborough, Carriacou

BANKERSCIBC First Caribbean International Bank Ltd.Cnr. Church & Halifax Streets, St. George’s,

Grenada Co-operative Bank Ltd.Church Street, St. George’s

Scotia BankHalifax Street, St. George’s

RBTT Bank Grenada Ltd.Grand Anse, St. George’s

Republic Bank Grenada Ltd.Melville Street, St. George’s

LEGAL COUNSELKeisha Lander

AUDITORSPKF Accountants & Business AdvisorsGrand Anse, St. George’s

2018 Annual Report4

BOARD OFDIRECTORS

Mr. Ron AntoineChairman (Jan - Mar)

Government Representative

Dr. Bert BrathwaiteDeputy Chairman (May - Dec)Government Representative

Mr. Ashton FrameDeputy Chairman (Jan - Mar)Government Representative

Mr. Bert PatersonEmployees’

RepresentativeMr. Alfred P. Logie

Director

Mr. Kenny JamesEmployees’

Representative

Mr. Benedict BrathwaiteEmployers’ Representative

Mr. Lennox AndrewsEmployers’ Representative

Mr. ChristopherHusbands

Chairman (May - Dec)Government Representative

52018 Annual Report

INVESTMENTCOMMITTEE

Dr. Wayne SandifordChairman

Mr. Ashton FrameDeputy Chairman (Jan - Feb)

Dr. Bert BrathwaiteDeputy Chairman (Mar - Dec)

Mr. James PittMember

Mr. Fitzroy O’NealeMember

Mr. Alfred P. LogieMember

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2018 Annual Report6

Mr. Alfred P. LogieDirector

Mr. Dorsett CromwellDeputy Director

Mr. Louis A. WilliamsFinance Manager

Mrs. Janice FrancisHuman Resource Manager

Mr. Duane NoelInformation Technology Manager

Ms. Cindian St. BernardInvestment Manager

Ms. Marcelle CharlesBoard Secretary/Executive Assistant

Mrs. Pearl Moses-DennisInternal Auditor(reports to Audit Committee)

SENIORMANAGEMENT1 2

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72018 Annual Report

MINISTER’SMESSAGE

It is my pleasure as Minister with responsibility for Social Security, to report on the performance of the National year as the Board celebrated 35 years of existence, with a theme that was so appropriate - “Forging ahead responsibly to preserve your tomorrow.”

It is quite an honour to highlight the achievements that

of Grenada, Carriacou and Petite Martinique and to give some indications of the way forward as the Board strives towards continuous improvements.

As at December 31, 2018 the National Insurance Board can boast of a Reserve of $927.5 million, while the investment portfolio stood at $926.2 million. Section 20 (A) of the National Insurance Act (as amended) dictates that expenses

paid in the year. For 2018, the Board kept this expense ratio at 5.53%, well below the statutory requirement. During the

making the NIS the most important social safety net in our country.

classes and continues to diversify the portfolio geographically for risk mitigation purposes. Since 2016, the Board has engaged the services of experienced investment consultants to manage its international investment portfolio, as the Board realizes that the investment of the funds is key to maintaining surpluses and growing the Reserve.

The Government is cognizant of the need to make parametric changes to the National Insurance Scheme (NIS) to ensure that it remains sustainable and equitable for future generations. Across the region, social security systems have responded to the said challenges facing NIS Grenada at this time by adopting a number of changes. The Eleventh Actuarial Review made the following two recommendations to enhance the sustainability of the Fund:

1. A gradual increase in the pensionable age from 60 to 65 over a period of 16 years and the implementation of early retirement and late retirement factors.

2. An increase in the contribution rate by 2% in 2018. Further increases will also have to be considered.

The Government, together with the Board is forging ahead with discussions to ensure that the required parametric changes are made using a consultative approach with all stakeholders.

Praises must be given to the Board, its various Committees,

of the resources of our contributors and for doing so in a transparent and accountable manner.

To all stakeholders – employees, employers and investors, I thank you for your contribution and support given to the National Insurance Board during the year. Let us all continue to work together to build this country for the well-being of our Grenadian people.

Hon. Nickolas T.C. SteeleMinister Of Health, Social Security AndInternational Business

2018 Annual Report8

CHAIRMAN’SREPORT

It was a privilege and honour to be asked to chair the National Insurance Board (NIB) from May 2, 2018. I assumed this onerous responsibility shortly after the institution celebrated its 35th Anniversary on April 4, 2018 under the theme “Forging Ahead Responsibly to Preserve Your Tomorrow.”

Over its 35-year history, the National Insurance Board has

exemplary customer service. The NIB continues to be accountable to the public and conducts its business in a transparent manner.

There have not been any meaningful changes to the parameters of the NIB since its inception, to enhance sustainability and equity across successive generations. The 11th Actuarial Review in 2016, concluded that the

years, warrants immediate action, to ensure its continued

continued to grow over time as projected, the rate of growth has slowed in recent years. This reduction in growth rate results from the use of investment income to subsidize contribution income in order to meet expenditure requirements.

The Governor of the Eastern Caribbean Central Bank (ECCB), Dr. Timothy Antoine, was the keynote speaker at the Board’s 35th Anniversary Dinner and Awards Ceremony. Dr. Antoine opined, that the National Insurance Board is the most important social safety net in the history of the country, and stated categorically that the NIS Grenada, is

Caribbean. The Governor reiterated the need for the NIS

to increase the contribution rate and normal retirement age as recommended by the Actuaries.

92018 Annual Report

The NIB is committed to working with the Government of Grenada to put the Fund on a sustainable and equitable path. As required by statute, the NIB commenced the process of conducting the 12th Actuarial Review which is expected to be completed in 2019. As recommended during the 11th Actuarial Review, a Funding Policy with linkages to the Investment Policy will also be developed as part of the current Actuarial engagement.

In 2018, in keeping with International Financial Reporting Standards, the Board adopted IFRS 9 which replaced IAS 39 for annual periods on or after January 1, 2018. Comparative

of IFRS 9 was not restated, but rather reported under IAS 39 and therefore is not comparative to the information presented for 2018. Differences arising from the adoption of IFRS 9 were recognized directly in the Fund as of January 1, 2018.

during 2018 was commendable and can be summarized as follows:1. Contribution income increased from $73.3 million in

2017 to $79.9 million in 2018.

2. The Board’s Investment Income totalled $9.5 million.

3. The adoption of IFRS 9 resulted in a downward adjustment of $41.2 million to the “Total Fund and Reserves” to $926,210,998 as at December 31, 2018.

4. expenditure of $71.93 million.

5. Total expenditure for 2018 amounted to $98.2 million and exceeded contribution income by $18.3 million as was predicted during the 11th Actuarial Review in 2016.

6. The NIB paid monthly pensions to 10,011 pensioners and

employment injury and grants.

• Administrative expenses totalled $9.3 million. Administrative expenses as a percentage of

in 2017 to 5.5% in 2018, well below the statutory limit of 12%.

7. The pay-as-you-go rate as at December 31, 2018 was 11.1%. This is 2.1% above the stipulated 9% contribution rate.

Finally, I take this opportunity to extend thanks and appreciation to the other members of the Board, Management and Staff of this noble institution for their co-operation and continued dedication to serve the people of Grenada, Carriacou & Petite Martinique in the provision of quality social security coverage.

Christopher HusbandsChairman

Contribution income increased from $73.3

million in 2017 to $79.9 million in 2018

Benefit expenditure totalled $88.9 million

with pension expenditure of $71.93 million

The NIB paid monthly pensions to 10,011 pensioners and paid

11,840 other beneficiaries in short-term benefits,

employment injury and grants

$79.9 $88.9 10,011

2018 Annual Report10

The Eastern Caribbean Central Bank (ECCB) concluded in its Annual Economic and Financial Review that economic activity in Grenada continued to be buoyant in 2018. The bank estimated real GDP to have expanded by 4.8% in 2018 and highlighted that this robust growth performance was due to developments in the construction, hotels and restaurants, manufacturing and education sectors.

The National Insurance Board (NIB) performed

are outlined in the subsequent paragraphs. The NIB continued to administer the business of

and effective manner with excellent customer

routinely by the 20th of each month and to pay in excess of 90% of all short-term claims within one (1) working day.

However, the institution continued to operate without the implementation of any of the parametric adjustments recommended by the Actuaries to ensure continued sustainability and equity for future generations. Notably, recommendations made by the Actuaries in the last four (4) Actuarial Reviews are yet to be implemented. In the 11th Actuarial Review the

pressure on the Scheme in the coming years will be so high that immediate actions are needed to make it sustainable and equitable for the next generations. The status quo is no longer an

to pay for expenditures on an annual basis.” This is a crucial statement that must not be ignored

DIRECTOR’SREPORT

112018 Annual Report

REVIEW OF OPERATIONS

branches: short-term, long-term and employment injury.

a 7.2% increase compared to 2017. Of the total claims received, 18,725 were short-term claims with the remaining 1,956 being long-term claims. This is a 7.9% and 0.8% growth respectively, relative to the number of short and long-term claims received in 2017. From the 18,725 short-term claims received, the NIB paid 92.2% of these claims within one working day.

expenditure in 2018 exceeded total contribution income

was driven mainly by increase in age pension and sickness

during the year, $73.9 million was long-term, while $13.9 and $1.1 million were short-term and employment injury

has been and continues to be driven by the increasing number of pensioners, increasing life expectancy and the corresponding pension expenditure. During 2018, the NIB paid $72.0 million to 10,011 pensioners; this compares with $62.0 million to 9,357 pensioners in 2017. The $72.0

has increased annually on average by 12.8%; influenced by the increasing number of pensioners. The average increase

The number of new pensioners added to the pension payroll in 2018 totalled 1,156, a 2.4% increase relative to 2017. From the total number of new pensioners in 2018, 73.9% were age pensioners followed by survivors with 18.3% and invalidity with 7.7%.

in contribution income from employers, self-employed persons and voluntary contributors. This represents a 9.0% increase relative to 2017. Collection from private sector employers totalled $59.6 million and Government of Grenada, $20.3 million. Annual growth in contribution income averaged

manufacturing, construction and hotels and restaurants increased by 13.9%, 10.4% and 16.7% respectively, in keeping with the Eastern Caribbean Central Bank assessment of sectoral growth developments.

There were 6,020 active employers in 2018, compared to 6,346 in 2017, a 5.1% decline. During 2018, a total of 3,951

has grown by 14% relative to 2017.

2018 2017 2015 20142016

BENEFIT AND PENSION EXPENDITUREEC ($M)

$0

$20

$40

$60

$80

$100

TOTAL PENSIONERS

2018 2017 2015 20142016

10,011

9,357

8,7838,280

7,846


year, this represents a 10.7% decline. From the 1,055 registered employers, 424 were self-employed, a 19.1% decline in the number of self-employed registration relative to 2017. Employee registration fell by 4.3% from 2,486 in 2017 to 2,379 in 2018.

In this challenging period, where demographic, economic and other pressures are having a negative impact on social security systems, administrators are duty bound to exercise budgetary discipline and keep administrative expenses within acceptable limits. Administrative expenses totalled $9.3 million in 2018, compared to $8.5 million in 2017. This

increase of 5.4%. Administrative expenses, as a percentage

from 5.7% in 2017 to 5.5% in 2018, well below the statutory requirement of 12%.

The pay-as-you-go rate, is the rate that is necessary to pay

in a given year. At the end of December 2017, that rate stood at 10.3% and has increased to 11.1% at the end of December 2018. This is 2.1% above the stipulated 9% contribution rate.

The Board, Investment Committee and Management continue

investment decisions are made in the best interest of the Fund. Investment decisions are exercised based on the Prudent Investment Rule. The Board continues to ensure that preservation of capital, is a foremost requirement in exercising our duties as trustees. Additionally, over the years, the Board has exerted concerted efforts to ensure

such as hurricanes.

totalled $945.1 million representing a marginal decline of 0.8% in relation to 2017. Net Investment income for 2018 totalled $9.5 million, a 70.3% decline relative to 2017. This

the volatility of the international market in the latter part of 2018. This resulted in an unrealized loss to the international equity portfolio for the year of $10.5 million and was mainly

in 2018 compares with a surplus of $20.5 million in 2017.

The following pie chart shows a portfolio composition that

$10

$8

$6

$4

$2

$0

2018 2017 2015 20142016

ADMINISTRATIVE EXPENDITUREEC ($M)

$80

$70

$60

$50

$40

$30

$20

2018 2017 2015 20142016

CONTRIBUTION INCOMEEC ($M)


The National Insurance Scheme continues to focus on training and development of its staff. The Annual Customer Service training was facilitated by Mr. Edward Frederick, a specialist in that area.

Training was also conducted in the following areas:• Executive Administrative - attended by the Executive

Assistant

• Members of Management participated in a Risk

Branch of the Institute of Chartered Accountants of the Eastern Caribbean (ICAEC).

• Three employees are pursuing an Executive Diploma in Social Security Management with the University of

Barbados. Staff members also attended the following overseas training programmes:

» Social Security Investment Forum and 48th meeting of Directors of Social Security - St. Kitts

» ECHMB 23rd Annual General Meeting - Antigua

ACKNOWLEDGEMENT

As we record yet another successful year, I thank the Board

placed in the Management and Staff of the NIS. I express thanks also to the Management and Staff for their continued

the Social Security Funds of this country to remain prudent and diligent in our task.

Alfred P. LogieDirector

The adoption of IFRS 9 resulted in a downward adjustment of $41.2 million to the “Total Funds and Reserves” to $926,210,998 as at December 31, 2018. Over the last

3.5%. From 2009, the average 10-year growth (4.1%) in the Reserves has been accumulating at a slower rate, compared to the 10-year period prior to 2009 (11.9%). The Reserve expenditure ratio stood at 9.2 at the end on 2018, down from 11.3 in 2017.

The following chart shows historical year-end reserves.

INVESTMENT RATIOEC ($M)

Real EstateEquitiesFixed IncomeCash & Cash Equivalent

INCOME & ADMINISTRATIVE EXPENDITUREEC ($M)

$120

$100

$80

$60

$40

$20

$02018 2017 2016 2015 2014

Admin ExpenseContribution Income Total Income

$90.13

$79.93$73.33

$105.75 $107.05

$117.30

$107.50

$65.10

$78.74

$90.34 $8.45 $8.31 $8.29 $7.32

$69.94

YEAR END RESERVESEC ($M)

$700

$750

$800

$850

$900

$950

$1000

2018 2017 2016 2015 2014


Newly Registered Self-Employed Persons By Economic Activity

INDUSTRIAL CLASSIFICATION

FINANCIAL YEAR

2014 2015 2016 2017 2018

Agriculture, Hunting, Forestry & Fishing 73 73 68 104 73

Manufacturing 20 11 30 16 22

- - - 1 -

Construction 41 28 25 47 27

91 90 81 138 122

Restaurants & Hotels 12 6 21 11 8

Transport, Storage & Communication 27 24 42 55 47

Banking, Finance & Insurance 2 3 5 4 3

Real Estate & Business Services 15 26 33 44 40

Social & Related Community Services 21 30 44 60 48

Personal & Household Services 15 16 16 31 26

Recreation & Cultural Services 3 6 14 8 6

Public Administration & Defense - 3 - 1 -

Sanitary & Similar Services - - 2 4 2

Total 320 316 381 524 424

Newly Registered Employers by Parish

PARISH

FINANCIAL YEAR

2014 2015 2016 2017 2018

Carriacou 59 49 29 51 31

St. Andrew 162 128 117 134 124

St. David 45 50 39 47 45

St. George 277 270 291 320 331

St. John 62 45 42 33 33

St. Mark 29 10 20 10 15

St. Patrick 96 64 77 63 52

TOTAL 730 616 615 658 631

STATISTICALTABLES


Newly Registered Employers By Economic Activity


FINANCIAL YEAR

2014 2015 2016 2017 2018

Agriculture, Hunting, Forestry & Fishing 28 33 30 45 36

Manufacturing 26 26 22 35 34

1 1 1 2 -

Construction 76 62 71 67 66

67 71 72 78 84

Restaurants & Hotels 25 32 30 47 44

Transport, Storage & Communication 9 18 16 17 27

Banking, Finance & Insurance 2 4 11 6 5

Real Estate & Business Services 28 33 36 42 53

Social & Related Community Services 21 40 28 35 51

Personal & Household Services 71 76 72 63 72

Recreation & Cultural Services 7 11 14 9 11

Public Administration & Defense 4 - - 1 3

Sanitary & Similar Services 1 - 2 1 1

Roadside Cleaning & Maintenance 364 209 210 210 144

Total 730 616 615 658 631

Newly Registered Employees by Parish

PARISH

FINANCIAL YEAR

2014 2015 2016 2017 2018

Carriacou 96 86 116 100 123

St. Andrew 619 510 542 565 535

St. David 273 239 287 279 281

St. George 952 833 999 1,065 1,063

St. John 199 148 163 147 132

St. Mark 116 92 87 84 76

St. Patrick 274 270 250 246 169

TOTAL 2,529 2,178 2,444 2,486 2,379


Newly Registered Employees By Age Group

AGE GROUP

FINANCIAL YEAR

2014 2015 2016 2017 2018

15-19 1,011 881 1,058 1,134 1,050

20-24 974 817 884 832 803

25-29 178 158 156 154 139

30-34 86 79 109 109 104

35-39 67 56 65 58 87

40-44 54 50 39 49 47

45-49 42 30 37 46 43

50-54 49 32 42 40 38

55-59 32 28 24 29 35

60-64 18 18 19 18 24

65+ 18 29 11 17 9

TOTAL 2,529 2,178 2,444 2,486 2,379

BENEFIT BRANCH

FINANCIAL YEAR

2014 2015 2016 2017 2018

LONG-TERM

$38,765,019 $43,495,285 $48,808,865 $56,418,658 $66,399,475

$3,316,488 $3,628,307 $3,942,368 $4,270,577 $4,404,654

$2,522,643 $2,690,727 $2,780,280 $2,960,353 $3,100,531

Sub-total $44,604,150 $49,814,319 $55,531,513 $63,649,588 $73,904,660

SHORT-TERM

Sickness $4,624,537 $4,249,598 $5,849,911 $7,671,630 $10,122,098

Maternity $2,269,402 $2,302,832 $2,293,348 $2,166,102 $2,492,310

Funeral $998,555 $1,023,887 $1,158,244 $1,191,534 $1,303,571

Sub-total $7,892,494 $7,576,317 $9,301,503 $11,029,266 $13,917,979

EMPLOYMENT INJURY

Injury $254,257 $297,524 $337,003 $495,052 $545,809

Medical Expense $69,868 $139,765 $150,525 $161,037 $174,106

Disablement Grant $69,376 $92,977 $52,592 $31,442 $186,016

Disablement Pension $96,953 $93,787 $110,191 $104,113 $115,483

$39,766 $52,414 $71,221 $67,323 $64,879

Sub-total $530,220 $676,467 $721,532 $858,967 $1,086,293

Grand Total $53,026,864 $58,067,103 $65,554,548 $75,537,821 $88,908,932


BENEFIT BRANCH

FINANCIAL YEAR

2014 2015 2016 2017 2018

LONG-TERM

6,354 6,703 7,044 7,806 8,453

1,214 1,298 1,442 1,411 1,458

573 597 604 605 606

Sub-total 8,141 8,598 9,090 9,822 10,517

SHORT-TERM

Sickness 11,013 8,521 11,729 15,641 18,522

Maternity 1,490 1,559 1,616 1,581 1,665

Funeral 447 460 527 547 582

Sub-total 12,950 10,540 13,872 17,769 20,769

EMPLOYMENT INJURY

Injury 491 455 538 720 822

Medical Expense 216 241 285 379 457

Disablement Grant 6 7 6 2 6

Disablement Pension 18 17 18 19 18

5 6 14 12 10

Sub-total 736 726 861 1,132 1,313

Grand Total 21,827 19,864 23,823 28,723 32,599



FINANCIAL YEAR

2014 2015 2016 2017 2018

Agriculture, Hunting, Forestry & Fishing $1,038,018 $873,066 $1,086,310 $1,212,126 $1,362,238

Manufacturing $2,945,617 $2,493,483 $2,899,708 $3,053,635 $3,497,291

$2,130,704 $1,788,608 $2,061,216 $2,091,834 $2,236,317

Construction $3,473,110 $2,955,797 $4,137,259 $5,199,905 $5,769,847

$8,238,403 $7,045,403 $8,542,208 $9,237,084 $9,983,197

Restaurants & Hotels $5,226,861 $4,889,520 $5,747,501 $5,927,530 $6,942,943

Transport, Storage & Communication $3,893,201 $3,511,762 $4,164,579 $4,361,096 $4,603,384

Financial Intermediations $3,816,904 $3,750,798 $4,546,081 $4,470,540 $4,656,100

Real Estate & Business Services $4,699,554 $4,421,363 $5,534,047 $6,209,299 $7,075,524

Public Administration & Defense $20,411,779 $39,016,195 $22,049,511 $21,130,815 $8,686,906

Social & Related Community Services $6,806,638 $5,894,612 $6,725,227 $7,574,061 $811,602

Personal & Household Services $748,202 $617,307 $721,358 $797,986 $912,266

Recreation & Cultural Services $542,854 $488,612 $636,650 $791,729 $22,363,623

Sanitary & Similar Services $182,519 $166,688 $195,240 $229,752 $239,574

Roadside Cleaning & Maintenance $948,707 $830,660 $893,962 $1,046,781 $791,430

TOTAL $65,103,072 $78,743,872 $69,940,855 $73,334,174 $79,932,242



AuditedFinancial Statement

24

NATIONAL INSURANCE BOARDNOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST DECEMBER, 2018(continued)

2018 Annual Report

Report on the Audit of the Financial Statements Opinion

We have audited the financial statements of the National Insurance Board (“the Board”) , which comprise

the statement of financial position at December 31, 2018, and the statement of comprehensive income,

statement of changes in equity and statement of cash flows for the year then ended, and notes to the

financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial

position of the Board as at December 31, 2018 and its financial performance and its cash flows for the

year then ended in accordance with International Financial Reporting Standards (IFRSs). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our

responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit

of the Financial Statements section of our report. We are independent of the Board in accordance with the

ethical requirements that are relevant to our audit of the financial statements in Grenada, and we have

fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information included in the Board’s 2018 Annual Report Other information consists of the information included in the Board’s 2018 Annual Report, other than the

financial statements and our auditor’s report thereon. Management is responsible for the other

information.

INDEPENDENT AUDITORS’ REPORT TO THE BOARD OF DIRECTORS

AND MINISTER OF HEALTH, SOCIAL

SECURITY AND INTERNATIONAL BUSINESS


Pannell House | P.O. Box 1798 | Grand Anse | St. George’sGrenada | West IndiesTel (473) 440-2562/3014/2127/0414Fax (473) 440-6750 | Email [email protected]

Partners: Henry A. Joseph FCCA (Managing), Michelle A. Millet B. A., CPA, CGA (Mrs.), Michelle K. Bain ACCA (Miss)

25



2018 Annual Report

Report on the Audit of the Financial Statements (continued) Other information included in the Board’s 2018 Annual Report (continued) Our opinion on the financial statements does not cover the other information and we will not express any

form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information

identified above when it becomes available and, in doing so, consider whether the other information is

materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise

appears to be materially misstated. Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in

accordance with IFRSs, and for such internal control as management determines is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Board’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the

going concern basis of accounting unless the Board either intends to liquidate the National Insurance

Fund or to cease operations, or has no realistic alternative but to do so. Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that

includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit

conducted in accordance with ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the

basis of these financial statements.




NATIONAL INSURANCE BOARD(continued)

26



2018 Annual Report

Report on the Audit of the Financial Statements (continued)

Auditor’s Responsibility for the Audit of the Financial Statements (continued) As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional

skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud

or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that

is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Board’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the Board’s ability to continue as a going concern. If we

conclude that a material uncertainty exists; we are required to draw attention in our auditor’s report to

the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our

opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s

report. However, future events or conditions may cause the Board to cease to continue as a going

concern.





27



2018 Annual Report





Report on the Audit of the Financial Statements (continued) Auditor’s Responsibility for the Audit of the Financial Statements (continued) Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

GRENADA

July 4th, 2019 Accountants & Business Advisers

28



2018 Annual Report

Notes ASSETS Property, plant and equipment 4 Investment properties 5 Investment securities - Equity 6 Investment securities - Debt 7 Mortgages and other loans 8 Contributions and other receivables 9 Interest receivable 10 Cash and cash equivalents 11 TOTAL ASSETS FUNDS, RESERVE AND LIABILITIES FUNDS Long-term benefits 12 Short-term benefits 13 Employment injury benefits 14 TOTAL FUNDS REVALUATION RESERVE 15 TOTAL FUNDS AND RESERVE LIABILITIES Trade and other payables 16 TOTAL LIABILITIES TOTAL FUNDS, RESERVE AND LIABILITIES

2018

23,115,304 102,054,595 182,244,119 522,377,475 57,530,538

5,332,396 8,660,002

26,172,546

$927,486,975

890,990,104 16,942,362

18,278,532

926,210,998

-

926,210,998

1,275,977

1,275,977

$927,486,975

2017

24,127,382 103,064,160 210,842,545 500,488,585

61,979,627 3,206,367 8,180,391

58,077,574

$969,966,631

856,555,278 19,817,489

16,106,240

892,479,007

74,934,206

967,413,213

2,553,418

2,553,418

$969,966,631

The accompanying notes form an integral part of these financial statements

Approved by the Board of Directors on July 3rd, 2019 and signed on its behalf by:


STATEMENT OF FINANCIAL POSITION

AT 31ST DECEMBER, 2018

29



2018 Annual Report

NA

TIO

NA

L I

NSU

RA

NC

E B

OA

RD

INC

OM

E A

ND

EX

PE

ND

ITU

RE

AC

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UN

T

FO

R T

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YE

AR

EN

DE

D 3

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CE

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ER

, 201

8

Long

-term

be

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s Sh

ort-t

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be

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s Em

ploy

men

t in

jury

ben

efit

20

18

20

17

Inco

me

Not

es

Con

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19

Surc

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tere

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ontri

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In

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men

t

17

O

ther

inco

me

18

To

tal i

ncom

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xpen

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re

Ben

efits

(Sch

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G

ener

al a

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dmin

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expe

nse

(Sch

edul

e II)

C

redi

t los

s exp

ense

To

tal e

xpen

ditu

re

Net

(def

icit)

/sur

plus

for

the

year

65

,720

,289

11

2,12

5 9,

121,

600

538,

457

75,4

92,4

71

73,9

04,6

60

7,67

8,24

1 2,

174,

929

83,7

57,8

30

$(8,

265,

359)

11,5

42,2

16

19,6

92

211,

040

12,4

58

11,7

85,4

06

13,9

17,9

79

1,34

8,50

2

381

,975

15

,648

,456

$(

3,86

3,05

0)

2,

669,

737

4,55

5 17

1,51

8 10

,125

2,

855,

935

1,08

6,29

3 31

1,91

1

88,

352

1,46

8,55

6 $1

,369

,379

79

,932

,242

13

6,37

2 9,

504,

158

561,

040

90,1

33,8

12

88,9

08,9

32

9,33

8,65

4 2,

645,

256

100,

892,

842

$(10

,759

,030

)

73

,334

,174

1

26,6

77

32,0

36,3

33

2

54,0

10

105,

751,

194

75

,537

,821

8,

447,

795

1,

297,

461

85

,283

,077

$2

0,46

8,11

7

The

acco

mpa

nyin

g no

tes f

orm

an

inte

gral

par

t of t

hese

fina

ncia

l sta

tem

ents

30



2018 Annual Report

2018 2017

Net (deficit)/surplus for the year Revaluation of Investments Total Comprehensive (loss)/Income for the year

(10,759,030)

-

$(10,759,030)

20,468,117

32,178,503

$52,646,620

The accompanying notes form an integral part of these financial statements


STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31ST DECEMBER, 2018

31



2018 Annual Report

NA

TIO

NA

L I

NSU

RA

NC

E B

OA

RD

STA

TE

ME

NT

OF

CH

AN

GE

S IN

FU

ND

S

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EN

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8

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inju

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enef

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l Fun

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alan

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t 1st Ja

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017

Net

surp

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or th

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ar

Bal

ance

at 3

1st D

ecem

ber,

2017

– A

s pre

viou

sly

repo

rted

Impa

ct o

f ado

ptin

g IF

RS

9 –

Initi

al re

cogn

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of I

FRS

9 EC

Ls

Impa

ct

of

adop

ting

IFR

S 9

– R

ecla

ssifi

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in

vest

men

t se

curit

ies

from

ava

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o fa

ir va

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thro

ugh

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ss (N

ote

2)

Impa

ct o

f ad

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g IF

RS

9 –

Rem

easu

rem

ent o

f se

curit

ies

– eq

uity

at

fair

valu

e R

ecla

ssifi

catio

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inve

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ent p

rope

rty su

rplu

s B

alan

ce a

t 1 Ja

nuar

y, 2

018

– re

stat

ed

Net

(def

icit)

/sur

plus

for t

he y

ear

Bal

ance

at 3

1st D

ecem

ber,

2018

83

7,02

7,17

2 19

,528

,106

85

6,55

5,27

8 (5

,465

,637

) 48

,769

,968

(2

3,75

2,16

1)

23,1

48,0

15

899,

255,

463

(8,2

65,3

59)

$890

,990

,104

20

,781

,236

(9

63,7

47)

19,8

17,4

89

(126

,454

) 1,

128,

355

(549

,536

) 53

5,55

8 20

,805

,412

(3

,863

,050

) $1

6,94

2,36

2

14

,202

,482

1,

903,

758

16,1

06,2

40

(102

,773

) 91

7,04

6 (4

46,6

24)

435,

264

16,9

09,1

53

1,36

9,37

9 $1

8,27

8,53

2

87

2,01

0,89

0 20

,468

,117

89

2,47

9,00

7 (5

,694

,864

) 50

,815

,369

(2

4,74

8,32

1)

24,1

18,8

37

937,

970,

028

(10,

759,

030)

$9

26,2

10,9

98

Th

e ac

com

pany

ing

note

s for

m a

n in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts

32



2018 Annual Report

Note OPERATING ACTIVITIES Net (deficit)/surplus for the year Adjustments for: Impact of adopting IFRS 9 – initial recognition of ECLs Impact of adopting IFRS 9 – remeasurement of investment securities – equity Depreciation Revaluation of investment property Gain on disposal of investment property (Gain)/loss on disposal of property, plant and equipment Operating (deficit)/surplus before working capital changes Changes in non-cash working capital items: (Increase)/decrease in contributions and other receivables Decrease in trade and other payables Decrease in mortgages and other loans Cash (used in)/provided by operating activities INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of investment property Proceeds from sale of investment property Net movement in investments securities Cash provided by/(used in) investing activities Net decrease in cash and cash equivalents Cash and cash equivalents - at the beginning of year - at the end of year 11

2018

(10,759,030)

(5,694,864)

(24,748,321) 1,275,792

- (90,435) (46,019)

(40,062,877)

(2,605,640) (1,277,441) 4,449,089

(39,496,869)

(288,303) 70,608

- 1,100,000 6,709,536

7,591,841

(31,905,028) 58,077,574

$26,172,546

2017

20,468,117

-

- 1,262,729

32,178,503 -

6,907

53,916,256

2,605,350 (322,687)

9,085,462

65,284,381

(314,070) 990

(111,935) -

(111,106,107)

(111,531,122)

(46,246,741) 104,324,315

$58,077,574


STATEMENT OF CASH FLOWS


33



2018 Annual Report

1. CORPORATE INFORMATION

The National Insurance Scheme (“the Scheme”) was established by Peoples Law No. 14 of 1983 and continued under Chapter 205 of the Continuous Revised Edition of the Laws of Grenada having come into effect on 4th April of 1983 by S.R.O. No. 10 of 1983, for the purpose of providing social security benefits for nationals of Grenada, Carriacou and Petite Martinique and other qualified persons. The principal place of business is located at Melville Street, St. George’s. During the year the Board employed on average eighty-seven (87) persons (2017 - 89 persons).

2. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of Preparation

These financial statements have been prepared in accordance with International Financial

Reporting Standards (IFRS) and under the historical cost convention. The financial statements are expressed in Eastern Caribbean Currency Dollars.

The preparation of financial statements in conformity with IFRS requires the use of certain critical

accounting estimates. It also requires management to exercise its judgment in the process of applying the Board’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to these financial statements are disclosed in Note 3.

b) Changes in accounting policies and disclosures (i) New accounting standards, amendments and interpretations The accounting policies adopted in the preparation of the financial statements are consistent with

those followed in the preparation of the Board’s annual financial statements for the year ended December 31, 2017 except for the adoption of new standards and interpretations below.

IFRS 9 Financial Instruments (effective 1 January, 2018) IFRS 9 replaces IAS 39 for annual periods on or after 1 January 2018. The Board has not restated

comparative information for 2017 for financial instruments in the scope of IFRS 9. Therefore, the comparative information for 2017 is reported under IAS 39 and is not comparable to the information presented for 2018. Differences arising from the adoption of IFRS 9 have been recognised directly in the Fund as of 1 January, 2018 and are disclosed in this note.


NOTES TO THE FINANCIAL STATEMENTS


34



2018 Annual Report

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

b) Changes in accounting policies and disclosures (continued) (i) New accounting standards, amendments and interpretations (continued) IFRS 9 Financial Instruments(continued) To determine their classification and measurement category, IFRS 9 requires all financial assets,

except equity instruments and derivatives, to be assessed based on a combination of the entity’s business model for managing the assets and the instruments’ contractual cash flow characteristics.

The IAS 39 measurement categories of financial assets - fair value through profit or loss (FVPL),

available for sale (AFS), held-to-maturity (HTM) and loans and receivables (L&R) have been replaced by:

• Debt instruments at amortised cost (AC) • Debt instruments at fair value through other comprehensive income (FVOCI), with gains

or losses recycled to profit or loss on derecognition • Equity instruments at fair value through profit or loss (FVPL) • Equity instruments at FVOCI by irrevocable designation, with no recycling of gains or

losses to profit or loss on derecognition • Financial assets (residual categories) at fair value through profit or loss (FVPL)

The accounting for financial liabilities remains largely the same as it was under IAS 39 which is at amortised cost.

The Board’s classification of its financial assets and liabilities is in Note 2(f). The quantitative

impact of applying IFRS 9 as at 31 December, 2018 is disclosed in the transition disclosures in this note.

35



2018 Annual Report


c) Changes in accounting policies and disclosures (continued) (i) New accounting standards, amendments and interpretations (continued) IFRS 9 Financial Instruments(continued)

Changes to impairment calculation

The adoption of IFRS 9 has changed the Board’s accounting for financial assets impairment by

replacing IAS 39’s incurred loss approach with a forward-looking expected credit loss (ECL) approach. IFRS 9 requires the Board to record an allowance for ECLs for all financial assets not held at FVPL. The allowance is based on the ECLs associated with the probability of default in the next twelve months unless there has been a significant increase in credit risk since origination.

IFRS 7 Financial Instruments: Disclosures Revised

To reflect the differences between IFRS 9 and IAS 39, IFRS 7 - Financial Instruments:

Disclosures revised was up-dated and the Board has adopted it, together with IFRS 9, for the year beginning 1 January, 2018. Changes include transition disclosures as shown in this note.

Transition disclosures The following sets out the impact of adopting IFRS 9 on the statement of financial position, which

is the effect of replacing IAS 39’s incurred credit loss calculations with IFRS 9’s ECLs.

36



2018 Annual Report

NA

TIO

NA

L I

NSU

RA

NC

E B

OA

RD

NO

TE

S T

O T

HE

FIN

AN

CIA

L S

TA

TE

ME

NT

SF

OR

TH

E Y

EA

R E

ND

ED

31S

T D

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EM

BE

R, 2

018

(con

tinu

ed)

2.

SIG

NIF

ICA

NT

AC

CO

UN

TIN

G P

OL

ICIE

S (c

ontin

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b) C

hang

es in

acc

ount

ing

polic

ies a

nd d

isclo

sure

s (co

ntin

ued)

(i)

New

acc

ount

ing

stand

ards

, am

endm

ents

and

inte

rpre

tatio

ns (c

ontin

ued)

Tran

sitio

n di

sclo

sure

s

IA

S 39

R

ecla

ssifi

catio

n

Rem

easu

rem

ent

I

FRS

9 Fi

nanc

ial a

sset

s

Cat

egor

y

Am

ount

Am

ount

E

CL

Oth

er

Am

ount

Cat

egor

y

Cas

h an

d ca

sh e

quiv

alen

ts

Con

tribu

tions

and

oth

er re

ceiv

able

s In

tere

st re

ceiv

able

M

ortg

ages

and

oth

er lo

ans

Loan

s and

rece

ivab

les f

inan

cial

ass

ets

Hel

d-to

-mat

urity

fina

ncia

l ass

ets

Ava

ilabl

e-fo

r-sa

le fi

nanc

ial a

sset

s In

vest

men

t sec

uriti

es –

Deb

t (A

C)

from

loan

s and

rece

ivab

les f

inan

cial

as

sets

(L&

R) a

nd

Hel

d to

mat

urity

fina

ncia

l ass

ets

(HTM

)

In

vest

men

t sec

uriti

es –

Equ

ity –

FV

PL

From

ava

ilabl

e-fo

r-sa

le fi

nanc

ial

asse

ts –

AFS

Fina

ncia

l lia

bilit

ies

Trad

e an

d ot

her p

ayab

les

L&

R

L&R

L&

R

L&R

L&

R

HTM

A

FS

AC

58

,077

,574

3,

206,

367

8,18

0,39

1 61

,979

,627

93

,745

,043

4

06,7

43,5

42

210

,842

,545

- $8

42,7

75,0

89

2,

553,

418

$2,5

53,4

18

- - - -

(93,

745,

043)

(4

06,7

43,5

42)

(210

,842

,545

) 50

0,48

8,58

5 21

0,84

2,54

5 $

-

-

$

-

- - (9

7,32

8)

371,

348 - - -

(5,9

68,8

84)

-

$(5,

694,

864)

-

$

-

- - - - - - - -

(2

4,74

8,32

1)

$(

24,7

48,3

21)

-

$

-

58

,077

,574

3,

206,

367

8,08

3,06

3 62

,350

,975

- - - 49

4,51

9,70

1 18

6,09

4,22

4 $8

12,3

31,9

04

2,55

3,41

8 $2

,553

,418

AC

A

C

AC

A

C

AC

FVPL

AC

37



2018 Annual Report


b) Changes in accounting policies and disclosures (continued) (i) New accounting standards, amendments and interpretations (continued)

As of 1 January 2018, the Board has re-classified its previous loans and receivable and held-to- maturity financial assets portfolio as debt securities at amortised cost. These instruments met the solely payments of principal and interest (SPPI) criterion, were not actively traded and were held with the intention to collect cash flows and without the intention to sell.

The Board designated its previously available-for-sale equity securities as equity securities at

FVPL.

The Board’s IFRS 9 categories therefore include amortised cost (AC) and fair value through profit or loss (FVPL).

The impact of transition to IFRS 9 on reserves and the Fund are as follows:

The

Fund Revaluation

Reserve

Total Closing balance under IFRS 9 at 31st December, 2017 Initial recognition of ECLs Reclassification of investment securities – equity from available-for-sale to fair value through profit and loss Remeasurement of investment securities – equity at fair value Opening balance under IFRS 9 at 1st January, 2018

892,479,007

(5,694,864)

50,815,369

(24,748,321)

$912,851,191

74,934,206

-

(50,815,369)

-

$24,118,837

967,413,213

(5,694,864)

-

(24,748,321)

$936,970,028

38



2018 Annual Report


b) Changes in accounting policies and disclosures (continued)

(i) New accounting standards, amendments and interpretations (continued)

The following table reconciles the aggregate opening financial asset impairment under IAS 39 to the ECL allowances for financial assets under IFRS 9.

Financial asset impairment

under IAS 39 at 31

December 2017

Remeasurement

ECLs under IFRS 9 at 1

January 2018

Impairment allowance for: Interest receivable Per IAS 39 to amortised cost under IFRS 9 Mortgage and other loans per IAS 39 to amortised cost under IFRS 9 Held to maturity Per IAS 39 to amortised cost under IFRS 9

-

3,025,976

-

$3,025,976

97,328

(371,348)

5,968,884

$5,694,864

97,328

2,654,628

5,968,884

$8,720,840

IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018)

IFRS 15 replaces all existing revenue requirements in IFRS (IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue – Barter Transactions Involving Advertising Services) and applies to all revenue arising from contracts with customers, unless the contracts are in scope for other standards, such as IAS 17 Leases (or IFRS 16, once effective). It also provides a model for the recognition and measurement of gains and losses on disposal of certain non-financial assets including property, equipment and intangible assets.

The standard outlines the principles an entity must apply to measure and recognise revenue. The core principle is that an entity will recognise revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer.

16

39



2018 Annual Report




The principles in IFRS 15 must be applied using a five-step model:

1. Identify the contract(s) with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price.

4. Allocate the transaction price to the performance obligations in the contract. 5. Recognise revenue when (or as) the entity satisfies a performance obligation.

The standard requires entities to exercise judgement, taking into consideration all of the relevant

facts and circumstances when applying each step of the model to contracts with their customers.

The standard also specifies how to account for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract.

The standard is more prescriptive than the current IFRS requirements for revenue recognition and provides more application guidance. The disclosure requirements are also more extensive. When IFRS 15 is adopted, it can be applied either on a fully retrospective basis, requiring the restatement of the comparative periods presented in the financial statements, or a modified retrospective approach which is applied as an adjustment to the fund on the date of adoption. When the latter approach is applied it is necessary to disclose the impact of IFRS 15 on each line item in the financial statements in the reporting period.

The adoption of this standard has no impact on the Board.

IFRS 2 Classification and Measurement of Share-based Payment Transactions –

Amendments to IFRS 2 (effective 1 January 2018)

The IASB issued amendments to IFRS 2 Share-based Payment in relation to the classification and measurement of share-based payment transactions. The amendments address three main areas:

• The effects of vesting conditions on the measurement of a cash-settled share-based

payment transactions • The classification of a share-based payment transaction with net settlement features for

withholding tax obligations • The accounting where a modification to the terms and conditions of a share-based

payment transaction changes its classification from cash-settled to equity-settled.


40



2018 Annual Report




IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration (effective

1 January 2018) The interpretation clarifies that in determining the spot exchange rate to use on initial recognition

of the related asset, expense or income (or part of it) on the de-recognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration.


(ii) Standards in issue not yet effective

The following is a list of standards and interpretations that are not yet effective up to the date of

issuance of the Board's financial statements. The Board intends to adopt these standards where appropriate, when they become effective.

Amendments to IAS 19 – Plan Amendment, Curtailment or Settlement (Effective 1 January

2019) IFRS 16 Leases (Effective 1 January 2019) IFRIC Interpretation 23 Uncertainty over Income Tax Treatments (Effective 1 January 2019) IFRS 17 insurance Contracts (Effective 1 January 2021) IFRS 10 and IAS 28 Sale or Contribution of Assets between an investor or Joint Venture –

Amendments to IFRS 10 and IAS 28 (Effective date postponed indefinitely) IFRS 9 – Prepayment features with negative compensation (Effective 1 January 2019)

(iii) Improvements to International Financial Reporting Standards The annual improvements process of the International Accounting Standards Board deals with

non-urgent but necessary clarifications and amendments to IFRSs.

41



2018 Annual Report



(iii) Improvements to International Financial Reporting Standards (continued)

The following amendments are applicable to annual periods beginning on or after 1 January 2019.

IFRS Subject of Amendment IFRS 3 Business Combinations – Previously held interests in a joint operation. IFRS 11 Joint Arrangements – Previously held interests in a joint operation. IAS 12 Income Taxes – Income tax consequences of payments on financial instruments

classified as equity. IAS 23 Borrowing Costs – Borrowing costs eligible for capitalization.

(c) Property, Plant and Equipment Land and Buildings comprise properties located at Melville Street, St. George’s and Victoria

Street, Grenville. Land and buildings are stated at cost, less subsequent depreciation on buildings. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the assets carrying amounts or are recognized as a separate asset,

as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Board and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred.

Increases in the carrying amount arising on revaluation of land and buildings are credited to

revaluation reserve in the fund. Decreases that offset previous increases of the same assets are charged against the surplus directly in the fund; all other decreases are charged to the statement of comprehensive income.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives. The rates used are as follows:

Per annum Freehold buildings 2% - 5% Furniture and equipment 10% - Computer equipment 25% Motor vehicle 20%

42



2018 Annual Report


(c) Property, Plant and Equipment (continued)

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each

statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s

carrying amount is greater than its estimated recoverable amount.

(d) Investment Property Investment property is property held either to earn rental income or for capital appreciation or for

both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes.

(e) Mortgages and Other Loans Mortgages and other loans are financial assets with fixed or determinable payments. These are

measured at amortised cost. (f) Financial Instruments

(i) Classification and measurement

Initial recognition

Financial instruments are contracts that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

The Board recognises loans to borrowers on the date on which they are originated. All other financial instruments (including regular-way purchases and sale of financial assets) are recognised on the trade date, which is the date on which the Board becomes a party to the contractual provisions of the instrument.

Initial measurement

The classification of financial instruments at initial recognition depends on their contractual terms and the business model for managing the instruments. Financial instruments are initially measured at their fair value, except in the case of financial assets and financial liabilities recorded at fair value through profit or loss (FVPL) whereby transaction costs are added to, or subtracted from, this amount.

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2018 Annual Report


(f) Financial Instruments (continued)

(i) Classification and measurement (continued)

Measurement categories of financial assets and liabilities From 1st January, 2018 the Board classifies all of its assets at either: • Amortised cost or • FVPL

Before 1st January, 2018, the Board classified its financial assets as held-to-maturity, loans and receivables and available-for-sale.

The Board retained the existing requirements in IAS 39 for the classification of financial liabilities which is at amortised cost.

Amortised cost

From 1st January, 2018 the Board measures its cash and cash equivalents, debt securities, mortgage and other loans and contributions and other receivables at amortised cost. Financial assets are measured at amortized cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash ows and

• The contractual terms of the financial asset give rise on specified dates to cash ows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

Financial assets at fair value through profit or loss

Financial assets in this category are those that are designated by management upon initial recognition or are mandatorily required to be measured at fair value under IFRS 9. Financial assets at FVPL are recorded in the statement of financial position at fair value. Changes in fair value are recorded in profit and loss.

Dividend income from equity instruments measured at FVPL is recorded in profit or loss as other income when the right to the payment has been established.

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(ii) Impairment

Impairment of financial assets

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss (ECL) model as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires the Board to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. Therefore, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

From 1st January 2018 the Board has been recording an allowance for expected credit losses for all loans and individual debt securities and accounts receivable.

ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Board expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in three stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures which are credit impaired or for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

The Board considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Board may also consider a financial asset to be in default when internal or external information indicates that the Board is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Board.

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(i) Impairment (continued)

Impairment of financial assets (continued) Based on the above process, the Board classifies its ECLs into Stage 1, Stage 2 and Stage 3.

Stage 1 When financial assets are first recognised, the Board recognises an allowance based on 12 months ECLs. Stage 1 financial assets also include facilities where the credit risk has improved and the financial assets have been reclassified from Stage 2.

Stage 2

When financial assets have shown a significant increase in credit risk since origination, the Board records an allowance for the Lifetime ECLs. Stage 2 also include facilities, where the credit risk has improved, and financial assets have been reclassified from Stage 3. Stage 3 Financial assets considered credit-impaired. Here the Board records an allowance for the Lifetime ECLs.

The mechanics of the ECL calculations are outlined below and the key elements are, as follows:

PD The Probability of Default is an estimate of the likelihood of default over a given period of time. A default may only happen at a certain time over the asserted period, if the facility has not been previously derecognised and is still in the portfolio.

EAD The Exposure at Default is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date including repayments of principal and interest, whether scheduled by contract or otherwise.

LGD The Loss Given Default is an estimate of the loss arising in the case where a default occurs at

a given time. It is based on the difference between the contractual cash flows due and the cash flows expected to be received. It is usually expressed as a percentage of the EAD.

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(ii) Impairment (continued)

The maximum period for which the credit losses are determined is the contractual life of a financial instrument.

Calculation of ECLs

Stage 1 The 12mECL is calculated as the portion of LTECLs that represent the ECLs that result from default

events on a financial instrument that are possible within the 12 months after the reporting date. The Board calculates the 12mECL allowance based on the expectation of a default occurring in the 12 months following the reporting date. These expected 12-month default probabilities are applied to a forecast EAD and multiplied by the expected LGD.

Stage 2 When financial assets have shown a significant increase in credit risk since origination, the Board

records an allowance for the LTECLs. The mechanics are similar to those explained above, but PDs and LGDs are estimated over the lifetime of the loan.

Stage 3 For financial assets considered credit-impaired, the Board recognises the lifetime expected credit losses

for these financial assets. The method is similar to that for Stage 2 assets.

(iii) Impairment of other financial assets

Cash and cash equivalents

The Board’s cash at bank and short-term debt securities (fixed deposits and treasury bills) are deposits placed with reputable institutions and countries where there has been no significant default. The Board therefore considers the risk of default to be low. The ECLs on these instruments were therefore determined to be zero.

Contributions and other receivables The Board’s contributions and other receivables are mostly short-term with minimal exposure to risk.

The ECL on these instruments were therefore determined to be zero.

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(iv) Write offs

The gross carrying amount of a financial asset is written off to the extent that there is no realistic prospect of recovery. This is generally when the Board determines that the borrower does not have assets or resources of income that would generate sufficient cash flows to repay the amount subject to the write-off. However, the financial assets could still be subject to enforcement activities in order to comply with the Board’s procedures.

(v) Derecognition of financial assets

The Board derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Board neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Board recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Board retains substantially all the risks and rewards of ownership of a transferred financial asset, the Board continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

(vi) Financial liabilities

When financial liabilities are recognised, they are measured at fair value of the consideration given plus transactions costs directly attributable to the acquisition of the liability. Financial liabilities are re-measured at amortised cost.

Financial liabilities are derecognized when they are extinguished, that is when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability extinguished and the consideration price is recognised in the statement of comprehensive income.

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2018 Annual Report


(g) Contributions Receivable

Contributions receivable are amounts due from contributors in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

(h) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and at bank and short-term demand deposits with original maturities of three (3) months or less.

(i) Trade Payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Accounts payable are recognised initially at fair value and subsequently measured at amortized cost using the effective interest rate method.

(j) Employee Benefits

Pension benefits The Board operates a defined contribution pension plan. The Board pays fixed contributions into the fund and has no legal or constructive obligation to pay further contributions. The Board’s contribution is recorded as an expense in the statement of comprehensive income.

(k) Provisions

Provisions are recognised when the Board has a present legal or constructive obligation, as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the obligation can be made of the amount.

(l) Foreign Currencies

Foreign currency transactions during the year have been affected at the rates of exchange ruling at the dates of the transactions. Assets and liabilities expressed in foreign currencies are translated to Eastern Caribbean Currency Dollars at the rates of exchange ruling at the end of the financial year. Differences arising from fluctuations in exchange rates are included in the statement of comprehensive income.

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2018 Annual Report

2. SIGNIFICANT ACCOUNTING POLICIES (continued) (m) Revenue Recognition

Contributions and surcharges and interest on contributions are accounted for in current operations on the accrual basis.

i) Interest income/ Investment income These are recognised on an accrual basis. ii) Sales of services

Sales of services are recognised in the accounting period in which the services are rendered.

iii) Dividend income

Dividend income is recognized on the accrual basis.

iv) Rental income

Rental income is recognized on an accrual basis.

(n) Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. Assets leased out under operating leases are included in investment property, in the statement of financial position. They are depreciated over their expected useful lives on a basis consistent with similar property, plant and equipment. Rental income is recognized on a straight-line basis over the lease term. Payments made under operating leases are charged to the statement of comprehensive income in accordance with the terms of the lease.

Under a finance lease, substantially all the risks and rewards incidental to legal ownership are

transferred by the Board to the lessor. Finance leases are recognized as receivables and reported in loans and receivables financial assets. Finance lease income is recognized over the term of the lease.

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2018 Annual Report


(o) Related Parties

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operating decisions. Transactions entered into with related parties in the normal course of business are carried out on commercial terms and conditions and market rates during the year.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS IN APPLYING ACCOUNTING POLICIES

The development of estimates and the exercise of judgment in applying accounting polices may have a material impact on the Board's reported assets, liabilities, revenues and expenses. The items which may have the most effect on these financial statements are set out below. Valuation of property The Board utilises professional valuators to determine the fair value of its properties. Valuations are determined through the application of a variety of different valuation methods which are all sensitive to the underlying assumptions chosen. Fair value of equity investments The fair values of financial instruments that are not quoted in active markets are determined using the last traded value for the investment. Where no such value exists costs is used as an appropriate estimate of fair value. Property, plant and equipment Management exercises judgment in determining whether future economic benefits can be derived from expenditures to be capitalized and in estimating the useful lives and residual values of these assets. Calculation of expected credit loss allowances The measurement of impairment losses under IFRS 9 across all categories of financial assets requires judgement. These estimates are driven by a number of factors, changes in which can result in different levels of allowances.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to change in circumstances and of forecast economic conditions. The Board’s historical credit loss experience and forecast of economic conditions may also not be representative of actual default in the future.

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2018 Annual Report

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