TABLE OF - Grenada€¦ · consideration the recommendation of the most recent actuarial review and...

TABLE OF CONTENTS

Mission, Vision, Core Values 02

Corporate Information 03

Board of Directors 04

Investment Committee 05

Senior Management 06

Minister’s Message 07

Chairman’s Report 08

Director’s Report 10

Statistical Tables 15

Report of the Director of Audit 20

Independent Auditor’s Report 22

Statement of Financial Position 23

Statement of Comprehensive Income 24

Statement of Changes in Funds 25

Statement of Cash Flows 26

Notes to Financial Statement 27

Schedule of Benefits 55

Schedule of General and Administrative Expenses 56

1

CORE VALUES

MISSION STATEMENTProvide 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.

The National Insurance Scheme will be an

exemplary social security institution providing sustainable coverage and being responsive to national and global

challenges.

Vision

Mission Statement

Core ValuesVISIONCore Values

Vision

Mission Statement

SustainableGood Governance

Prudent ManagementCustomer Focused

Confidentiality

Annual Report 2015National Insurance Board GRENADA

2

CORE VALUES

MISSION STATEMENT

REGISTERED OFFICE Melville Street, St. George’s SUB-OFFICES Cnr Victoria & Jubilee Streets, Grenville, St. Andrew’s

Main Street, Hillsborough, Carriacou

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

RBTT Bank Grenada Ltd. Cnr Cross & Halifax Streets, St. George’s

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

LEGAL COUNSEL Afi Ventour-De Vega

AUDITORS PKF Accountants & Business AdvisorsGrand Anse, St George’s

Vision

Mission Statement

Core Values

CORPORATE INFORMATION

VISIONCore Values

Mission Statement

National Insurance Board GRENADA

Annual Report 2015

3

Mr. Alfred P. Logie Director

Mr. Bert Paterson

Employees’ Representative

Mr. Benedict BrathwaiteEmployers’ Representative

Mrs. Mondelle Squires-FrancisEmployers’ Representative

Mr. Ashton Frame

Government Representative

Deputy Chairman

Mr. Ron Antoine Government Representative Chairman

Mrs. Madonna Harford Employees’ Representative

BOARD OF DIRECTORS


4


Mr. Fitzroy O’neale

Member

Mr. Ashton Frame Member

Mr. Timothy AntoineChairman

Mr. Lennox Andrews

Deputy Chairman

INVESTMENT COMMITTEE


Annual Report 2015

5

SENIOR MANAGEMENT

Mr. Dorset Cromwell Deputy Director

Mr. Duane NoelInformation

Technology Manager

Ms. Marcelle CharlesBoard Secretary/

Executive Assistant

Mrs. Pearl Moses-Dennis

Mrs. Janice Francis Human Resource Manager

Investment ManagerMs. Cindian St. Bernard


Mr Louis A. Williams Finance Manager

Internal Auditor (reports to Audit Committee)


6

MINISTER’S MESSAGE


Annual Report 2015

As Minister with responsibility for National Insurance, it

is indeed a pleasure for me to bring to Parliament the

audited statement of accounts of the National Insurance

Fund (NIF) for the financial year 2015. The accounts

were independently audited by PKF Accountants and

Business Advisors. The certificate of the Director of Audit,

now required by the new Audit Act, is also enclosed. The

Reports of the Chairman and Director highlight the work

of the organization for the year under review.

In 2015, the National Insurance Scheme (NIS) continued

to fulfill its mandate, that of providing social security

coverage to a broad cross-section of our population by

way of pension payments to the elderly, survivors and

the disabled who have met the qualifying conditions, in

addition to the short-term benefits - sickness, maternity,

funeral and employment injury. In 2015, $58.1 million

was paid to contributors and their dependents who

were entitled to receive a benefit.

During the year, a new Strategic Plan that will chart

the way forward was developed. The Plan takes into

consideration the recommendation of the most recent

actuarial review and addresses key issues of sustainability

of the NIF. The development of a Strategic Plan for the

NIS is not only a good business practice but is now a

requirement of all statutory bodies under the Public

Finance Management Act.

At the end of December 2015, the National Insurance

reserves stood at $873.4 million. As laudable as this may

seem, the NIS has the responsibility to manage the Fund

prudently because we are living in an era of changing

demographics. People are living longer and on the

other hand fertility rates are declining significantly. As

a result, pension reform measures recommended by the

Actuaries must be closely studied by all stakeholders

of the NIS to ensure that future generations enjoy a

pension and that there is intergenerational equity, that

is, subsequent generations are not overburdened with

this responsibility. I am particularly pleased that the

Board and Government were able to reach a satisfactory

agreement to the restructuring of the Government’s

obligation to the NIF.

In April 2015, as the NIS celebrated its thirty-third

anniversary, it was able to officially open its new

headquarters. The facility allows for persons doing

business with the NIS as well as the staff to function in a

comfortable environment of a very high standard.

I take this opportunity as I close to applaud the

outstanding leadership that the Board of Directors

and Management have given to this institution. The

Investment Committee and the Appeals Tribunal are

two other key arms of the institution that continue

to play their role with distinction. The hard work and

dedication of the staff is indeed commendable. I

encourage all stakeholders to continue playing their

part in nation-building, and in particular, in ensuring

that there is a strong social security net available to the

people of Grenada, Carriacou and Petite Martinique.

Hon. Nickolas T. C SteeleMINISTER OF HEALTH AND SOCIAL SECURITY

7

CHAIRMAN’S REPORT


The National Insurance Board (NIB) realized a series of

key strategic and policy initiatives that resulted in the

National Insurance Fund (NIF) ending the year in an

improved position relative to the start of the year.

The key issues that the Board had to grapple with were:

1. Negotiating with the Government of Grenada

on the restructuring of its indebtedness to the

Fund in the form of investment instruments and

outstanding contributions.

2. Renegotiating a number of non-performing

loans to statutory bodies and the private sector.

3. Developing a Strategic Plan.

All of the above issues were satisfactorily dealt with

during the year under review. The debt negotiation

exercise with Government resulted in an agreement

being reached for a total of $178 million in government

instruments and other debt to the NIF being

restructured. This was achieved without any reduction

in the principal amounts.

The outcome of the year can be summarized as follows:

• The reserve at the end of the 2015 financial year

was $873.4 million, an increase of 7.5% over the

previous year.

• Revenue earned in 2015 amounted to $117.6

million an increase of 9.38% over 2014.

• Surplus in 2015 was $51.5 million, up from $38.5

million in 2014, an increase of 33.6%.

• Total expenditure, on the other hand, decreased

to $66 million down from $69 million in 2014, a

decrease of 4.21%.

• Administrative expense as a percentage of

contributions plus benefits declined from 6.2%

in 2014 to 6% in 2015.

The Board and Management worked on the Strategic

Plan for the period 2016-2018. The staff also had

opportunities to make an input during the process.

Critical strategic initiatives were identified for the period.

The mission, vision and core values were ratified. The

Strategic Plan, will no doubt, focus the organization on

the key issues to be addressed.

In recent years, the NIS, like most other institutions,

experienced the negative effects of the global economic

crisis. The Board recognized the need to diversify its

portfolio and has sought to invest in regional government

fixed income securities, trading on the international

market. It is imperative in order to safeguard the Fund

that the investment portfolio be diversified not only by

asset classes but also geographically. In this regard, the

Board commenced the process of recruiting the services

of consultants to assist in the investment of equities on

the international market.

8


Annual Report 2015

Looking ahead, the eleventh (11th) Actuarial Review

based on the financial results as at December 31, 2015 is

expected to be conducted by the second quarter of 2016.

The importance of the timely implementation of the

recommendations coming out of these reviews cannot

be over-emphasized. The sustainability of the NIS and

its ability to continue providing relevant benefits to its

stakeholders depend to a great extent on the effective

implementation of the Actuarial recommendations.

Overall, the Board is satisfied with the outcome of

the 2015 financial year. My sincerest thanks go out

to team NIS who consistently works to achieve the

goals that we have been tasked with. I would like to

assure all stakeholders of our continued, committed

and unwavering best efforts as we fulfill our fiduciary

responsibility as trustees of the National Insurance Fund.

Ron J. Antoine

CHAIRMAN

9

DIRECTOR’S REPORT


The year under review was an extremely busy one for the

National Insurance Board (NIB). There were a number

of activities which required full attention of the Board

and Management, none of them more important than

the negotiated restructuring of the Central Government

debt as well as loans of two statutory bodies which were

guaranteed by Government.

During the year, a new Strategic Plan which identified

key goals that the organization would pursue over the

next three years was developed. The mission and vision

as well as the core values were endorsed. The strategic

initiatives that would be needed to achieve the goals

identified were also approved. The exercise highlighted

the need to embark on the parametric reforms required

to ensure the sustainability of the National Insurance

Fund (NIF). The growing gap between the assets and

the liabilities of the NIF and the potential equity issues

between current contributors and future generations,

underscored the need for those reforms to be taken

with urgency. This mismatch is a design feature of the

pay-as-you-go social security system, however, timely

recalibration is required to ensure its sustainability.

REVIEW OF OPERATIONS

Benefit Administration

The National Insurance Scheme (NIS) offers coverage

to all employed and self-employed persons and offers

three main types of benefits: short-term, long-term

and employment injury. During the 2015 financial

year, the NIS received 13,264 benefit claims; relative

to 2014, this represents a 16.1% decrease. Of the total

claims received, 11,938 were short-term, indicating an

18.3% decline. There was however, a 10% growth in the

number of long-term claims received relative to 2014.

During 2015, the NIS paid $58.07 million to beneficiaries,

a 9.5% increase in expenditure relative to 2014. From

the $58.07 million paid in benefits during the year,

$49.81 million were long-term benefits while $7.58

and $0.68 million were short-term and employment

injury benefits respectively. Benefit expenditure had an

average increase of 9.9% over the last five years.

Pension expenditure for 2015 totalled $48.54 million;

this is an increase of 11.6% over 2014 and accounted for

83.6% of total benefit expenditure. Pension expenditure

over the last five years had an average increase of 10.8%.

The number of pensioners increased from 7,846 in 2014

to 8,280 in 2015, a 5.5% increase.

10


Annual Report 2015

The trend in benefit and pension expenditure is

illustrated in the following graphs:

Contribution Income

Contribution income accounted for in 2015 totalled

$81.10 million. Private sector employers paid $49.54

million and Government $31.55 million (includes $11.77

million from an earlier period).

There were 5,720 active employers in 2015; this,

compared with 5,538 during 2014, indicates a 3.3%

growth. From the 5,720 active employers, 890 were self-

employed.

Registration Activity

In the 2015 financial year, 932 employers were registered

with the NIS; relative to the previous year, this represents

an 11.2% decline. From the 932 registered employers,

316 were self-employed indicating a 1.3% decline in the

number of self-employed registrations relative to 2014.

Employee registration fell by 13.9% from 2,529 in 2014

to 2,178 in 2015. 3,200 persons contributed to the NIS

for the first time in 2015. That figure has declined by

29.2% compared to 2014.

Administrative Expenses

Administrative expenses totalled $8.3 million in 2015;

this, compared with $7.3 million during the 2014 financial

year, indicates a 13.2% growth. This expenditure over

the last five years had an average increase of 4.9%. The

significant increase in this expense was primarily driven

by the substantial increase in depreciation due to the

new head-office facility constructed in 2013/2014.

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$54.79$58.05 $59.99

$65.10

$78.74

EC ($

M)

Financial Year

Contribution Income

6,600

6,800

7,000

7,200

7,400

7,600

7,800

8,000

8,200

8,400

6,902

7,267

7,581

7,846

8,280

No.

Of P

ensi

oner

s

Financial Year

Total Pensioners

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$40.23$44.27

$47.94$53.03

$58.07

$32.31$36.07

$39.34$43.48

$48.54

EC($

M)

Financial Year

Benefit and Pension Expenditure

Benefit Expenditure Pension Expenditure

11


Administrative expenses as a percentage of

contributions plus benefits went from 6.2% in 2014 to

6% in 2015. Additionally, administrative expenses as a

percentage of insurable wages were 0.92%, down from

1.01% in the previous year.

The following graph shows Total Income, Contribution

Income and Administrative Expenses over the last five

years.

Investments

The investment portfolio of the NIS totalled $870.21

million representing an increase of $24.07 million or

10.1% in relation to 2014.

Investment income earned for 2015 totalled $38.53

million; this represents a 43.4% growth relative to 2014.

Net surplus for the 2015 financial year stood at $53.30

million; this, compared with $38.50 million in 2014,

indicates a 38.4 % growth.

As at December 31, 2015, the National Insurance Scheme’s

mortgage portfolio stood at $48.26 million indicating an

8.7% decline relative to 2014. Over the last five years,

the mortgage portfolio experienced an average annual

decline of 6.3%. During the 2015 financial year, a total

of 24 loans were approved amounting to $3.29 million;

this compares with 25 loans in 2014 amounting to $3.64

million.

The following pie chart shows the composition of the

portfolio by asset classes as at December 31, 2015 with

77.2% of the portfolio domiciled in Grenada.

Reserve Growth

The National Insurance Board’s reserve stood at $873.4

million at the end of 2015. This represents an increase

of 7.5% in relation to 2014. Over the last five years, the

reserve had an average annual growth of 4.6%. The

reserve to expenditure ratio stood at 13.1 at the end of

the financial year.

In the fiscal year 2015, the NIS achieved a yield on reserve

of 3.2%. A real rate of return on investments of 6% was

obtained. In 2014, the real rate of return stood at 4.4%.

17.33%

62.32%

9.46%10.88%

Investment Summary 2015

Cash & Cash Equilvalent

Fixed Income

Equities

$6.56 $7.32 $7.22 $7.32 $8.57

$54.79 $58.05 $59.99$65.10

$78.74

$88.66 $89.53 $87.11

$107.50$117.58

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

EC ($

M)

Contribution Income & Administrative Expenditure

Administrative Expenses Contribution Income Total Income

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$6.56$7.32 $7.22 $7.32

$8.57

EC ($

M)

Financial Year

Administrative Expenditure

12


Annual Report 2015

The reserve as a percentage of GDP, stood at 38.7%, up

from 38.2% in 2014.

Human Resource

The NIB is committed to the continued training and

development of its human resources. The areas of training

embarked on during 2015 included labour-market

information, health insurance, pension fund trustees,

performance management, anti-money laundering,

financial literacy, customer service, supervisory, events

management and marketing & sales.

Bereavement Ms. Michelle Sylvester, Customer Service Supervisor,

passed away in August, 2015. Ms. Sylvester worked with

the NIB for twenty-six (26) years and made a significant

contribution to the institution in varying positions. Her

dedication to duty and her pleasant personality will

remain indelible in our memories.

We thank everyone who continues to work diligently

and contribute to the success of this noble institution.

Alfred P. Logie

DIRECTOR

$300.00

$400.00

$500.00

$600.00

$700.00

$800.00

$900.00

$697.01$722.55

$757.12$784.99 $812.18

$873.37

EC($

M)

Financial Years

Year End Reserves

13

PARISH

Newly Registered Self-Employed Persons By Economic Activity


Satistical Tables

Newly Registered Employers By Parish

FINANCIAL YEARPARISH

2011 2012 2013 2014 2015

CARRIACOU 69 41 49 59 49

ST. ANDREW 212 153 267 161 128

ST. DAVID 81 30 137 45 50

ST. GEORGE 265 257 478 277 270

ST. JOHN 56 47 130 62 45

ST. MARK 25 21 55 29 10

ST. PATRICK 113 59 155 96 64

TOTAL 821 608 1,271 729 616

Newly Registered Self-Employed Persons By Economic Activity

FINANCIAL YEARINDUSTRIAL CLASSIFICATION

2011 2012 2013 2014 2015

Agriculture, Hunting, Forestry & Fishing

29

68

85

73

73

Manufacturing

21

20

31

20

11

Electricity, Gas & Water - - - - -

Construction

35

41

33

41

28

Wholesale & Retail Trade

79 103

123

91

90

Restaurants & Hotels

6

5

12

12

6

Transport, Storage & Communication

23

29

26

27

24

Banking, Finance & Insurance - -

2

2

3

Real Estate & Business Services

17

19

14

15

26

Social & Related Community Services

20

23

56

21

30

Personal & Household Services

8

15

27

15

16

Recreation & Cultural Services

2

8

15

3

6

Public Administration & Defense

1 - - -

3

Sanitary & Similar Services - - - - -

TOTAL 241

331

424

320

316


Annual Report 2015

15

Benefit Paid by Benefit Branch

FINANCIAL YEARBENEFIT BRANCH

2011 2012 2013 2014 2015

Long-Term

Age Benefit $ 28,413,016 $ 31,602,815 $ 34,960,009 $ 38,765,019 $ 43,495,285

Survivors Benefit $ 2,611,219 $ 3,041,271 $ 3,145,682 $ 3,316,488 $ 3,628,307

Invalidity Benefit $ 2,209,363 $ 2,382,240 $ 2,402,149 $ 2,522,643 $ 2,690,727

Sub-total $ 33,233,598 $ 37,026,326 $ 40,507,840 $ 44,604,150 $ 49,814,319

Short-Term

Sickness $ 3,300,521 $ 3,411,381 $ 3,611,421 $ 4,624,537 $ 4,249,598

Maternity $ 2,053,673 $ 2,032,434 $ 1,998,302 $ 2,269,402 $ 2,302,832

Funeral $ 861,352 $ 1,013,156 $ 1,006,230 $ 998,555 $ 1,023,887

Sub-total $ 6,215,546 $ 6,456,971 $ 6,615,953 $ 7,892,494 $ 7,576,317

Employment Injury

Injury $ 348,463 $ 406,920 $ 403,102 $ 254,257 $ 297,524

Medical Expense $ 287,849 $ 143,601 $ 141,033 $ 69,868 $ 139,765

Disablement Grant $ 34,507 $ 97,556 $ 138,244 $ 69,376 $ 92,977

Disablement Pension $ 73,750 $ 103,171 $ 97,589 $ 96,953 $ 93,787

Death Benefit $ 34,660 $ 35,597 $ 40,791 $ 39,766 $ 52,414 Sub-total $ 779,229 $ 786,845 $ 820,759 $ 530,220 $ 676,467

GRAND TOTAL $ 40,228,373 $ 44,270,142 $ 47,944,552 $ 53,026,864 $ 58,067,103

Newly Registered Employees By Parish

FINANCIAL YEARPARISH

2011 2012 2013 2014 2015

CARRIACOU 136 137 155 96 86

ST. ANDREW 551 526 985 619 510

ST. DAVID 291 256 420 273 239

ST. GEORGE 922 822 1,351 952 833

ST. JOHN 187 131 252 199 148

ST. MARK 90 76 205 116 92

ST. PATRICK 209 159 369 274 270

TOTAL 2,386 2,107 3,737 2,529 2,178


16

Newly Registered Employers By Economic Activity


2011 2012 2013 2014 2015

Agriculture, Hunting, Forestry & Fishing 21 19 35 28 33

Manufacturing 20 17 18 26 26

Electricity, Gas & Water - - - 1 1

Construction 74 58 77 76 62

Wholesale & Retail Trade 63 71 76 67 71

Restaurants & Hotels 25 29 38 25 32

Transport, Storage & Communication 6 15 16 9 18

Banking, Finance & Insurance 3 1 2 2 4

Real Estate & Business Services 29 28 32 28 33

Social & Related Community Services 23 20 25 21 40

Personal & Household Services 74 78 70 71 76

Recreation & Cultural Services 5 7 5 7 11

Public Administration & Defense 2 2 - 4 -

Sanitary & Similar Services - - 1 1 -

Roadside Cleaning & Maintenance 476 263 876 363 209

TOTAL

821 608

1,271

729

616

FINANCIAL YEAR

Newly Registered Employees By Age Group

AGE GROUP2011 2012 2013 2014 2015

15-19 785 712 1,231 1,011 881

20-24 1,036 910 1,680 974 817

25-29 223 164 325 178 158

30-34 81 80 111 86 79

35-39 56 62 88 67 56

40-44 61 40 66 54 50

45-49 48 42 81 42 30

50-54 49 30 52 49 32

55-59 26 37 44 32 28

60-64 11 15 24 18 18

65+ 10 15 35 18 29

TOTAL 2,386 2,107 3,737 2,529 2,178


Annual Report 2015

17

No. of Benefit Paid by Benefit Branch

FINANCIAL YEARBENEFIT BRANCH

2011 2012 2013 2014 2015

Long-Term

Age Benefit 5,485 5,723 6,065 6,354 6,703

Survivors Benefit 1,158 1,247 1,251 1,214 1,298

Invalidity Benefit 519 561 565 573 597

Sub-total 7,162 7,531 7,881 8,141 8,598

Short-Term

Sickness 7,111 7,400 7,562 11,014 8,521

Maternity 1,332 1,344 1,345 1,492 1,559

Funeral 387 456 456 447 460

Sub-total 8,830 9,200 9,363 12,953 10,540

Employment Injury

Injury 501 542 625 492 455

Medical Expense 280 364 325 216 241

Disablement Grant 7 11 11 5 7

Disablement Pension 14 19 19 18 17

Death Benefit 4 6 6 5 6

Sub-total 806 942 986 736 726

GRAND TOTAL 16,798 17,673 18,230 21,830 19,864

Contribution By Industrial Classification


18

Contribution By Industrial Classification


2011 2012 2013 2014 2015

Agriculture, Hunting,

Forestry & Fishing $ 1,131,726 $ 1,016,286 $ 879,480 $ 1,033,332 $ 873,066.17

Manufacturing $ 4,110,990 $ 3,446,936 $ 2,693,606 $ 2,941,299 $ 2,493,483.08

Electricity, Gas & Water $ 2,679,126 $ 2,556,732 $ 2,000,566 $ 2,096,619 $ 1,788,607.79

Construction $ 5,042,083 $ 4,107,997 $ 3,833,008 $ 3,448,205 $ 2,955,797.18

Wholesale & Retail Trade $ 10,723,772 $ 9,934,910 $ 7,615,657 $ 8,164,794 $ 7,045,403.06

Restaurants & Hotels $ 5,136,845 $ 4,927,584 $ 3,381,517 $ 5,194,867 $ 4,889,519.71

Transport, Storage

& Communication $ 5,077,115 $ 4,796,689 $ 3,638,731 $ 3,905,263 $ 3,511,761.75

Financial Intermediations $ 5,399,834 $ 5,157,964 $ 4,441,907 $ 4,456,963 $ 3,750,797.52

Real Estate & Business

Services $ 4,338,338 $ 4,255,201 $ 3,818,262 $ 4,641,523 $ 4,421,362.73

Public Administration

& Defense $ 661,426 $ 7,550,461 $ 17,685,560 $ 20,084,567 $ 39,016,194.74

Social & Related

Community Services $ 7,967,404 $ 8,101,935 $ 7,881,758 $ 6,714,485 $ 5,894,612.20

Personal & Household

Services $ 945,721 $ 905,833 $ 688,513 $ 756,429 $ 617,306.85

Recreation & Cultural

Services $ 610,092 $ 616,023 $ 454,319 $ 544,995 $ 488,611.65

Sanitary & Similar Services $ 233,303 $ 250,737 $ 174,298 $ 181,613 $ 166,687.71

Roadside Cleaning

& Maintenance $ 735,653 $ 420,253 $ 799,463 $ 938,119 $ 830,659.88

TOTAL $ 54,793,429 $ 58,045,540 $ 59,986,646 $ 65,103,072 $ 78,743,872.00


Annual Report 2015

19

Financial Statements 2015

21

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF

NATIONAL INSURANCE BOARD

We have audited the accompanying financial statements of the National Insurance Board which comprise the statement of financial position as at 31st December, 2015 and the related statement of comprehensive income, statement of changes in funds and cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes. Responsibility for the Financial Statements Those charged with governance are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Opinion In our opinion, the accompanying financial statements present fairly in all material respects, the financial position of the Board as of 31st December, 2015 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

GRENADA: May 10th, 2016 Accountants & business advisers:

2

22


STATEMENT OF FINANCIAL POSITION AT 31ST DECEMBER, 2015

Notes ASSETS Property, plant and equipment 4 Investment properties 5 7 Available-for-sale financial assets 6 Held-to-maturity financial assets 7 Mortgages and other loans 8 8 Trade and other receivables 9 Interest receivable 10 Loans and receivables financial assets 11 Cash and cash equivalents 12 TOTAL ASSETS FUNDS AND LIABILITIES FUNDS Long-term benefits 13 Short-term benefits 14 Employment injury benefits 15 13 TOTAL FUNDS LIABILITIES Trade and other payables 16 TOTAL LIABILITIES TOTAL FUNDS AND LIABILITIES

2015

25,049,740 94,657,228 70,828,792

406,713,626 81,028,549 13,207,760 9,039,118

126,566,125 49,099,415

$876,190,353

836,130,387 23,978,933 13,260,339

873,369,659

2,820,694

2,820,694

$876,190,353

2014

25,802,240 93,926,351 68,631,898

356,051,792 87,754,203 38,790,417 5,989,766

99,759,924 38,406,780

$815,113,371

781,063,242 20,190,582 10,930,499

812,184,323

2,929,048

2,929,048

$815,113,371

The notes on pages 7 to 34 form an integral part of these financial statements

3

The notes on pages 27 - 54 form an integral part of these financial statements

23

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25


STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31ST DECEMBER, 2015

OPERATING ACTIVITIES Net surplus for the year Adjustments for: Depreciation Un-realised gain/(loss) on financial asset Loss on disposal of property, plant and equipment Revaluation of investment properties Reversal of prior year adjustments Operating surplus before working capital changes Changes in non-cash working capital items: Decrease/(increase) in trade and other receivables (Decrease)/Increase in trade and other payables Decrease in mortgages and other loans Cash provided by operating activities INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of investment property Net increase/(decrease) in financial investments Cash used in investing activities Net increase in cash and cash equivalents Cash and cash equivalents - at the beginning of year - at the end of year REPRESENTED BY Cash and cash equivalents

2015

51,488,442

1,273,462 2,196,894 7,756

- 7,500,000

62,466,554

22,533,305 (108,354)

6,725,655

91,617,160

(1,234,452) 1,050

(26,194) (79,664,929)

(80,924,525)

10,692,635 38,406,780

$49,099,415

$49,099,415

2014

38,497,754

472,024 (11,300,144)

5,106 (15,106,094) -

12,568,646

(2,507,769) 466,281

4,236,655

14,763,813

(10,466,391) -

(63,682) 1,971,767

(8,558,306)

6,205,507

32,201,273

$38,406,780

$38,406,780

The notes on pages 7 to 34 form an integral part of these financial statements 6

The notes on pages 27 - 54 form an integral part of these financial statements

26


NOTES TO THE FINANCIAL STATEMENTS AT 31ST DECEMBER, 2015

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 ninety (90) persons (2014-85 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) New accounting standards, amendments and interpretations

(i) There are no new standards, amendments or interpretations that are effective for the first time for the financial year beginning on or after 1st January, 2015 that would be expected to have a material impact on the Board’s financial statements.

(ii) New standards, amendments and interpretations issued but not effective for the financial year beginning 1st January, 2015 and not early adopted. These either do not apply to the activities of the Board or have no material impact on its financial statements.

IAS 1 Presentation of Financial Statements – Disclosure Initiative Equity Method –

Effective for annual periods beginning on or after 1st January, 2016.

7

27



(continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) (b) New accounting standards, amendments and interpretations (continued)

IAS 16 Property, plant and equipment – Clarification of Acceptable Methods of Depreciation and Amortization – Effective for annual periods beginning on or after 1st January, 2016.

IAS 16 Property, plant and equipment – Bearer Plants – Effective for annual periods

beginning on or after 1st January, 2016.

IAS 27 Separate financial statements - Investment Entities – Effective for annual periods

beginning on or after 1st January, 2016.

IAS 28 Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and it’s Associate or Joint Venture – Effective for annual periods beginning on or after 1st January, 2016.

IAS 38 Intangible Assets – Clarification of Acceptable Methods of Depreciation and

Amortization – Effective for annual periods beginning on or after 1st January, 2016.

IAS 41 Agriculture – Bearer Plants – Effective for annual periods beginning on or after 1st January, 2016.

IFRS 9 Financial Instruments – Classification, Impairment, Hedge Accounting and De-

recognition – Effective for annual periods beginning on or after 1st January, 2018.

IFRS 10 Consolidated financial statements- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - Effective for annual periods beginning on or after 1st January, 2016.

IFRS 10 Consolidated financial statements- Applying the Consolidation Exception -

Effective for annual periods beginning on or after 1st January, 2016.

8

28


NOTES TO THE FINANCIAL STATEMENTS

AT 31ST DECEMBER, 2015 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

(b) New Accounting Standards, Amendments and Interpretations (continued)

IFRS 12 Disclosure of Interest in Other Entities – Applying the Consolidation Exception – Effective for annual periods beginning on or after 1st January, 2016.

IFRS 11 Joint Arrangements – Accounting for Acquisition of Interest in Joint Operations –

Effective for annual periods beginning on or after 1st January, 2016. IFRS 14 Regulatory Deferral Accounts – Effective for annual periods beginning on or after 1st

January, 2016. IFRS 15 Revenue from Contracts with Customers – Effective for annual periods beginning on

or after 1st January, 2017.

(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.

9 29



(continued)


(c) Property, Plant and Equipment(continued) 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% - 16⅔% Computer equipment 25% Motor vehicle 20%

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 less provision for impairment. (f) Financial Instruments

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

Financial assets and financial liabilities are recognised in the Board’s statement of financial

position when the Board becomes a party to the contractual provisions of the instrument. Recognition and measurement All regular way purchases and sales of financial assets are recognised or derecognised on the trade

date that is the date on which the Board commits itself to purchase or sell an asset. A regular way purchase or sale of financial assets is a purchase or sale of an asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the market place concerned.

10 30




2. SIGNIFICANT ACCOUNTING POLICIES (continued) (f) Financial Instruments (continued)

When financial assets are recognised initially, they are measured at fair value of the consideration

given plus transaction costs directly attributable to the acquisition of the asset. Financial assets are derecognised when the contractual rights to receive the cash flows expire or

where the risks and rewards of ownership of the assets have been transferred Financial assets The Board classifies its financial assets into the following categories: Loans and receivables, held-

to-maturity, and available-for-sale. Management determines the appropriate classification of its financial assets at the time of purchase and re-evaluates those designations at every reporting date.

Loans and receivables Investments classified as loans and receivables are non-derivative financial assets with fixed

determinable payments that are not quoted on an active market. They are included in current assets, except for maturities greater than twelve (12) months after the statement of financial position date. These are classified as non-current assets. The Board’s loans and receivables comprise of fixed deposits and loans.

Held-to-maturity Investments classified as held-to-maturity are non-derivative financial assets with fixed or

determinable payments and fixed maturities that the Board has both the intent and the ability to hold to maturity. These investments are stated at cost.

Available-for-sale Investments are classified as available-for-sale as they are intended to be held for an indefinite

period. These investments may be sold in response to needs for liquidity or changes in interest rates or equity prices. These investments are carried at fair value, based on quoted market prices where available. However, where a reliable measure is not available, cost is appropriate. Where available-for-sale investments are carried at fair value unrealized gains or losses are recognized directly in equity until the investment is derecognised or determined to be impaired at which time the cumulative gain or loss previously recorded in equity is recognized in the statement of comprehensive income. Available-for-sale investments are included in non-current assets unless management intends to dispose of the investment within twelve (12) months of the statement of financial position date.

11 31





(f) Financial Instruments (continued)

Fair Value The fair value of investments that are actively traded in organized financial markets is determined

by reference to quoted market bid prices at the close of business on the statement of financial position date. For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument which is substantially the same; discounted cash flow analysis or other valuation models.

Impairment of financial assets The Board assesses at each date of the statement of financial position whether there is objective evidence that a financial asset or group of financial assets is impaired.

A financial asset or group of financial assets is impaired and impairment losses are incurred if and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Objective evidence that a financial asset or group of financial assets is impaired includes

observable data that comes to the attention of the Board about the following loss events:

(i) Significant financial difficulty of the issuer or obligor.

(ii) A breach of contract, such as default or delinquency in interest or principal payments.

(iii) It is becoming probable that the borrower will enter into bankruptcy or other financial re-organization.

(iv) The disappearance of an active market for that financial asset because of financial

difficulties.

(v) Observable data indicating that there is a measurable decrease in the estimated cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with individual financial assets in the group, including adverse changes in the payment status of borrowers from the Board or national or economic conditions that correlate with defaults on assets in the Board.

12 32





(f) Financial Instruments (continued)

The Board first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant. If the Board determines that no objective evidence of impairment exists for an individually assessed financial asset, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

Impairment losses are recorded in an allowance account and are measured and recognised as follows:

(i) Financial assets measured at amortised cost The difference between the asset’s carrying amount and the present value of the estimated

future cash flows discounted at the financial asset’s original effective interest rate is recognised in the statement of comprehensive income.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be

related objectively to an event occurring after the impairment was recognised (such as improvement in the debtor’s credit rating), the previously recognised loss is reversed to the extent that the carrying amount of the financial asset does not exceed what the amortised cost would have been had the impairment not been recognised at the date that the impairment is reversed. The amount of the reversal is recognised in the statement of comprehensive income.

(ii) Financial assets measured at cost The difference between the asset’s carrying amount and the present value of the estimated

future cash flows (excluding future credit losses that have not been incurred) discounted at the current market’s rate of return for similar financial assets is recognised in the statement of comprehensive income. These losses are not reversed.

Financial liabilities When financial liabilities are recognised initially, they are measured at fair value of the

consideration given plus transaction costs directly attributable to the acquisition of the liability. Financial liabilities are re-measured at amortised cost using the effective interest method.

Financial liabilities are derecognised 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 paid is recognised in the statement of comprehensive income.

13 33





(g) Trade Receivables

Trade receivables 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.

Trade receivables are recognised initially at fair value and subsequently measured at amortised

cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Board will not be able to collect all amounts due according to the original terms of the receivable. Significant financial difficulties of the debtor and default or delinquency in payments are considered indicators that a trade receivable is impaired.

(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.

14

34



(continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Foreign Currencies Foreign currency transactions during the year have been effected 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.

(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 cash 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.

15 35



(continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) (n) Leases (continued) Under a finance lease, substantially all the risks and rewards incidental to legal ownership are

transferred by the Board to the lesser. 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.

(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.

Impairment of financial assets Management assesses at each statement of financial position date whether assets are impaired. An asset is impaired when the carrying value is greater than its recoverable amount and there is objective evidence of impairment. Recoverable amount is the present value of the future cash flows. Provisions are made for the excess of the carrying value over its recoverable amount. 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.

16 36

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,743

4,

343,

847

(3,9

62,9

62)

$380

,885

38

0,88

5 14

4,66

3 (5

,036

) - (1

68,2

60)

$352

,252

4,

481,

610

(4,1

29,3

58)

$352

,252

35

2,25

2 30

0,37

3 (2

,380

) - (2

20,4

64)

$429

,781

3,

758,

999

(3,3

29,2

18)

$429

,781

34

0,46

5 (3

01,3

38)

$39,

127

39,1

27

115,

000 - -

(42,

642)

$1

11,4

84

361,

465

(249

,981

) $1

11,4

84

111,

484 - - -

(38,

649)

$7

2,83

5 36

1,46

5 (2

88,6

30)

$72,

835

24

,427

,808

(8

,614

,628

) $1

5,81

2,97

9 15

,812

,979

22

,924

,985

(5

,106

) (1

2,45

8,59

5)

(472

,024

) $2

5,80

2,24

0 32

,792

,825

(6

,990

,585

) $2

5,80

2,24

0 25

,802

,240

1,

234,

451

(8,8

06)

(704

,683

) (1

,273

,461

) $2

5,04

9,74

0 32

,246

,620

(7

,196

,880

) $2

5,04

9,74

0

17

37



(continued)

5. INVESTMENT PROPERTIES

Cost/ Revaluation

Additions/ (Disposals)/ Revaluations

WDV 2015

WDV 2014

Development land River Antoine Grand Anse Calliste Point Estate Belle Isle

St. James Hotel Morne Jaloux Parliamentary Electoral Scott’s Street Maran Lucas Street Thebaide Drill Yard Sandino Plant Hotel California La Digue Craigston

Lauriston Carriacou: - Undeveloped land

- Developed land

Land and building Hillsborough Street Melville Street Leasehold property

Melville Street Annex

9,968,000 3,812,000 7,229,507 5,000,000

12,500,000 5,975,000

900,000 733,860 350,000 440,000 757,051 217,800

2,940,000 8,306,620 8,060,000

139,176 6,750,000

1,158,185

371,528

75,608,727

1,923,360 10,417,246

12,340,606

5,977,018

$93,926,351

- - - - - - - - - - - - - - - - -

- -

-

-

726,557

726,557

4,320

$730,877

9,968,000 3,812,000 7,229,507 5,000,000

12,500,000 5,975,000

900,000 733,860 350,000 440,000 757,051 217,800

2,940,000 8,306,620 8,060,000

139,176 6,750,000

1,158,185 371,528

75,608,727

1,923,360

11,143,803

13,067,163

5,981,338

$94,657,228

9,968,000 3,812,000 7,229,507 5,000,000

12,500,000 5,975,000

900,000 733,860 350,000 440,000 757,051 217,800

2,940,000 8,306,620 8,060,000

139,176 6,750,000

1,158,185 371,528

75,608,727

1,923,360

10,417,246

12,340,606

5,977,018

$93,926,351

18

38



(continued)

5. INVESTMENT PROPERTIES (continued)

*Included in leasehold properties is a portion of land which has been leased by the Board from St. George’s Newport Property Development Company Limited, for a period of 99 years with an option to renew for a further 66 years. Under the agreement a maintenance fee is charged annually. The lease confers the right to hold 1,819 ‘A’ shares in Melville Street Property Management Company Limited, a service company registered in Grenada. The lease terms provide for substantially all lease payments to be made at the beginning of the lease.

6. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Quoted equity securities – Grenada Electricity Services Limited Republic Bank (Grenada) Limited Grenreal Property Corporation Limited Unquoted equity securities – RBTT Bank Grenada Limited Jonas Browne & Hubbard (Grenada) Limited Eastern Caribbean Stock Exchange (ECSE) Eastern Caribbean Home Mortgage Bank Property Management Company Limited Cable and Wireless Grenada Limited Grenada Co-operative Bank Limited Grenada Breweries Limited Total available-for-sale investments

Number of shares

2,204,838

66,680 1,500,000

2,217,536 10,000 10,000 9,357 1,819

4,855,000 811,637 389,336

2015

22,048,380 3,000,600 3,240,000

28,288,980

13,305,216 200,000 100,000

1,497,120 1

19,420,000 5,681,459 2,336,016

42,539,812

$70,828,792

2014

24,253,218 3,033,940 3,240,000

30,527,158

8,870,144 200,000 100,000

1,497,120 1

19,420,000 5,681,459 2,336,016

38,104,740

$68,631,898

19

39




7. HELD-TO-MATURITY-FINANCIAL ASSETS

2015 2014 Treasury bills:

– Government of Grenada 47,780,100 67,424,700 – Government of St. Lucia - 2,942,303 Repurchase Agreement: - First Citizen Investment Services 12,369,739 9,063,886

Bonds:

– Government of Grenada 147,087,231 108,274,000 – Grenreal 12,200,000 - – Eastern Caribbean Home Mortgage Bank 17,500,000 17,500,000

– Grenada Electricity Services Limited 1,435,892 2,153,842 – Grenada Ports Authority 1,205,732 1,539,355 – Government of St. Lucia 8,499,458 20,503,711

– Government of the Commonwealth of Dominica 2,700,000 2,700,000 – Government of St. Vincent and the Grenadines 3,592,858 4,578,572 – Government of Barbados 19,231,791 20,089,585

– Government of Aruba 31,557,755 19,377,088 – Government of Bahamas 26,654,464 26,821,903 – Government of Bermuda 26,434,604 18,393,744 – Government of Cayman 12,780,246 13,023,222 – Government of Trinidad and Tobago 28,968,056 29,165,881 – Government of Panama 2,689,527 - – Government of Peru 4,026,173 -

406,713,626 363,551,792 Less: Provision for Impairment - (7,500,000) $406,713,626 $356,051,792

In November 2015, the Government and the Board completed negotiations for the restructuring of Government’s indebtedness to the NIB and exchange agreements were reached and signed for a total of $178 million in Government instruments and debt. The arrangement saw the Board and the Government agreeing to place the restructured debt into the following four (4) instruments: 1. Conversion of EC$92 million bond together with accrued interest to a new bond of

EC$100.9 million.

2. Conversion of EC$23.2 million in serial bonds together with accrued interest to a new bond of EC$25.2 million.

3. Exchange of Treasury Bills of EC$19.7 million together with accrued interest for a bond of

EC$20.9 million. 4. Conversion of other outstanding Government indebtedness to a loan of EC$31.2 million.

20 40



(continued)

8. MORTGAGES AND OTHER LOANS Mortgages

Housing loans: Other - - Secured by legal mortgages. Repayable over varying periods by equal monthly instalments.

Housing loans: Staff - - Secured by legal mortgages. Repayable over varying periods by equal monthly instalments.

Belvidere lands - Repayable over twenty-two (22) years from 1995.

Staff loans - Secured by bills of sale and third party guarantees. Repayable over varying periods.

Student loan - Secured by legal mortgages. Repayable over ten (10) years. Less: Provision for impairment Other loans

2015

43,619,080

4,637,433

266,602

542,359

35,639

49,101,113

(713,297)

48,387,816 32,640,733

$81,028,549

2014

48,726,044

4,127,964

278,729

564,857

40,952

53,738,546

(549,387)

53,189,159 34,565,044

$87,754,203

9. TRADE AND OTHER RECEIVABLES Trade receivables – net Other receivable Prepayment Government of Grenada – Matured serial bond

6,098,240 290,313

6,819,207 -

$13,207,760

31,410,011 221,148 59,258

7,100,000

$38,790,417

21 41



(continued) 9. TRADE AND OTHER RECEIVABLES (continued) As at 31st December, 2015 the analysis of trade receivables that were past due but not impaired is as follows:

Past due but not impaired Neither past

due nor impaired

30-60 days

61-90 days

91-120 days

Over

120 days

Total

2015 2014

$4,473,772

$4,686,354

$1,624,468

$8,802,187

$ -

$1,701,099

$ -

$1,709,357

$ -

$14,511,014

$6,098,240

$31,410,011

10. INTEREST RECEIVABLE Bonds and treasury bills:

- Government of Grenada - Eastern Caribbean Home Mortgage Bank - Government of St. Lucia - Government of the Commonwealth of Dominica - Government of St. Vincent and the Grenadines - Government of Barbados - Government of Trinidad and Tobago - Government of Aruba - Government of Cayman - Government of Bermuda - Government of Bahamas - Government of Bahamas - Government of Bahamas Other investments: Government Statutory bodies Commercial banks – fixed deposits Mortgages - Housing loans - Other loans

Student and staff loans Less: Provision for impairment Total interest receivable

2015

3,139,201 283,870 314,380 45,049 49,657

314,895 256,145 400,986 44,623

428,749 158,534

55,059 28,447

5,519,595

125,490 3,684,137

383,045 488,177

1,800,327 1,644

6,482,820

(2,963,297)

3,519,523

$9,039,118

2014

1,908,985 283,870 368,307 45,049

177,353 339,659 257,702 246,718 45,475

305,602 159,535

- -

4,138,255

- 4,505,845

598,433 411,459 784,699

1,635

6,302,071 (4,450,560)

1,851,511

$5,989,766

Interest earned ranged from 0.25% to 8% per annum.

22 42




11. LOANS AND RECEIVABLES FINANCIAL ASSETS Fixed deposits - Commercial banks British American Insurance Company Limited - Flexible premium annuity Clico International Life Insurance Limited - Flexible premium annuity Less: Provision for impairment Finance lease Other loans and receivables

Less: Provision for impairment

Total loans and receivables financial assets

2015

44,433,522

9,590,058

21,544,119

75,567,699

(31,134,177)

44,433,522

2,141,865

82,917,544 (2,926,806)

79,990,738

$126,566,125

2014

45,513,608

9,590,058

21,544,119

76,647,785

(31,134,177)

45,513,608

2,213,796

55,956,762 (3,924,242)

52,032,520

$99,759,924

Judicial Managers appointed to handle the operations of British American Insurance Company Limited (BAICO) issued a report which revealed that the Company is insolvent. Subsequent developments have resulted in considerable doubt as to the recovery of annuitants and policyholders’ investments. The Board therefore decided to provide for full impairment of the investments. Given the cash flow problems being experienced by Clico International Life Insurance Limited,

evidenced by non-payment of interest and matured investments, the Board provided for a full impairment of the investments.

12. CASH AND CASH EQUIVALENTS Cash on hand and at bank 91-day fixed deposit – Commercial banks 91-day treasury bills: Government of Grenada Government of St. Lucia Government of St. Vincent and the Grenadines Cash and cash equivalents

3,079,562 43,997,383

2,022,470

- -

$49,099,415

4,558,027 23,885,412

3,681,117 4,192,685

2,089,539

$38,406,780

23 43



(continued)

13. LONG-TERM BENEFITS BRANCH

This fund is held to cover retirement pensions, retirement grants, invalidity and survivors’ benefits in respect of qualifying persons.

14. SHORT-TERM BENEFITS BRANCH

This fund is held to cover sickness, maternity benefits and funeral grants in respect of qualifying persons.

15. EMPLOYMENT INJURY BENEFIT BRANCH

This fund is held to cover employment injury benefits to eligible insured persons. 16. TRADE AND OTHER PAYABLES Accruals Other payables

2015

2,342,698 477,996

$2,820,694

2014

2,499,015 430,033

$2,929,048

24 44



(continued)

17. INVESTMENT INCOME Government of Grenada – 1-9% Debentures Eastern Caribbean Home Mortgage Bank – Bonds Sundry bonds Treasury bills Statutory Bodies Commercial banks – fixed deposits and savings Mortgages – housing loans Other loans Dividends Early closure fees Rental income – investment property

2015

9,435,605 675,000

9,446,936 3,799,575 5,267,200

820,546 3,444,054 3,131,546 1,828,197 31,576

37,880,235

652,654

$38,532,889

2014

1,647,999 675,000

7,590,924 3,858,913 3,693,895 1,248,660 3,882,765 2,158,700 1,716,536

122,338

26,595,728 273,582

$26,869,310

18. OTHER INCOME Rent Loss on disposal of property, plant and equipment Other income

48,000 (7,956)

168,622

$208,666

110,300 (33,878) 237,761

$314,183

19. ALLOCATIONS OF INCOME/EXPENDITURE

a) Contributions, surcharge and interest on contributions are allocated over the various classes of benefits at the following rates.

Long-term benefits - Age, Invalidity and Survivors’ pension grants Short-term benefits

- Sickness and maternity benefits and funeral grants

Employment injury benefits - Injury, disablement and death benefits, medical expenses and funeral grants

%

82.22

14.44

3.34

%

82.22

14.44

3.34

25 45



(continued)

19. ALLOCATIONS OF INCOME/EXPENDITURE (continued)

b) Investment and other income are allocated on a ratio of the reserves at the beginning of the year.

c) General and administrative expenses are allocated using the rates specified in (a) above. 20. GENERAL AND ADMINISTRATIVE EXPENSES

a) Under the provisions of Sec. 20 (A) of the National Insurance Act (as amended), these expenses are limited to 12% of total the contributions collected, plus total benefits paid in that year.

Actual expenses are 6.3% (2014 – 6.2%).

b) The following items are included in the above expenses:-

Staff costs:

– Salaries, wages, overtime and allowances – Contributions – National Insurance Board

- Employee Injury Benefits - Staff uniforms – Staff training and scholarships – Pension plan – Staff health insurance and group life plan – Other staff costs

Total staff costs Depreciation Other general and administration expenses

Total expenses

2015

4,160,284 131,047 32,762 64,189 57,414

202,999 110,655

26,571

4,785,921

1,273,462 2,511,941

$8,571,324

2014

4,132,293 131,455 32,931 36,995

100,822 204,254 112,799 24,725

4,776,274

472,024

2,072,608

$7,320,906

26 46




21. COMMITMENTS

(i) The Board was committed to lend funds totalling $2,340,224 as at 31st December, 2015 (2014 - $2,411,990) which have not yet been disbursed.

(ii) A contract was signed for EC$17,822,858.09 VAT exclusive with Quinn Company Limited for

the construction of an office complex at Melville Street, St. George’s. At year end the unpaid balance was $995,945.31 before Value Added Tax (VAT).

22. TAXATION

The Board is exempted from income tax under Section 62 of the National Insurance Law, 1983.

23. STAFF PENSION PLAN

The Board maintains a defined contribution pension plan previously administered by Clico International Life Insurance Limited. The employer pays 5 – 7½% and employees pay 5% of gross salary into the plan on a monthly basis. The plan is being administered by Demerara Mutual Life Assn Society Limited, Sagicor Life Inc. and Grenada Public Service Co-operative Credit Union Limited. The Board’s pension contribution was $202,999 (2014 - $204,254).

24. COMPARATIVE FIGURES Where necessary comparative figures have been adjusted to conform with changes in presentation

in the current year. These changes have no effect on the net surplus.

27 47



(continued)

25. RELATED PARTY TRANSACTIONS

The following transactions were carried out with related parties: Directors and other key management compensation

Directors and other key management loans Government of Grenada investments Government of Grenada contributions receivable Government of Grenada contributions and surcharge/interest receivable (not accrued)

2015

$1,171,943

$ 1,415,300

$196,889,801

$3,263,140

$ -

2014

$1,163,763

$ 1,646,666

$175,698,700

$28,414,915

$29,232,709

26. FINANCIAL RISK MANAGEMENT

The Board’s activities expose it to the following risks from the use of financial instruments: Credit risk Liquidity risk Market risk Interest rate risk Foreign exchange risk

Risk management structure The Board’s risk management policies are established to identify and analyse the risk faced by the Board, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Board through its training and management standards and procedures, aims to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations. The Board of Directors is responsible for the overall risk management of the National Insurance Board. The Directors approve the implementation of risk strategies, principles, policies and procedures. Day to day adherence to risk principles is carried out by Management in compliance with the policies approved by the Board of Directors.

28 48



(continued)

26. FINANCIAL RISK MANAGEMENT (continued)

The Board of Directors has established an Audit Committee which has oversight for the integrity of the financial statements and reviews the adequacy and effectiveness of internal controls and risk management procedures. Credit risk: Credit risk is the risk of financial loss to the Board if a customer or counter-party to a financial instrument fails to meet its contractual obligations, and arises principally from the Board’s receivables from customers and its investments. The Board limits its exposure with respect to its bond portfolio by investing only in bonds issued by the Regional Governments or institutions with high creditworthiness. The Board, through the Investments Unit and the Investment Committee, consistently monitors the performance of these instruments. In respect to the mortgage portfolio, constant monitoring is also employed. The necessary contact with mortgagees is maintained to ensure that payments are received in a timely manner. Where necessary, mortgage re-scheduling is done which considers the borrower’s new financial position. When recovery seems doubtful, provisions are set aside to cover any potential losses. Exposure to credit risk The following table shows the maximum exposure to credit risk from the components of the statement of financial position:

Available-for-sale financial assets Held to Maturity financial assets Mortgages and other loans Trade and other receivables Loans and receivables financial assets Interest receivables Cash and cash equivalents

2015

70,828,792 406,713,626 81,028,549 13,207,760

126,566,125 9,039,118

49,099,415

$756,483,385

2014

68,631,898 356,051,792 87,754,203 38,790,417 99,759,924 5,989,766

38,406,780

$695,384,780

29 49



(continued)


Illustration of concentration of credit risk by customer sector: The following table summaries the credit exposure for trade and other receivables at their carrying amounts by customer sectors:

Government Other

2015

3,263,140 9,944,620

$13,207,760

2014

35,514,915 3,275,502

$38,790,417

The Board holds no collateral for its trade receivables. A provision for impairment is made for trade receivables on an individual basis based on facts such as period of arrears and the financial position of the customer. Generally, receivables are written off when there is no expectation of recovering the amounts due.

Liquidity risk: Liquidity risk is the risk that the Board will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivering cash or financial assets.

The Board’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 and stress conditions, without incurring unacceptable losses or risking damage to the Board’s reputation. The Board’s liquidity position is monitored on a daily basis and generally the Board monitors its risk to a shortage of funds by considering planned and probable expenditures against projected cash inflows from operations. The Board’s financial liabilities contractual maturity dates are within one (1) year of the statement of financial position date.

Market risk:

The Board takes on exposure to market risk which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk mainly arises from changes in foreign currency exchange rates and interest rates. There have been no changes to the Board’s exposure to market risks or the manner in which it manages and measures the risk from the previous years.

30 50



(continued)

26. FINANCIAL RISK MANAGEMENT (continued) Currency risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Such exposure arises from investment in cash and cash equivalents in currencies other than the Board’s functional currency.

Management monitors its exposure to foreign currency fluctuation and employs appropriate strategies to mitigate any potential losses. The Board operates primarily in Eastern Caribbean Currency Dollars; although some transactions are in United States Dollars, the currency risk exposures are minimal due to the fact that the Eastern Caribbean Currency Dollar is pegged to the United States Dollar. The Board is also exposed to a minimal amount of currency risks from transactions conducted in Trinidad and Tobago Dollars and Barbados Dollars. The exchange rates of these currencies at year-end were as follows:

United States ($USD) Trinidad and Tobago ($TTD) Barbados ($BBD)

2015

2.7169 0.4207 1.3568

2014

2.7169 0.4494 1.3568

31 51

NA

TIO

NA

L IN

SUR

AN

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BO

AR

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are

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eld-

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ortg

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Tr

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and

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r rec

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Lo

ans a

nd re

ceiv

able

s fin

anci

al a

sset

s In

tere

st re

ceiv

able

s C

ash

and

cash

equ

ival

ents

B

alan

ce a

t 31st

Dec

embe

r, 2

015

Lia

bilit

ies

Trad

e an

d ot

her p

ayab

les

Bal

ance

at 3

1st D

ecem

ber,

201

5

- -

152,

342,

616 - - - -

- $1

52,3

42,6

16

-

$

-

- - 2,

440,

760 - - - -

-

$2,4

40,7

60

-

$

-

- - 5,

085,

476 - - - -

-

$5,0

85,4

76

-

$

-

94,6

57,2

28

70,8

28,7

92

246,

844,

774

81,0

28,5

49

13,2

07,7

60

126,

566,

125

9,03

9,11

8 4

9,09

9,41

5 $6

91,2

71,7

61

2,82

0,69

4 $2

,820

,694

94

,657

,228

70

,828

,792

40

6,71

3,62

6 81

,028

,549

13

,207

,760

12

6,56

6,12

5 9,

039,

118

49,0

99,4

15

$851

,140

,613

2,

820,

694

$2,8

20,6

94

32

52

NA

TIO

NA

L IN

SUR

AN

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BO

AR

D

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ST

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(con

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are

as f

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U

S$

TT$

BD

$ EC

$ To

tal

Ass

ets

Inve

stm

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rope

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A

vaila

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fina

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Hel

d-to

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Mor

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Trad

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Loan

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inan

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ass

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Inte

rest

rece

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Cas

h an

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quiv

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Bal

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at 3

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201

4 L

iabi

litie

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ade

and

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able

s

B

alan

ce a

t 31st

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embe

r, 2

014

- -

115,

403,

357 - - - -

- $1

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57

-

$

-

- - 2,

440,

760 - - - -

-

$2,4

40,7

60

-

$

-

- - 5,

148,

465 - - - -

-

$5,1

48,4

65

- $

-

93,9

26,3

51

68,6

31,8

98

233,

059,

210

87,7

54,2

03

38,7

90,4

17

99,7

59,9

24

5,98

9,76

6 38

,406

,780

$6

66,3

18,5

49

2,92

9,04

8 $2

,929

,048

93

,926

,351

68

,631

,898

35

6,05

1,79

2 87

,754

,203

38

,790

,417

99

,759

,924

5,

989,

766

38,4

06,7

80

$789

,311

,131

2,

929,

048

$2,9

29,0

48

33

53





Interest rate risk:

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.

Exposure to interest rate risk

The Board is primarily exposed to interest rate risk with respect to its fixed rate debentures, government securities and bonds.

Management of interest rate risk

These are regularly monitored by the Investment Unit and communicated to the Board of Directors by the Investment Committee.

Operational risk: Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Board’s processes, personnel, technology and infrastructure, and from ex- ternal factors other than credit, market and liquidity risks such as those rising from legal and regulatory requirements and generally accepted standards of good corporate behaviour. Operational risks arise from all of the Board’s operations. The Board’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Board’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity. The primary responsibility for development and implementation of controls to address operational risk is assigned to senior management. This responsibility is supported by the development of overall Board standards for the management of operational risk in the following areas:

Requirements for appropriate segregation of duties, including the independent authorization of

transactions Requirements for the reconciliation and monitoring of transactions Compliance with regulatory and other legal requirements Documentation of controls and procedures Requirements for the periodic assessment of operational risks faced, and the adequacy of

controls and procedures to address the risks identified Requirements for the reporting of operational losses and proposed remedial action Development of contingency plans Training and professional development Risk mitigation, including insurance where this is effective

34 54


SCHEDULE OF BENEFITS

FOR THE YEAR ENDED 31ST DECEMBER, 2015 (continued)

SCHEDULE I BENEFITS

Long-term benefits: Pension:

Age Provident fund Invalidity Survivors Reduced age Grants: Age Invalidity Survivors

Short-term benefits: Sickness Maternity Funeral Maternity grants Employment injury: Benefit Medical Disabled pensions Disabled grants Death benefit Total benefits

2015

39,783,789 1,473,737 2,683,875 3,622,392

974,078

1,263,681 6,852

5,915

49,814,319

4,249,598 1,860,697 1,023,887 442,135

7,576,317

297,524 139,765 93,787 92,977 52,414

676,467

$58,067,103

2014

34,954,820 1,664,310 2,515,428 3,312,127 1,035,300

1,110,589 7,215

4,361

44,604,150

4,624,537 1,831,966

998,555 437,436

7,892,494

254,257 69,868 96,953 69,376 39,766

530,220

$53,026,864

35 55


SCHEDULE OF GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED 31ST DECEMBER, 2015

(continued)

SCHEDULE II

GENERAL AND ADMINISTRATIVE EXPENSES Staff costs

Depreciation Utilities Investment expenses Repairs and maintenance Anniversary expenses Subscriptions Public relations Office supplies and stationery Insurance Cleaning Directors and subcommittee fees Rent Audit fees Security Entertainment Publications and journals Printing Legal and professional fees Miscellaneous Licences Actuarial expenses Appeal tribunal fees Advertising Medical expenses Bank charges Satisfaction survey

Total expenses

2015

4,785,921 1,273,462

346,023 285,046 610,674 16,770 3,721

134,735 198,608 217,128 138,918 101,900 22,420 51,175 95,470 13,364 26,520 11,136

162,411 17,361 1,075

- 9,375

184 19,552 25,375

3,000

$8,571,324

2014

4,776,274 472,024 508,278 185,778 122,411

5,982 78,670

164,200 167,773 140,810 123,569 108,600 22,326 46,000 67,004 13,911 1,920

26,090 133,721 21,434 1,075

60,028 28,000 9,730

23,127 9,081

3,090

$7,320,906

36 56

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