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NDC - Annual Report 2008 - World Facing & Invested [St Lucia]

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    NDC - Annual Report 2008 - World Facing & Invested [St Lucia] NDC - Annual Report 2008 - World Facing & Invested [St Lucia] Document Transcript

    • WORLD FACING & INVESTED Saint Lucia stands poised to lead as the premiere investment market of the Eastern Caribbean. Against the bold and visionary plans that promise an historic physical and socio-economic transformation of the Castries Waterfront, the city of Castries itself, the Rodney Bay Marina and surrounding communities, our proposition is very s t r o n g. As such our target must be the most financially endowed partners Simply put, this market must frame a strategy that can engage and excite at the most influential levels of the investor community where resources and investment agendas align with ours. Conceptually World Facing & Invested interprets NDC’s marketing strategy, and corporate approach. It also resonates with the values that underpin our investment action plan. Significantly it demonstrates that NDC is ready to engage in the new investment paradigm that has been fuelled by globalization; one which places information communication technology, market information and marke t innovation as a driver of value. Indeed, in the global market, the NDC must place a premium on its powerful proposition, and promote this proposition in a targeted manner at the vantage of the investment power brokers who guarantee material and collateral value to our national assets. This report is also introspective as the NDC takes stock of where we are, what we have to offer, who we need to engage and how we position to do so. In that regard, this year’s theme communicates NDC’s corporate strategy and business approach in this exciting though highly competitive global investment environment. Investor Relations is used to dealing with risk solely from an investor’s point of view. The focus must now be widened to include all audiences that impact enterprise value. The approach must become holistic and top-down, not fragmented and bottom-up. Managing the Perception of Risk and Reward, (G. A Graut & Co Inc.) 1
    • MISSION MISSION STATEMENT To stimulate, facilitate and promote investment opportunities for foreign and local investors and to promote the economic development of Saint Lucia. VISION VISION STATEMENT To become a world-class Investment Promotion and Development Agency, positioning Saint Lucia as a leading investment location. 2
    • CONTENTS N RE-ENGINEERING & REPOSITIONING . . . . . . . . . . . . . . . . . . 4 CHAIRMAN’S REPORT BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 INVESTMENT TEAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 GLOBAL TRENDS AND OUTLOOK . . . . . . . . . . . . . . . . . . . . 10 CORPORATE GOVERNANCE IN 2008 . . . . . . . . . . . . . . . . . 11 HIGHLIGHTS FOR 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 INSTITUTIONAL SUPPORT & STRENGTHENING . . . . . . . . . 15 THE WAY FORWARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 DUTY FREE POINTE SERAPHINE . . . . . . . . . . . . . . . . . . . . . 19 ENSURING SUSTAINABILITY HOTEL CHOCOLAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SWEETENING SAINT LUCIA’S ECO TOURISM PRODUCT LOOKING AHEAD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 AUDITORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 24 3
    • RE-ENGINEERING & REPOSITIONING CHAIRMAN’S REVIEW One would be hard-pressed to identify a 12-month span over the past 50 years that could surpass, in number and scope, the challenges that the past year held — for Saint Lucia, the Caribbean and the world. Headlines told of an economic collapse that reverberated in all corners of the globe, seen in the erratic rise and fall of oil prices; the crumbling of major financial institutions; the crash of stock markets throughout the industrialized world; the bankruptcy of top airline carriers; and record unemployment figures. Callistus Vern Gill | Chairman We here in Saint Lucia — like our Caribbean neighbours — were certainly not immune. Our economy pivots on tourism and foreign direct investment, and these two vital industries found themselves vulnerable and exposed. Challenging times, however, are hardly the time for national d e s p a i r. Instead, these challenges must be seen as opportunities for re-assessment, realignment, new focus and growth. For within each challenge lies the chance to become wiser — to learn from the mistakes of ourselves and others, and to refashion and reposition what we have to offer to meet the evolving needs of our marke t . And so, over the past 12 months, in light of slowing FDI flows the world over, the Saint Lucia National Development Corporation — our island’s principal development agency and investor’s link to relevant government ministries — undertook a Competitive Review & Benchmarking Study, the purpose of which was to better understand both the positive and negative aspects of our island’s investment product; our unique and marketable selling points as an investment destination, and the policy / regulatory changes that may be needed to improve our investment climate while contributing to long-term economic vibrancy. Conclusions emanating from this study1, conducted in partnership with the United States Agency for International Development (USAID), have certainly demonstrated that our nation is a sound investment destination. This study has also equipped us with the information necessary to strategically chart the way forward. Among the conclusions were: • Saint Lucia is making significant progress in re-orientating its economy from agriculture towards a broad services 1 Competitiveness Review and Benchmarking Study 2009 4
    • based economy. Services sector activities as a In addition, Saint Lucia ranks number 1 in the percentage of GDP and exports have grown rapidly Caribbean in the World Bank’s Doing Business 2009 in the past decade; Survey2; and • Saint Lucia’s relative development offers a wide • Saint Lucia, given the stage of development of its range of opportunities for a more diversified tourism sector, remains one of the most cost tourism offering; competitive countries in the region — in particular when compared to Barbados and the Bahamas. • Saint Lucia already has one of the highest stocks of overseas investment among the comparator As stated before, the past 12 months have been replete countries — a strong selling point for new investors; with challenges, but with each challenge comes the chance to emerge stronger and with clearer vision. We • In terms of trade, Saint Lucia ranks as the sixth most at the National Development Corporation are excited open economy among those benchmarked — an about the overall investment product which our nation important selling point for overseas investors. This has to offer. indicates that a modern, accommodating regulatory environment governs aspects of international trade. 2 Doing Business 2009: Organisation of Eastern Caribbean States; World Bank 5
    • Pinkley Francis | Businessman Jacqueline Emmanuel | Director – OPSR Callistus Vern Gill | Chairman WORLD FACIN THE NATIONAL DEVELOPME
    • Jodi Boodhoo | Consultant Robert Norstrom | Group Managing Director – ECFH NG & INVESTED ENT BOARD OF DIRECTORS
    • Timothy Greene | Corporate Services Manager Deale Lee | Legal Officer/ Acting Corporate Secretary John Labadie | Assistant Properties Manager WORLD FACIN THE NATIONAL DEVELOPMENT CO
    • O’Donavan Yarde | International Investment Development Director Callistus Vern Gill | Chairman NG & INVESTED ORPORATION INVESTMENT TEAM
    • INVESTMENT PROMOTION / SERVICES GLOBAL TRENDS AND OUTLOOK According to the United Nations Conference on Trade amounts of financial resources available in emerging and Development (UNCTAD) World Investment Report countries, quick expansion of new activities such as new 2008, global Foreign Direct Investment (FDI) inflows fell energy and environment-related industries, and the by 21% in 2008 to US$1.4 trillion. The impact of the relative resilience of international companies. It is global crisis varied widely in 2008 depending on region possible that 2010 will see a modest recovery in FDI and country, with consequently varying impacts on the levels with momentum increasing in 2011. geographic patterns of FDI flows. In developing and transition economies, FDI inflows were more resilient Against this backdrop, the critical challenge faced by than in developed countries, though the worst impacts of small economies like Saint Lucia is to secure the global economic crisis had still, at year´s end, to be investments that have the maximum economic impact fully transmitted to these countries. and the highest calibre of potential employment. FDI flows to Latin America are expected to have shown Already, Saint Lucia has a very high level of FDI stock significant resilience to the world economic slowdown. relative to the size of the economy. As early as 2007; the They increased by 13% in 2008, partly as a result of a stock of FDI in Saint Lucia reached US$1,669 million in strong rise in FDI flows to South America. However, 2007, which equals 174% of GDP indicating that the Central America and the Caribbean — which are country has been very successful in the past in attracting traditionally highly dependent on the United States FDI — a key selling point for future investors1. economy, registered a decline. Saint Lucia remains one of the most favored economies In the short-term, the negative impacts of the financial and in Latin America and the Caribbean for doing business. economic crises on FDI are expected to remain dominant According to the World Bank 2009 doing business report, and to contribute to a continued fall in overall FDI through Saint Lucia ranks 3rd amongst Caribbean & Latin America 2009. Developing countries will not be exempted — FDI countries and placed 34th in the world with regards to falls in 2009 will be more widespread and it is probable ease of business in 2008. that small-island states in the Caribbean will be hit even harder by declines in FDI as well as falls in remittances and Given these attributes, the NDC will continue to double-digit declines in tourism. capitalize on these unique selling points and work with key stakeholders in improving the country’s weaknesses However, various positive factors are at work and will in the coming months. The NDC in partnership with a trigger, sooner or later, a resurgence of FDI. These wide array of national stakeholders will continue to re- factors include investment opportunities based on cheap position Saint Lucia and ensure that we are viewed as a asset prices and industry restructuring, relatively large prime location for global investment. 1 Information obtained from Saint Lucia Competitiveness Review and Benchmarking Study 2008 10
    • INVESTMENT PROMOTION / SERVICES CORPORATE GOVERNANCE IN 2008 Sound corporate governance is essential to the chartered firm to audit the books of the Corporation. Corporation’s successful pursuit of its development These audited statements are then laid before Parliament, mandate. The National Development Corporation Act Cap making the NDC truly accountable to the People of Saint 15.24 of the Revised Laws of Saint Lucia 2001 establishes Lucia. In addition, an Annual Report is prepared and made a corporate governance structure that is robust enough to available to all stakeholders. In fulfillment of this objective, ensure that the Corporation is accountable for its this document reports on the Corporation’s activities and activities and yet flexible enough to enable it to cope with performance for the year 2008. the fluid dynamics of investment promotion. The structure also seeks to balance the Corporation’s various Corporate Services interests — namely those of its customers, stakeholders, employees and the national community. The NDC and Its People Just as national development is people-centred, the Board of Directors Corporation is similarly anchored and focussed. 2008 The Corporation is governed by a Board of Directors was characterised by a Human Resource audit, with a appointed by the Minister with responsibility for the view to assessing and strengthening internal capacity to Corporation. The Board of Directors is charged with better align corporate effort with the Corporation’s vision overall responsibility for the management of the and strategic focus. In that regard, the Corporation set Corporation and in particular for determining the out to assemble a cadre of qualified, dynamic and highly Corporation’s focus and strategic vision and risk motivated professionals, appropriately skilled with the management. various competences needed for the task of facilitating economic development, through visionary planning, bold By the close of 2008 a five member board was well prospecting and the pursuit of sound investment established and was on its way in serving for a three year opportunities and partnerships. period. The Board, under the Chairmanship of prominent attorney Callistus Vern Gill possesses a range of In effect, an improved organizational structure was professional skills and experience. implemented which resulted in operational streamlining and the elimination of workflow redundancies, ultimately The Board of Directors has three sub committees — improving response times to clients and stakeholders. Finance, Human Resource and Properties, each charged with overseeing a core function of the Corporation and Capacity building and institutional strengthening providing guidance and a regular means of continued in 2008 with key appointments in several communication with the management of the Corporation. departments. The appointment of an International Investment Development Director and additional support Management staff, equipped the Investments Department with The management team is responsible for the day to day requisite leadership to negotiate the rough terrains of a administration of the Corporation and the global economic crisis; at the same time successfully operationalisation of the strategic plan. The new negotiating a number of prudent and profitable management structure is an integral part of the investments, over this reporting period. repositioning of the Corporation and reflects its investment promotion focus. A number of challenges peculiar to Saint Lu c i a’s south — among them a vexing issue of land rationalization — Audit necessitated action to improve the Corporation’s reach Financial management is another important aspect of the and response, and ultimately, it’s corporate image in Corporation’s Corporate Governance Structure. that part of the country. The recruitment of Management has instituted strong internal controls to professional staff, improved systems of control and govern procurement of goods and services and the procedures as well as revised policies have been handling of the Corporation’s assets. The Act also provides instituted, and the Corporation can boast of a more guidelines for the maintenance of the Corporation’s c u s t o m e r-focussed Vieux Fort operation and an accounts and the conduct of annual financial audits. At the improved customer experience. Board’s recommendation, the Minister appoints a 11
    • INVESTMENT PROMOTION / SERVICES investment, for multi-sector growth As a major player on the Saint Lucian economic and economic expansion. landscape, the Corporation embraces its role as The rationale was the adaptation of a a facilitator of opportunity for its clients… brand strategy that focused on many of the elements that beckon Giving Voice to Saint Lucian Development discerning travellers and investors Effective communication is critical to business growth seeking a rare and unmatched destination experience and sustainability. In recognition of the value of timeliness and lucrative business opportunities. Giving support to and consistency of marketing communications, 2008 saw this was a noted cultural shift, which imbued within staff the deliberate effort by the Corporation to amplify its an enhanced work ethos, one clearly discernable to our voice so as to resonate within the global marketplace, on various publics. behalf of the Saint Lucian businesses. Internally: Improving The Stakeholder Value Chain • The Corporation effected improvements to its Over the last financial year and consistent with its Information Communication Technology with state- economic development mandate, the Corporation of-the-art software that has enabled it in delivering a maintained focus on relationship building and more highly responsive service. collaboration with key agencies and private sector organizations on a number of initiatives. The goal has • The Corporation continued its regular publication of been to link these institutions into a network of press releases and widened the distribution of its stakeholders collaborating to position Saint Lucia as a newsletter to more clients and stakeholders. business-friendly destination of choice for investors. This network is premised on sound ethical principles, fairness • Specifically targeted advertising campaigns were and accountability as the pivot upon which sustainable, also designed and implemented to sensitize and mutually beneficial relationships flourish. This expanded educate the general public on various development marketing network includes suppliers, contractors and a issues and on the work of the Corporation. gamut of service providers. Moreover, by embracing the principles of good corporate governance, the Corporation has sought to improve the s t a keholder value chain by introducing continuous improvements in its procurement procedures to ensure sound ethical business practices. Making Its Mark — The Corporation and Contributing to a Stronger Society The National Brand Cooperation and cohesion are the hallmarks of a strong 2008 saw the continuation of a process which began in society and by extension, a strong economy. As a major 2007, and one that sought to rebrand the Corporation in player on the Saint Lucian economic landscape, the tandem with the Saint Lucia Tourist Board’s efforts to Corporation embraces its role as a facilitator of opportunity reposition Saint Lucia as a place for fine hospitality, for its clients, demonstrated through: good business and sound investment. This corporate rebranding was accomplished through the creation of a • Concessionary rates national brand. In effect, the Corporation’s brand is • Sponsoring of social and business activities adapted from the new Saint Lucia [Tourist Board] brand. • General Support This accomplished a practical alignment, given the different, although, related mandates of the two Concessionary Rates entities; one being economic development through In 2008, the NDC owned 31 factory shells, which house destination marketing in the tourism and hospitality a variety of business interests of both a business and segment, and the other, the pursuit of foreign direct social nature. Many benefit from the Corporation’s policy 12
    • INVESTMENT PROMOTION / SERVICES of start-up support through concessionary rental fees. • Centre for Adolescent Renewal and Education That contribution amounts to over $2.9M in support to (C.A.R.E.) — a non-profit organization which has help many of Saint Lucian businesses stay afloat. provided support for disadvantaged and marginalized young people since 1993. Sponsoring of Social and Business Activities ($120,000.00 in rental waiver) The National Development Corporation continues to partner with the general business community on • The Saint Lucia Fire Service — Training Centre worthwhile ventures. The Corporation’s inputs take the ($128,000.00 in rental wavier) form of capacity building, facilitation/sponsorship and institutional support. Organizational beneficiaries included NDC — Patron of Saint Lucian Arts the Saint Lucia Chamber of Commerce and the Saint and Culture Lucia Industrial and Small Business Association. The Corporation continues to be involved in a wide variety of activities on Saint Lucia’s artistic and cultural General Support scene, in the capacity of patron of several special events The Corporation continued to support a number of throughout the year — Jazz on the Pier, Mas on the Pier organizations such as: and Jounen Kweyol. • Saint Lucia Bureau of Standards — the agency As such, the NDC continues to stay closely linked to the responsible for leading the country towards meeting Saint Lucian people, while giving a platform to Saint global standards. ($200,000.00 in reduced rental) Lucia’s dynamic and developing cultural industries. Harmonites Steel Band at Jazz on the Pier Soca Artiste, Mantius, at Mas on the Pier 13
    • INVESTMENT PROMOTION / SERVICES HIGHLIGHTS FOR 2008 Investments Against the background of the worsening economic climate the number of new enquiries received by the NDC from foreign investors was down in 2008. Nevertheless, a number of foreign investors confirmed their intention to invest or reinvest in Saint Lucia, notable amongst these were NDC facilitated projects such as: • Ark TeleServices The entry of the company has added much value to Estimated Project Value: EC$2M the telecommunications industry in Saint Lucia. Additionally, approximately eighty-three locals have been employed and trained in the areas of customer care, line construction and installation and other technical areas. As the company expands southwards a further EC$20M is expected to be invested into its operations. It is expected that 120 persons will be employed by year end. ArkTeleservices is one of the new entrants into the Saint Lucia call centre industry at Bisee. Government • e-Services in its quest to promote ICT has granted fiscal Estimated Project value: EC$2M incentives for the company to operate a 300 seat call centre facility. The NDC has been a substantial partner in this project as its team was responsible for retrofitting of the shell to create the modern IT facility. • Karib Cable Estimated Project Value: EC$50M The company opened its doors to the Saint Lucia public in 2006. At that time approximately 150 persons were employed as customer service agents and technical support staff. Since its inception the company has continued to thrive as a leading BPO contact centre in the Caribbean. Last year, the company undertook major expansion works allowing it to increase capacity to 300 customer After three years of mobilizing its operations in Saint service agents. The company currently provides Lucia, Karib Cable finally opened its doors to the inbound customer care to fortune 500 companies public in May 2008. The Company launched its such as LIME, Grey Hound and Xerox. services offering both cable tv and high-s p e e d internet to the local public. Although most of Karib Cable’s operations have been concentrated in the Northern corridor of the island, work on directing services to the south are now at an advanced stage. 14
    • INVESTMENT PROMOTION / SERVICES INSTITUTIONAL SUPPORT AND STRENGTHENING the specific needs of the NDC. The use of the new software has allowed the NDC to modernize its functions and operating procedures. This streamlining of operations and data sharing has resulted in improved efficiency and accountability within the Investment Services Department. • Strategic, Promotion and Competitiveness Workshop A strategic objective for the year was the repositioning of the organization as an International Investment Agency to better attract sustainable, high- quality foreign investment into Saint Lucia. In endeavoring to accomplish this objective, management decided that it would begin this programme of change through the training of the investment team in Strategic, Investment Promotion and Competitiveness. The two week training was facilitated by International Development Ireland and Recruitment: Ireland Development Agency. The work shop took In 2008 the Investment Services Department became place in June 2008 and was held in Dublin. fully functional with a five member team consisting of an International Development Director, two Investment Training with the Ireland Development Agency was a Services Officers, two Investment Promotion Officers tactical choice because Ireland’s ability to attract and one Research Officer. The team's primary foreign investment has been the cornerstone of its responsibility is to facilitate and promote Foreign Direct economic success. For several years, the NDC has Investment (FDI) into Saint Lucia as well as provide after strived to achieve better, more equitable regional care services to all new and established companies. balance in investment across Saint Lucia. Like Saint Lucia, over a third of Ireland’s population resides Capacity Building within city areas and therefore developing its rural • Training & Implementation of ACT Software areas has been an important priority. There are Staff of the Investment Services Division of the lessons to learn from Ireland’s success story since National Development Corporation received training the development agency has successfully attracted in a new system designed to track current and investments in a number of rural regions while potential investors. The training was made possible sustaining an innovative environment in which through the financing of Caribbean Open Trade enterprise can thrive. Support Programme, an initiative of the United States Agency for International Development (USAID). Corporate Rebranding: The NDC continues to embark on its rebranding The system is designed to assist the NDC in tracking initiatives. The Investment Services Department has contact with investors from the initial inquiry, been assigned the task of reintroducing the NDC to the throughout the investment process. The specialized public. This reintroduction would come with a new database brings all of the information for a particular marketing name for the Corporation. The name National client under the finger tips of NDC Investment Development Corporation (NDC) will remain as the legal Services staff. The information contained in the entity. The new brand name has already been chosen database includes business opportunities, official and is in keeping with best practices as it relates to documents, investment projects and all relevant Investment Promotion agencies. Additionally, the name correspondence. is expected to confirm the investment facilitation role of the Corporation. To date, the NDC’s website has been In addition to staff training, the consulting firm completed and is expected to be launched in the latter assisted in the customization of the software to suit part of 2009. 15
    • INVESTMENT PROMOTION / SERVICES THE WAY FORWARD »» Targeted Investment Promotion Strategy existing competitive strength and comparative advantage. Saint Lucia’s potential as an investment location remains The NDC is proposing to identify foreign investments in sound and opportunities continue to grow in various niche sectors within the following industries: economic sectors. In seeking to realize this potential and in keeping with the economic and financial shifts 1. Tourism occurring in the global environment, greater emphasis is 2. Creative Industries being placed on selective targeting of investments 3. Education related to Saint Lucia’s development thrust rather than 4. ICT (Information Communication Technology) general investment promotion activities. 5. Business Process Outsourcing 6. Agro-Processing It is anticipated that targeted investments would have the potential to have a transformational impact on the In targeting these sectors the Corporation will: industry sector and contribute to the social and economic development of the island. Investments in • Perform opportunity analysis of industry sectors sectors such as the creative industry in particular, will be • Develop value propositions for investors for pursued with a view to diversifying the economic base of each sector the island as well as create a sustainable platform for • Proactively engage with target companies/investors cultural and social expression. We believe that a more focused approach will result in The financial events of the past year have given new more value-added investments as well as investments impetus to the Corporation’s drive to seek investment in which represent a close fit with the country’s strategic alternative markets whilst remaining open to objectives. Part of our strategy is to derive wider benefits opportunities in traditional target markets. from FDI by building stronger links between foreign investors and Saint Lucian companies through supply Deliverables contracts. This will help investors establish deeper roots The Corporation in its new thrust has identified and will in the country and create new jobs in the supply chain. continue to identify key sectors in which Saint Lucia has an 16
    • PROPERTIES PROPERTIES Introduction Land Use Plan As one of the core units of the Corporation, the Vieux Fort Lands Properties Department remains steadfast in its pursuit to The recently completed land use plan for Vieux Fort aid in the development of Saint Lucia through outlines and highlights the Corporation land development commercial, agricultural, industrial, residential, and strategy for the period 2009 – 2014. tourism investments, whilst seeking to ensure maximum returns accrue to the country. Dennery Lands Whilst the land use plan for Dennery represents a work The past year has been very challenging and saw the in progress, the Corporation has taken decisive action as continuation of preparatory activities towards the it relates to the management of these lands. The end development of a comprehensive Land Use Plan for product will see a detailed land use plan which will take the areas of Vieux Fort and Dennery. Despite these into account the various avenues the Corporation and challenges — in particular developing rationalization the Government of Saint Lucia believes to be most concepts for densely populated lands occupied by beneficial for Dennery. varied users, and the variety of land uses i.e. residential, commercial and agricultural — the Proposed Residential Developments Properties Department has managed to pull through The Corporation believes that land is one of the most and has now completed its master plan for Vieux Fort valuable assets and that every Saint Lucian should be and is 25% complete with its master plan for Dennery. afforded an opportunity to own it. It is our goal to provide This land use plan has now enabled the Corporation to within reason, residential lands to locals at all levels of better manage the lands asset portfolio, whilst making the financial and social sphere. We believe that once provision for investor facilitation through commercial, citizens are given the opportunity to own land this would touristic, agricultural and residential development. translate into more efficient land use, less land use 17
    • PROPERTIES greatly improve the corporate image from the vantage of our internal and external publics. Squatting of NDC Lands In this reporting period and through a series of animated television advertisements, the Corporation intensified its campaign at sensitizing the general public on the ramifications of squatting/un-planned development. This program has received the support and endorsement of ke y Proposed Land Use for Black Bay (Ocean View) stakeholders such as Saint Lucia Air and Seaports Authority (SLASPA), the National Emergency Management conflicts and greater economic benefits, such as Organization (NEMO), Saint Lucia Fire Service, collateral, mortgage etc. Development Control Authority (DCA) and the Water and Sewerage Company (WASCO). The Properties Department has already taken the initiative and has prepared residential subdivisions for lands in Special attention was given to this vexing issue in the Vieux Fort and Dennery to meet the growing demand. preparation for our land use plan with the development of rationalization concepts. To date, the Properties Vieux Fort Residential Developments Department has prepared two such rationalization • Black Bay Gardens: 56 residential lots concepts for lands in Cantonement and Pomme Black Bay, • Black Bay Seaview East: 12 residential lots taking into account illegally occupied lands whilst making • Black Bay Ocean View: 20 residential lots allocations for new residential, commercial, mixed use, • La Tourney Phase 6 recreational and institutional lots. It is our goal to • Campeche Heights 1&2 transform, within reason, all illegally occupied lands into a community concept by regularizing what happens on the Dennery Residential Developments ground whilst making allocations for infrastructure. • Bois Jolie Extension • Bois Jolie phase 3 Conclusion It is the ultimate goal of the Properties Department to Estates Facelift remain a core department of the Corporation by This project comprised the execution of broad-based providing the requisite services to accommodate condition surveys of the Corporation’s seven (7) estates, investment in Saint Lucia. which comprises thirty one (31) factories. This project is intended; 1. To create a database of works required. 2. To improve the ambience of the estates. 3. To improve on the customer service relationship with our tenants. The condition surveys are now completed, and the implementation phase has commenced. It is the Properties Department goal to create a more appealing work environment; the outcome of which is expected to 18
    • DUTY FREE POINTE SERAPHINE ENSURING SUSTAINABILITY Following the significant structural improvements and Marketing and Promoting of the Shopping modifications at the Duty Free Pointe Seraphine Complex Shopping Complex made in 2007, the NDC undertook to There was an increased focus on marketing and implement a comprehensive strategy to increase the promotion of the complex which commenced at the efficiency of operating procedures at Duty Free Pointe opening of the Christmas season. The aggressive two Seraphine. This decision was taken in recognition of week marketing and promotion campaign dubbed value of the Duty Free Pointe Seraphine Complex to the “Courtyard Christmas — Duty Free Style” was Cruise sector in particular, and the tourism sector as a successfully sustained through radio promotions and whole. This is with a view to ensuring the sustainability give-aways, store customer appreciation days, a of the DFPS Complex as a viable investment for the NDC children's tea party onboard a cruise ship, and a Cultural and its users, and maintaining its popularity as a unique, Christmas portrayal featuring local artistes. customer-service friendly, cruise ship destination. Jazz on the Pier continues to be a successful event on Recommendations emanating from a comprehensive the Saint Lucia Jazz calendar in keeping with the review of the Complex were discussed with the Corporation’s drive to develop the event into a first rate management team and the following priority areas activity while allowing as wide a participation as possible. agreed upon: The addition of Mas’ on The Pier to the suite of activities at the Complex during Carnival celebrations in July also Streamlining of Procedures and Operations forms part of the overall marketing strategy in keeping at the Complex with the island's annual calendar of activities. The shop tenants/operators of the Shopping Complex are important partners with the NDC and their buy-in and Establishing and Maintaining Effective support are imperative in ensuring the viability and Dialogue with all Agencies involved in the sustainability of the Shopping Complex. A review of operations of the Complex's tenants/service providers Cruise Sector and the Wider Tourism Industry was undertaken in November 2008 following which a The Duty Free Pointe Seraphine Shopping Complex is an series of meetings and consultations were held with all important asset to the cruise industry. However, in recent users of the Complex. years, the NDC has not fully maximized its role as a key player in the island's cruise Industry. In 2009, the NDC Security concerns are continuously juxtaposed against sought greater involvement and participation as a player the demands of the growing cruise sector and the in the industry in order to gain optimal benefits and to balancing of needs of tour-related operators and tenants contribute effectively towards the future of tourism. An which remain a challenge. increase in cruise ship calls to Saint Lucia saw even more vessel facilitation activities undertaken at the Complex. Notwithstanding, it is anticipated that the streamlining and reinforcement of procedures will positively impact There is ongoing dialogue with the relevant agencies on the efficiency of service providers conducting administrative procedures and port security measures. commercial activities at the Complex in terms of time Further, the NDC will actively seek to have a visible role management and cost effectiveness. in the 16th Florida-Caribbean Cruise Association’s (FCAA) annual conference scheduled for October 2009 in Saint Lucia. The 16th FCAA conference will provide the NDC the Strengthening Communication Channels opportunity to showcase the Shopping Complex, with Tenants and Service Providers establish relationships with key industry executives and The NDC continues to dialogue with the gain valuable insight into cruise industry trends. tenants/operators of the Shopping Complex with a view to identifying opportunities for development and growth, It is anticipated that these trends/developments in the seeking solutions to challenges and providing feedback cruise industry would guide the operations of the where relevant. Complex and would be determining factors in guiding the NDC’s development of policies for the Complex into the near future. 19
    • SPECIAL FEATURE HOTEL CHOCOLAT SWEETENING SAINT LUCIA’S ECO TOURISM PRODUCT A sound international foundation The vision is novel and pioneering. It marks an exciting new chapter in the story of Saint Lu c i a’s most historic town — Soufrière, where the cocoa crops have weathered time over the centuries to become more than a hot morning beverage for estate workers, but an industry supporting community livelihoods, agricultural diversification, sector linkages and international competitiveness for Saint Lucia. Saint Lucia is coupled with the state of Boston, USA as one of two new expansion markets of Hotel Chocolat1. A direct-to-consumer luxury chocolate brand international group operating primarily within the UK and established in 1993, Hotel Chocolat, is one of the UK’s fastest growing private companies, with the envious ranking by The Sunday Times / Virgin Atlantic FAST TRACK 100 listed Number 1 company. Hotel Chocolat Launch Party, April 2008 With more than 300,000 active customers who buy its products via catalogue, website and a developing number of company retail stores totalling 32 to date, Hotel Chocolat’s success is driven by original and exclusive products only available from Hotel Chocolat, authenticity and quality, made from the very best ingredients, a strong entrepreneurial culture, and exceptional marketing skills and experience. The Saint Lucia Advantage In the early 2000’s, the company’s global expansion strategy considered the world’s cocoa producing regions and determined (1) the Caribbean as being strategically suited (2) and Saint Building Nurseries 1 Hotel Chocolat is a brand name with no connections (at present) to the hotel industry. The name alludes to a metaphorical place where chocolate dreams are fully realised and true chocolate bliss point is reached. 20
    • Lucia as an ideal central chocolate manufacturing hub for the cocoa growing region of the Caribbean and Central America. The Saint Lucia advantage was determined by (1) The suitability of available cocoa plantations (2) the degree of support measures available from government agencies (3) The reputation and esteem of the Governance of Saint Lucia (4) The people and Farmers Mid-Harvest Cracking Cocoa the culture. completion timeline for the Saint Lucia chocolate factory To this end, the Caribbean/Saint Lucia business was is 3 to 4 years. launched in mid 2005 and the Rabot Estate acquisition was completed on April 2006, with plans for expansion Phase three will see the construction of a Unique via a suitable additional Estate acquisition in 2009. The Boutique Hotel, operated in accordance with intention is to develop linkages to Saint Lucia’s Eco- environmentally friendly principles, and marrying the Tourism aspects, through Hotel Chocolat’s extensive cultivation, research and development, production and marketing programmes in the UK and the USA. packaging aspects into the visitor experience, thus linking agriculture with tourism and educating the Facilitating the shift in manufacturing… consumer through direct experience. from local to global An initial investment of just over EC$ 50,000,000 is being injected into the Hotel Chocolat cocoa-eco- Progress to date — (Phase 1) tourism concept. Cocoa Renaissance & Regeneration Currently in the cocoa crop renaissance phase, there is The vision is in three phases. Phase one will see a much to report — 15,000 seedlings ready for planting at renaissance and regeneration of both the Rabot Estate Rabot Estate, over 68 farmers engaged through the and the island wide cocoa growing industry. HCCAPEE scheme; Markets provided for 65,000 Kg wet cocoa beans — already purchased from local growers; In Phase two, the design and build of a Chocolate and the Rabot Estate Centre of Excellence established. Manufactory and tourist/visitor interaction center within Well on train is the construction of new nurseries to the Rabot Estate. support farmers’ expansion plans. This Manufactory will convert beans not only from Hotel The HCCAPEE standard was launched in June 2008 and Chocolat’s own Rabot Estate, but from all the Saint Lucia a guaranteed cocoa price of EC$ 5.0 per lb dried cocoa cocoa growers as well as the wider Caribbean region, beans for cocoa farmers secured. This price it is making Saint Lucia a central hub of cocoa and chocolate estimated, will constitute 30% to 40% above world manufacturing for the Caribbean. market price. The project aims to secure employment and reverse By 2009, Hotel Chocolat anticipates that through its decline through compensation to local farmers above aggressive marketing, the name of Saint Lucia will be re- market rates to make cocoa growing financially viable, established as a source of Fine-Flavour cocoa in the and to enable farmers to reinvest and grow more. The world cocoa/chocolate market. 21
    • Saint Lucia is successfully undergoing a significant transition from an agriculture-based economy to a more modern and sophisticated service-based economy. Competition for trade and investment is increasing both within the region and beyond, and as such we must strengthen our proposition to the market in order to remain a relevant and attractive investment destination. As we continue our much-needed focus on tourism, we must also address the vital requirements of other services such as international financial services, overseas education, business process outsourcing and ICT. Indeed, the development of a national policy or vision for enterprise development would be useful in this regard. And as the availability of a skilled workforce is perhaps the single biggest driver of LOOKING AHEAD »» competitiveness, our nation must continue to strive for improvements in this area. After all, our greatest resource is our human resource, and we must therefore invest heavily in training and education endeavours from primary through to tertiary and vocational levels. We must continue to invest as well in our infrastructure: e.g. road maintenance; renewable energy sources; and air and sea port modernization. And our regulatory environment in Saint Lucia, though currently a significant strength, must be kept well-aligned with the needs of a changing global marketspace. It is the commitment of the NDC to work with both government ministries and agencies as well as with the private enterprise sector to better meet the needs of both our local stakeholders and our valued international partners. 22
    • PricewaterhouseCoopers April 22, 2009 Pointe Seraphine P Box 195 .O. Castries Independent Auditors’ Report Saint Lucia, West Indies Telephone: (758) 456 2600 To the Members of Facsimile: (758) 4521061 National Development Corporation Report on the Financial Statements We have audited the accompanying non-consolidated financial statements of National Development Corporation (the Corporation) which comprise the non-consolidated balance sheet as of March 31, 2008 and the non-consolidated statements of income, changes in equity and cash flow for the year then ended and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these non-consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control 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 non-consolidated 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Basis for Qualified Opinion As discussed in Note 2, the Corporation has not consolidated the financial statements of its subsidiaries as required by International Accounting Standard Number 27, “Consolidated and Separate Financial Statements”. The investments are accounted for on a cost basis. Had the subsidiaries been consolidated, many elements in the accompanying financial statements would have been materially affected. Qualified Opinion In our opinion, except for the effect of matters described in the Basis for Qualified Opinion paragraph, the accompanying non-consolidated financial statements present fairly, in all material respects, the financial position of the Corporation as of March 31, 2008 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Chartered Accountants PricewaterhouseCoopers refers to the Easter Caribbean firm PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. A full listing of the partners of the Eastern Caribbean firm is available on request at the above address. 23
    • National Development Corporation Non-consolidated Balance Sheet As of March 31, 2008 (expressed in Eastern Caribbean dollars) 2008 2007 $ $ Assets Current assets Cash and cash equivalents (Note 5) 1,744,377 4,581,639 Trade and other receivables (Note 6) 1,053,130 1,666,309 2,797,507 6,247,948 Non-current receivables (Note 6) 34,859,598 34,911,925 Land developments (Note 7) 11,168,400 6,530,870 Land for sale and lease (Note 8) 18,262,323 18,873,462 Available-for-sale financial assets (Note 9) 1,380,000 600,000 Investment in subsidiary companies (Note 10) 6 6 Property, plant and equipment (Note 12) 1,275,850 984,468 Investment properties (Note 13) 32,617,007 34,099,421 Other assets 374,066 374,066 Total assets 102,734,757 102,622,166 Liabilities Current liabilities Borrowings (Note 14) 3,689,300 2,210,272 Trade and other payables (Note 15) 3,319,693 3,193,943 Provision for future development costs (Note 16) 3,315,932 1,500,000 10,324,925 6,904,215 Borrowings (Note 14) 39,272,628 38,461,049 Provision for future development costs (Note 16) 4,868,834 3,368,834 Deferred revenue (Note 17) 2,423,782 2,222,677 Due to subsidiary (Note 18) 1,578,651 1,578,651 Total liabilities 58,468,820 52,535,426 Equity Contributed capital (Note 19) 34,200,178 34,730,526 Fair value reserve (Note 9) 30,000 - Retained earnings 10,035,759 15,356,214 Total equity 44,265,937 50,086,740 Total liabilities and equity 102,734,757 102,622,166 Approved by the Board of Directors on April 22, 2009 Director Director 24
    • National Development Corporation Non-consolidated Statement of Income For the year ended March 31, 2008 (expressed in Eastern Caribbean dollars) 2008 2007 $ $ Departmental operating profit (Note 21) Properties Department 880,000 1,070,144 Pointe Seraphine 472,724 1,491,508 1,352,724 2,561,652 Other income – net (Note 22) 2,741,557 1,820,036 Administrative and general expenses (Note 23) (9,235,802) (4,741,077) Operating profit (5,141,521) (359,389) Finance costs (178,934) (229,556) Loss for the year (5,320,455) (588,945) 25
    • National Development Corporation Non-consolidated Statements of Changes in Equity As of March 31, 2008 (expressed in Eastern Caribbean dollars) 2008 2007 $ $ Contributed capital (Note 19) At beginning of year 34,730,526 34,730,526 Adjustment during the year (530,348) - At end of year 34,200,178 34,730,526 Fair value reserve At beginning of year - - Fair value adjustment during the year 30,000 - At end of year 30,000 - Retained earnings At beginning of year 15,356,214 15,945,159 Loss for the year (5,320,455) (588,945) At end of year 10,035,759 15,356,214 Equity, end of year 44,265,937 50,086,740 26
    • National Development Corporation Non-consolidated Statement of Cash Flows For the year ended March 31, 2008 (expressed in Eastern Caribbean dollars) 2008 2007 $ $ Cash flows from operating activities Loss for the year (5,320,455) (588,945) Adjustments for: Dividend income (Note 22) (2,068,439) (1,240,540) Depreciation on investment properties (Note 13) 883,959 904,975 Finance costs 178,934 229,556 Depreciation on property, plant and equipment (Note 12) 133,758 124,752 Gain on disposal of investment property (Note 22) (78,114) (167,295) Operating loss before working capital changes (6,270,357) (737,497) Decrease/(increase) in trade and other receivables 613,179 (786,775) Increase/(decrease) in trade and other payables 125,750 (272,107) Increase in provision for future development costs 1,815,932 - Cash used in operations (3,715,496) (1,796,379) Finance costs paid (178,934) (229,556) Net cash used in operating activities (3,894,430) (2,025,935) Cash flows from investing activities Decrease/(increase) in land developments (4,637,530) 219,771 Dividends received 2,068,439 1,586,376 Increase/(decrease) in provision for future development costs 1,500,000 (1,451,314) Increase in available-for-sale financial assets (Note 9) (750,000) (374,066) Proceeds from sale of investment property 705,648 - Decrease in land for sale and lease 611,139 41,752 Decrease in contributed capital (530,348) - Purchase of plant and equipment (Note 12) (425,140) (31,698) Increase/(decrease) in deferred revenue 201,105 1,293,600 Decrease in non-current receivables 52,327 1,553,857 Increase in investment properties (29,079) - Proceeds from sale of plant and equipment - 167,295 Net cash (used in)/provided by investing activities (1,233,439) 3,005,573 Cash flows from financing activities Proceeds from borrowings 2,881,894 - Repayment of borrowings (1,943,144) (1,589,571) Net cash provided by/(used in) financing activities 938,750 (1,589,571) Net decrease in cash and cash equivalents (4,189,119) (609,933) Cash and cash equivalents, at beginning of year 4,378,146 4,988,079 Cash and cash equivalents, at end of year (Note 5) 189,027 4,378,146 27
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 1 General information National Development Corporation (the Corporation) is a Government Statutory Body and was established by the National Development Corporation Act, 1971 (with subsequent amendments) to promote the economic development of Saint Lucia. This Act of 1971 was superseded by Act # 23 of 2001 in support of the new focus/ functions of the Corporation’s economic activities. The Act defines the powers of the Corporation. The Corporation is wholly exempt from the payment of Income Tax and Customs Duties. The registered office and principal place of business of the Corporation is Government Buildings, The Waterfront, Castries, Saint Lucia. 2 Summary of 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. Basis of preparation The non-consolidated financial statements of National Development Corporation have been prepared in accordance with the International Financial Reporting Standards (IFRS) and under the historical cost convention as modified by revaluation on available-for-sale financial assets. Consolidated financial statements have not been prepared due to the absence of audited financial statements of the subsidiaries (Note 10) as required by International Accounting Standard Number 27, “Consolidated and Separate Financial Statements” and accordingly assets liabilities and operating results of the subsidiaries are not reflected in these financial statements. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Corporation's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4. Standard effective in 2007 IFRS 7, Financial instruments: Disclosures, and the complementary amendment to IAS 1, Presentation of financial statements — Capital disclosures, introduces new disclosures relating to financial instruments and does not have any impact on the classification and valuation of the Corporation's financial instruments, or the disclosures relating to taxation and trade and other payables. Standards, amendments and interpretations effective in 2007 but not relevant to the Corporation The following standards, amendments and interpretations are mandatory for accounting periods beginning on or after January 1, 2007 but are not relevant to the Corporation's operations: • IFRS 4, Insurance contracts; • IFRIC 7, Applying the restatement approach under IAS 29, Financial reporting in hyper-inflationary economies; • IFRIC 8, Scope of IFRS 2; • IFRIC 9, Re-assessment of embedded derivatives; and • IFRIC 10, Interim financial reporting and impairment. 28
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 2 Summary of significant accounting policies…continued Standard not yet effective and has not been early adopted by the Corporation The following standard has been published and is mandatory for the Corporation's accounting periods beginning on or after January 1, 2008 or later periods, but the Corporation has not early adopted: • IAS 1, ‘Presentation of Financial Statements (revised)’, (effective for annual periods beginning January 1, 2009) replaces the income statement by a statement of comprehensive income which will include all non-owner changes in equity, such as the revaluation of available for sale financial assets. Alternatively, entities will be allowed to present two statements: a separate income statement and a statement of comprehensive income. Management expects the revised standard to affect the presentation of the Corporation's financial statements but to have no impact on the recognition or measurement of any of its transactions or balances. • IAS 23 (Amendment), Borrowing costs (effective from January 1, 2009). The amendment to the standard is still subject to endorsement by the European Union. It requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The Corporation will apply IAS 23 (Amended) from January 1, 2009 but is currently not applicable to the Corporation as there are no qualifying assets. Standard and interpretations to existing standards that are not yet effective and not relevant for the Corporation’s operations The following standard and interpretations to existing standards have been published and are mandatory for the Corporation’s accounting periods beginning on or after 1 January 2008 or later periods but are not relevant for the Corporation’s operations: • IFRS 8, ‘Operating segments’, (effective from January 1, 2009); • IFRIC 12, ‘Service concession arrangements,’ (effective from January 1, 2008); • IFRIC 13, ‘Customer loyalty programmes’, (effective from July 1, 2008); • IFRIC 14, ‘IAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction’, (effective from January 1, 2008); • IFRIC 15, ‘Agreements for the Construction of Real Estate’, (effective for annual periods beginning January 1, 2009); and • IFRIC 16, ‘Hedges of a Net investment in a Foreign Operation’, (effective for annual periods beginning October 1, 2008). Cash and cash equivalents Cash and cash equivalents represent cash on hand, deposits held on call with banks and bank overdraft. The bank overdraft is shown within borrowings in current liabilities on the balance sheet. Investments in associates Associates are all entities over which the Corporation has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are recorded at cost. 29
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 2 Summary of significant accounting policies…continued Investment in subsidiary undertakings Subsidiaries are those entities over which the Corporation has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Corporation controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Corporation. That is de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiary by the Corporation. The cost of acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. The investments in subsidiaries are recorded at cost and accordingly, the subsidiary's assets, liabilities and results of operations are not reflected in these accounts. Financial assets The Corporation classifies its financial assets in the following categories: loans and receivables, held-to-maturity investments and available-for-sale investments. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date. (a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and where management has no intention of trading. They are included in current assets, except for maturities greater than 12 months after the balance sheet date in which case, these are classified as n o n -current assets. Cash and cash equivalents and trade and other receivables are included in this category. (b) Held-to-maturity investments H e l d - t o-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Corporation’s management has the positive intention and ability to hold to maturity. They are included in non-current assets, except for those with maturities less than 12 months from the balance sheet date, which are classified as current assets. Held-to-maturity investments are carried at amortised cost using the effective interest method. The Corporation does not hold any held-to-maturity investments as of March 31, 2008. (c) Available-for-sale investments Available-for-sale investments are non-derivative financial assets that are either designated in this category or not classified into any other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Purchases and sales of financial assets are recognised on trade date — the date on which the Corporation commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from financial assets have expired or have been transferred and the Corporation has transferred substantially all the risks and rewards of ownership. Available-for-sale financial investments are subsequently carried at fair value. Unrealised gains and losses arising from changes in the fair value of investments classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the non-consolidated statement of income as gains and losses from investment securities. 30
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 2 Summary of significant accounting policies…continued Financial assets…continued If the market for a financial asset is not active (and for unlisted securities), the Corporation establishes fair value by using valuation techniques. These include the use of recent arm's length transactions, reference to other instruments that are substantially the same and discounted cash flow analysis. The Corporation assesses at each balance sheet date whether there is objective evidence that a financial asset or a group or financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If such evidence exists for available- for-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss — is removed from equity and recognised in the non-consolidated statement of income. Impairment losses recognised in the non-consolidated statement of income on equity instruments are not reversed through the non-consolidated statement of income. Trade receivables 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 Corporation will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the non-consolidated statement of income. Land for sale and lease Land for sale and lease consists of agricultural and undeveloped lands that have been vested by the Government of Saint Lucia which is rented/ lease out and sold to investors. Inventory of land held for sale and lease is valued at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Land developments Land developments comprise of inventory of land held for development and future expected development costs. The estimated cost of infrastructural development of land held for resale is included in land development. The total deferred expense is written to cost of sales on the basis of land sold in each development in each period. Inventory cost of unsold lands included within land development is valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Property, plant and equipment Property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Corporation and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the non-consolidated statement of income during the financial period in which they are occurred. 31
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 2 Summary of significant accounting policies…continued Property, plant and equipment…continued Depreciation on other assets is calculated using the reducing balance and straight line method to allocate their cost to their residual values over their estimated useful lives as follows: Leasehold improvements 2% Straight line method Furniture and fittings 10% Reducing balance method Office equipment 12% Reducing balance method Engineering equipment 12 – 20% Reducing balance method Motor vehicles 20% Straight line method The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An assets’ carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the statement of income. Investment property Investment property, principally comprise a shopping complex and factory shells. Investment property is carried at cost, held for long-term rental yields and capital gains and is not occupied by the Corporation. Depreciation is calculated on the straight-line method to write off the cost of each asset to their residual value over their estimated useful lives at a rate of 2%. Land is not depreciated. Impairment of assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Trade payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the non-consolidated statement of income over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Corporation has unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. Contributed capital Contributed capital represents investments, cash, land and buildings vested by the Government of Saint Lucia and are recognised at fair value in the period in which they are vested. 32
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 2 Summary of significant accounting policies…continued 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 received under operating leases are credited to the non-consolidated statement of income on a straight-line basis over the period of the lease. Revenue and expense recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services, net of discounts in the ordinary course of the Corporation’s activities. Revenue is recognised as follows: (a) Land Sales Income from land sales is recognised upon issuance of deed of sale and when costs incurred or to be incurred in respect of the transaction can be measured reliably. Deposits received prior to the completion of the transaction are recorded as advance deposits in deferred revenue. (b) Rental income Rental Income is recorded on an accrual basis. (c) Dividend income Dividend income is recognised when the right to receive payment is established. (d) Other income Other income is recorded on an accrual basis. (e) Interest income Interest income is recognised on a time-proportion basis using the effective interest method. Expenses are recognised when incurred. Cost of land sold Cost of land sold is determined on the basis of the cost of land inventory plus future estimated cost of development of unsold land apportioned on the total area sold each year for each project. Termination benefits Termination benefits are payable when employment is terminated by the Corporation before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Corporation recognises termination benefits when it is demonstrably committed to either; terminating the employment of current employees according to a detailed formal plan without the possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value. 33
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 2 Summary of significant accounting policies…continued Foreign currency translation (a) Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Eastern Caribbean dollars, which is the Corporation's functional and presentation currency. (b) Transaction and balances Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the non-consolidated statement of income. Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets, are included in the fair value reserve in equity. Provisions Provisions, if any, are recognised when the Corporation has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. Interest expense is included in finance cost in the n on-consolidated statement of income. Contingent liabilities Contingent liabilities are not recognised in the non-consolidated financial statements but are disclosed unless the possibility of the outflow of resources embodying the economic benefits is remote. A contingent asset is not recognised in the non-consolidated financial statements but disclosed when an inflow of economic benefits is probable. Subsequent events Post year-end events that provide additional information about the Corporation’s position at the balance sheet date (adjusting events) are reflected in the Corporation’s non-consolidated financial statements. Post year-end events that are not adjusting events are disclosed when material to the non-consolidated financial statements, if any. Comparatives Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. 34
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 3 Financial risk management The Corporation’s activities expose it to a variety of financial risks; foreign currency risk, credit risk, liquidity risk and interest risk. Foreign currency risk Changes in foreign currency rates may expose the Corporation to currency risk. The Corporation’s borrowings are denominated United States dollars and Trinidad and Tobago dollars (TT$). The exchange rate of the Eastern Caribbean dollar (EC$) to the United States dollar (US$) has been formally pegged at EC$2.70 = US$1.00 since July 1976. The exposure to US$ and TT$ is detailed in Note 14. Management does not believe significant exposure to foreign currency risk exists as at March 31, 2008. Credit risk Credit risk arises from the possibility that counterparties may default on their obligations to the Company. The amount of the Corporation's maximum exposure to credit risk is indicated by the carrying amount of its financial assets. The Corporation operates primarily in the real estate industry and financial instruments which potentially expose the Corporation to concentrations of credit risk consist primarily of cash and cash equivalents, trade and other receivables and available-for-sale financial assets. Management does not believe significant credit risk exists at March 31, 2008. Maximum exposure to credit risk: 2008 2007 $ $ Cash and cash equivalents 1,744,377 4,581,639 Trade and other receivables 35,912,728 36,578,234 Available-for-sale financial assets 1,380,000 600,000 39,037,105 41,759,873 Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying business, the Corporation attempts to maintain flexibility in funding by maintaining availability under committed credit facilities coupled with support from the Government of Saint Lucia. Management monitors the Corporation's liquidity position on the basis of expected cash flow. 35
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 3 Financial risk management…continued Liquidity risk…continued The table below analyses the Corporation’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months are estimated to equal their carrying balances as the impact of discounting is not significant. Less than Between 1 Between 2 1 year and 2 years and 5 years Over 5 years $ $ $ $ At March 31, 2008 Borrowings 3,965,018 3,562,356 3,652,242 33,066,696 Trade payables 3,319,693 - - - Due to subsidiary - - - 1,578,651 7,284,711 3,562,356 3,652,242 34,645,347 At March 31, 2007 Borrowings 2,371,401 3,953,067 3,606,067 31,076,003 Trade payables 3,193,943 - - - Due to subsidiary - - - 1,578,651 5,565,344 3,953,067 3,606,067 32,654,654 Interest rate risk Differences in contractual repricing or maturity dates and changes in interest rates may expose the Corporation to interest rate risk. The Corporation’s exposure and interest rate risk on its financial assets and liabilities is disclosed in Notes 5, 6 and 14. Fair value estimation Fair value amounts represent estimates of the consideration that would currently be agreed upon between knowledgeable, willing parties who are under no compulsion to act and is best evidenced by a quoted market value, if one exists. Estimated fair values are assumed to approximate their carrying values. The nominal value less estimated credit adjustments of trade receivables and payables assumed to approximate their fair value. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Corporation for similar financial instruments. 36
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 4 Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Corporation makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: Provision for future development costs The Corporation's Properties Department determines the future estimated costs of infrastructural development of land held for resale, based on projected expenditure required to complete developments to facilitate the transfer to the local authority under section 11(1) National Development Corporation Act, 2001 or sale. Management reassesses the estimate at each year end and adjust the provision for future development costs as considered necessary. If the actual cost to complete the developments will differ by 20% from management’s estimate, the carrying amount of development lands and provision for future development costs would be higher or lower by $1,636,953. 5 Cash and cash equivalents 2008 2007 $ $ Cash at bank and on hand 950 950 Short-term bank deposits 1,743,427 4,580,689 1,744,377 4,581,639 The weighted average effective interest rate on short-term bank deposits at March 31, 2008 was 5% (2007 – 5%). Cash and cash equivalents include the following for the purposes of the cash flow statement: 2008 2007 $ $ Cash at bank and on hand 1,744,377 4,581,639 Bank overdraft (Note 14) (1,555,350) (203,493) 189,027 4,378,146 37
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 6 Trade and other receivables 2008 2007 $ $ Trade receivables 6,122,172 6,102,265 Provision for impairment on trade receivables (5,849,307) (5,680,166) Trade receivables – net 272,865 422,099 Due from related parties (Note 18) 10,316,209 6,896,289 Provision for impairment on due from related parties (7,813,211) (4,406,086) Due from related parties - net (Note 18) 2,502,998 2,490,203 Other receivables 32,996,912 33,719,004 Provision for doubtful receivables (33,209) (79,810) Other receivables - net 32,963,703 33,639,194 Prepayments 173,162 26,738 35,912,728 36,578,234 Current (1,053,130) (1,666,309) Non-current 34,859,598 34,911,925 On July 23, 2003 the Corporation entered into a secured loan facility with a bank. Under the terms of an emphyteutic lease agreement between the Corporation and a third party, the loan facility at March 31, 2008 amounting to $32,420,590 (Note 14) (2007 – $33,105,621) is payable by the third party. The non-current receivable matures as follows: 2008 2007 $ $ Between 1 and 2 years 1,665,984 2,175,518 Between 2 and 5 years 2,055,092 2,839,812 Over 5 years 31,138,522 29,896,595 34,859,598 34,911,925 The weighted average effective interest of non-current receivables at March 31, 2008 was 7% (2007 – 7 %). 38
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 6 Trade and other receivables…continued The movement on the Corporation's provision for impairment of trade and other receivables follows: 2008 2007 $ $ Beginning of year 10,166,062 9,689,965 Provision during the year (Note 23) 4,408,581 924,922 Recovery (Note 23) (20,217) (11,566) Written off during the year (858,699) (437,259) 13,695,727 10,166,062 7 Land developments 2008 2007 $ $ Southern Shores development At beginning of year 5,310,205 5,310,205 Provision for impairment of land (4,392,789) (4,392,789) At end of year 917,416 917,416 Other developments At beginning of year 5,613,454 5,833,225 Land sales recognised in the year (897,071) (219,771) Development cost accrued during the year 45,473 - Increase during the year 5,489,128 - At end of year 10,250,984 5,613,454 11,168,400 6,530,870 8 Land for sale and lease 2008 2007 $ $ At beginning of year 18,873,462 18,915,214 (Decrease)/increase in land for sale and lease (575,076) 3,119 Land sales recognised in the year (36,063) (44,871) At end of year 18,262,323 18,873,462 39
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 9 Available-for-sale financial assets 2008 2007 $ $ At beginning of year 600,000 600,000 Investment during the year 750,000 - Fair value adjustment during the year 30,000 - At end of year 1,380,000 600,000 Available-for-sale financial assets include the following: Unlisted equity securities 600,000 600,000 Listed equity securities 780,000 - 1,380,000 600,000 10 Investment in subsidiary companies Provision for Net Net No. of Interest Cost impairment 2008 2007 Shares % $ $ $ $ Dennery Farmco Limited 456,000 100 4,560,000 (4,560,000) - - Saint Lucia Livestock Limited 1,600,000 100 1,804,221 (1,804,221) - - National Landco Limited 3 100 1 - 1 1 Saint Lucia Fish Marketing Corporation Limited 3 100 5 - 5 5 6,364,227 (6,364,221) 6 6 On January 15, 2007, the National Development Corporation received correspondence from the Prime Minister, instructing management to transfer the Saint Lucia Livestock Limited and Saint Lucia Fish Marketing to the Government of Saint Lucia. At the time of the audit, management was engaged in regulating operational issues to facilitate same. 11 Investment in associated undertakings Provision for Reduction Net Net No. of Interest Cost in value 2008 2007 Shares % $ $ $ $ Northrock Limited 196,000 49 196,000 (196,000) - - Saint Lucia Model Farms Limited 10,000 33 10,000 (10,000) - - SCIC (Windward Islands) Limited 2,700 25 270,000 (270,000) - - 476,000 (476,000) - - 40
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 12 Property, plant and equipment Leasehold Furniture Office Engineering Motor Improvements and Fitings Equipment Equipment Vehicles Total $ $ $ $ $ $ At March 31, 2006 Cost 268,090 484,067 1,450,745 177,353 166,070 2,546,325 Accumulated depreciation (43,430) (307,552) (926,436) (153,902) (37,483) (1,468,803) Net book amount 224,660 176,515 524,309 23,451 128,587 1,077,522 Year ended March 31, 2007 Opening net book value 224,660 176,515 524,309 23,451 128,587 1,077,522 Additions - - 25,730 5,968 - 31,698 Depreciation charge (5,362) (18,665) (63,841) (3,670) (33,214) (124,752) Closing net book value 219,298 157,850 486,198 25,749 95,373 984,468 At March 31, 2007 Cost 268,090 484,067 1,476,475 183,321 166,070 2,578,023 Accumulated depreciation (48,792) (326,217) (990,277) (157,572) (70,697) (1,593,555) Net book amount 219,298 157,850 486,198 25,749 95,373 984,468 Year ended March 31, 2008 Opening net book value 219,298 157,850 486,198 25,749 95,373 984,468 Additions 153,038 51,370 194,702 26,030 - 425,140 Depreciation charge (6,922) (18,471) (71,802) (3,349) (33,214) (133,758) Closing net book value 365,414 190,749 609,098 48,430 62,159 1,275,850 At March 31, 2008 Cost 421,128 535,437 1,671,177 209,351 166,070 3,003,163 Accumulated depreciation (55,714) (344,688) (1,062,079) (160,921) (103,911) (1,727,313) Net book amount 365,414 190,749 609,098 48,430 62,159 1,275,850 41
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 13 Investment properties Land Buildings Total $ $ $ At March 31, 2007 Cost 4,184,824 45,248,716 49,433,540 Accumulated depreciation - (15,334,119) (15,334,119) Net book amount 4,184,824 29,914,597 34,099,421 Year ended March 31, 2008 Opening net book value 4,184,824 29,914,597 34,099,421 Additions 3,693 29,000 32,693 Disposals (3,614) (627,534) (631,148) Depreciation charge - (883,959) (883,959) Closing net book value 4,184,903 28,432,104 32,617,007 At March 31, 2008 Cost 4,184,903 44,115,616 48,300,518 Accumulated depreciation - (15,683,511) (15,683,511) Net book amount 4,184,903 28,432,104 32,617,007 Investment properties were last valued by the directors on March 31, 2004 at $65,665,688. Management estimates that there has been no significant movement in fair value and all additions approximate fair value. The following amounts have been recognised in the statement of income: 2008 2007 $ $ Rental income 5,443,622 5,656,125 Direct operating expenses arising from investment property that generates rental income 3,382,360 1,740,024 Direct operating expenses arising from investment property that did not generates rental income 1,979,401 1,773,390 42
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 14 Borrowings 2008 2007 $ $ Current Bank overdraft (Note 5) 1,555,350 203,493 Bank borrowings 2,133,950 2,006,779 3,689,300 2,210,272 Non-current Government of Saint Lucia 2,601,461 2,601,461 Bank borrowings 36,671,167 35,859,588 39,272,628 38,461,049 Total borrowings 42,961,928 40,671,321 The Corporation’s overdraft is guaranteed by a lien over the Corporation's 100,000 shares in Windward and Leeward Brewery Limited. All loans from Caribbean Development Bank are in the name of the Government of Saint Lucia. The Corporation acts as the executing agency. The Government of Saint Lucia guarantees the loans. Other bank borrowings are secured by a first mortgage debenture of $33,885,000 (US$12,550,000) over certain properties of the Corporation in Vieux Fort. The loan is for an amortisation period of 13.5 years and interest is charged at a rate of LIBOR (present 360 day LIBOR is about 1.33%) plus 4% per annum. The loan balance for this facility as at March 31, 2008 amounted to $32,420,590 (US$12,007,626). The prior year's balance was $33,105,621 (US$12,261,341). The loans from the Government of Saint Lucia are unsecured. Maturity of non-current borrowings: 2008 2007 $ $ Between 1 and 2 years 3,186,265 3,763,107 Between 3 and 5 years 3,290,638 3,506,159 Over 5 years 32,795,725 31,191,783 39,272,628 38,461,049 43
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 14 Borrowings…continued The weighted average effective interest rates at the balance sheet date were as follows: 2008 2007 % % Bank overdraft 10.00 10.00 Bank borrowings 6.00 6.00 The Corporation’s exposure to foreign currency exchange rate risk at year end is as follows: 2008 2007 $ $ US$ 36,083,026 37,449,500 TT$ 45,668 54,242 36,128,694 37,503,742 The exchange rate of the Eastern Caribbean dollar (EC$) to the United States dollar (US$) has been formally pegged at EC$2.70 = US$1.00 since July 1976. The TT rate to the US dollar at March 31, 2008 was TT$6.24. 15 Trade and other payables 2008 2007 $ $ Trade payables 456,482 478,914 Deferred revenue (Note 17) 2,103,677 1,830,016 Security deposits 307,130 338,697 Retention fund 274,085 185,813 Accrued expenses 114,826 131,899 Other payables 63,493 228,604 3,319,693 3,193,943 16 Provision for future development costs 2008 2007 $ $ At beginning of year 4,868,834 6,320,148 Provision utilised during the year (2,173,196) (1,451,314) Increase during the year 5,489,128 - At end of year 8,184,766 4,868,834 Current (3,315,932) (1,500,000) Non-current 4,868,834 3,368,834 44
    • National Development Corporation Notes to Non-consolidated Financial Statements March 31, 2008 (expressed in Eastern Caribbean dollars) 17 Deferred revenue 2008 2007 $ $ Advance deposits 4,527,459 4,052,693 Current portion (Note 15) (2,103,677) (1,830,016) 2,423,782 2,222,677 18 Related party balances and transactions 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 by making financial and operational decisions. 2008 2007 $ $ Due from related parties (Note 6) Non-current Saint Lucia Livestock Limited 5,018,021 4,406,086 Southern Development Corporation 724,347 500,000 Saint Lucia Fish Marketing Corporation Limited 200,000 200,000 Dennery Farmco Limited 4,373,841 1,790,203 10,316,209 6,896,289 Less provision for impairment (7,813,211) (4,406,086) 2,502,998 2,490,203 Due to subsidiary Dennery Farmco Limited 1,578,651 1,578,651 The Corporation is related to the above companies by common ownership and management. The amounts due from and due to the related parties are unsecured, non-interest bearing and payable upon demand. Transactions with related parties during the year were as follows: 2008 2007 $ $ Advances: Saint Lucia Livestock Limited 611,935 122,196 Southern Development Corporation 224,347 32,595 836,282 154,791 45
    • National Development Corporation Non-consolidated Balance Sheet March 31, 2008 (expressed in Eastern Caribbean dollars) 19 Contributed capital 2008 2007 $ $ Cash 1,434,821 1,434,821 Investment 6,281,350 6,281,350 Land - Vieux Fort 12,564,057 13,094,405 - Pointe Seraphine 4,051,080 4,051,080 - Bisee 247,879 247,879 - La Toc 100,000 100,000 - Dennery 32,000 32,000 Buildings - Cantonement 6,081,629 6,081,629 - Beauchamp Industrial 2,864,506 2,864,506 - Odsan 388,581 388,581 - Vieux Fort 154,275 154,275 34,200,178 34,730,526 20 Vested property Cabinet by conclusion No. 842 of 2000 agreed to vest in Free Zone Management Authority eleven (11) warehouses and (1) administrative building at a total value of $17,000,000. The land and other contiguous parcels totalling to approximately 15.3 acres are to be transferred by National Development Corporation. The value of the land and compensation payable has not been agreed and vesting orders have not been executed. These financial statements therefore do not reflect the value of the assets. 21 Departmental operating profit 2008 2007 $ $ Properties department Revenue Land sales 2,287,549 723,404 Rental 2,521,611 2,746,037 4,809,160 3,469,441 Direct costs (Note 23) Factory and land rental (2,996,853) (2,137,773) Cost of land sales (932,307) (261,524) (3,929,160) (2,399,297) 880,000 1,070,144 46
    • National Development Corporation Non-consolidated Balance Sheet March 31, 2008 (expressed in Eastern Caribbean dollars) 21 Departmental operating profit…continued 2008 2007 $ $ Pointe Seraphine Rental income 2,685,041 2,625,316 Facility fees 133,750 100,500 Other 103,219 181,272 2,922,010 2,910,088 Direct costs (Note 23) (2,449,286) (1,418,580) 472,724 1,491,508 22 Other income – net 2008 2007 $ $ Dividend income 2,068,439 1,240,540 Sundry administrative income 510,099 332,007 Interest income 84,905 80,194 Gain on disposal of investment property 78,114 167,295 2,741,557 1,820,036 47
    • National Development Corporation Non-consolidated Balance Sheet March 31, 2008 (expressed in Eastern Caribbean dollars) 23 Expenses by nature 2008 2007 $ $ Bad debts (Note 6) 4,388,364 913,356 Employee benefit expense (Note 24) 2,734,932 2,507,352 Repairs and maintenance 2,090,832 368,789 Legal and professional fees 1,253,751 577,163 Depreciation 1,017,717 1,029,726 Cost of land sales 932,308 261,524 Insurance 614,078 664,347 Utilities 522,479 490,974 Promotions and publicity 402,130 468,345 Grant funding 387,970 212,130 Security 336,000 340,350 Office expenses 324,112 280,014 Office rent 255,357 243,108 Travelling and entertainment 206,430 131,933 Advertising 81,664 32,816 Printing and stationary 40,292 19,090 Bank charges 22,832 8,187 Members allowance 3,000 9,750 15,614,248 8,558,954 24 Employee benefit expense 2008 2007 $ $ Salaries and wages 2,457,080 2,227,842 Termination benefits 138,100 164,070 Other staff costs 139,752 115,440 2,734,932 2,507,352 48
    • ACKNOWLEDGEMENTS The National Development Corporation acknowledges the support received throughout 2008 from all government agencies, private sector agencies, Board of Directors, subsidiaries, Ministers of Government as well as community organizations and client companies we have worked with throughout the year.