2008/9 BUDGET

STATUTORY AUTHORITIES AND GOVERNMENT COMPANIES

OWNERSHIP AGREEMENTS For the year ending 30 June 2009

2 2004/5 Ownership Agreements

Table of Contents Page

Preface 4

Ownership Agreements for:

• Cayman Airways Limited 7 • Cayman Islands Airports Authority 29 • Cayman Islands Development Bank 47 • Cayman Islands Monetary Authority 67 • Cayman Islands National Insurance Company Limited 91 • Cayman Islands National Museum 109 • Cayman Islands Stock Exchange Limited 127 • Cayman National Cultural Foundation 143 • Cayman Turtle Farm (1983) Ltd. 161 • Children and Youth Services (CAYS) Foundation 179 • Civil Aviation Authority 195 • Electricity Regulatory Authority 213 • Health Services Authority 229 • Information Communication and Technology Authority 249 • Maritime Authority of the Cayman Islands 267 • The National Drug Council 289 • National Gallery of the Cayman Islands 305 • National Housing Development Trust 323 • National Roads Authority 341 • Port Authority of the Cayman Islands 359 • Public Service Pensions Board 379 • Sister Islands Affordable Housing Corporation 389 • Tourism Attractions Board 413 • University College of the Cayman Islands 433 • Water Authority 455

2008/9 Ownership Agreements 3

4 2004/5 Ownership Agreements Preface

This volume of documents contains Ownership Agreements between the Cabinet and each Statutory Authority and Government Company.

Although Statutory Authorities and Government Companies are legally separate from the Government, they are all owned by the Government on behalf of the people of the Cayman Islands. This ownership relationship exists regardless of whether ownership is reflected in the form of shares or a formal capital holding.

Like any owner, the Government expects the organisations it owns to perform within agreed boundaries. The purpose of the Ownership Agreement is to specify the ownership performance that the Cabinet and the Board of each Statutory Authority or Government Company have agreed the Authority or Company will seek to achieve during the 2008/9 financial year.

Ownership performance is the performance that an owner of an organisation expects and can be categorised into five areas:

• Nature and Scope of Activities

• Strategic Goals and Objectives

• Financial Performance

• Maintenance of Human and Physical Capability

• Risk Management

Each of these five dimensions of performance is specified in the Ownership Agreement.

In addition, the Ownership Agreement specifies any ownership financial flows between the Authority or Company and the Government namely:

• Equity Investments

• Capital Withdrawls

• Dividend or Profit Distributions

• Government Loans

• Government Guarantees

In addition to its ownership relationship, the Government also has a purchase relationship with some Statutory Authorities and Government Companies. This performance is specified in a separate document: a Purchase Agreement.

2008/9 Ownership Agreements 5 6 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Cayman Airways Limited

For the year ending 30 June 2009

2008/9 Ownership Agreements 7

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

8 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of Cayman Airways Limited have agreed that Cayman Airways Limited will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which Cayman Airways Limited is to operate during the year.

General Nature of Activities

The Cayman Airways Limited activities involve providing scheduled passenger and cargo flights to, from and within the Cayman Islands.

The airline also provides charter flights on a demand basis.

Scope of Activities

The scope of Cayman Airways Limited activities are as follows:

The airline currently owns one 737-200 jet aircraft. It is expected that the company will dispose of this aircraft within the budget year.

In addition, the company leases three 737-300 aircraft which provide international connection as well as service to Cayman Brac.

The company also owns two Twin Otter aircraft through a wholly owned subsidiary – Cayman Airways Express. The aircraft provide service between Grand Cayman and the sister islands of Cayman Brac and Little Cayman.

The airline generates additional revenue by providing handling services to other airlines at Owen Roberts Airport in Grand Cayman.

Customers and Location of Activities

The services provided by Cayman Airways Limited are provided through scheduled jet service between Grand Cayman, Miami, Tampa, New York, Chicago, Havana, Kingston, Montego Bay and Cayman Brac. Additional routes are being evaluated to facilitate decision making on their profitability.

2008/9 Ownership Agreements 9

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for Cayman Airways Limited for the 2008/9 financial year are as follows:

• Continue the process of restructuring the company based on the “turnaround” strategies as part of the process towards sustainability. The objective is to reduce and subsequently eliminate the gap that exists between revenue and expenses by focusing on being more efficient in all areas of our operations.

• The airline will continue to target costs reductions in expenses. The restructuring of the company has seen the inclusion of a Purchasing department in the new structure. It is expected that the new purchasing procedures and supply chain management will produce significant cost savings.

• The company will be implementing new cash management systems and procedures which are expected to improve the use of financial resources.

• The airline plans to achieve sisterhood in its aircraft fleet through the move to an all 737-300 jet fleet which will reduce the costs related to stocking of spare parts, training and retaining technical staff and other maintenance costs.

• The company intends to aggressively pursue possible alternatives to minimize the costs of fuel. Cayman Airways expect to continue to benefit from improved fuel prices through joint negotiations in the budget year.

• The new computerized reservation system (CRS) which was implemented in January 2007 allows the company to improve several areas including customer service, electronic ticketing and reporting. The reporting capability of this is being further expanded to allow for better revenue management.

• The airline expects to continue working with the public sector as well as to embark on joint initiatives with the private sector to coordinate marketing and advertising efforts.

• The National Flag Carrier will continue to explore commercial agreements with select international carriers. The commercial agreements may range from connected websites to full code share agreements.

• The airline will continue to implement the recommendations produced by the efficiency audit in order to improve revenue and reduce costs.

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4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for Cayman Airways Limited for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $’000 $’000 Revenue from Cabinet 10,500 12,600 Revenue from ministries, portfolios, statutory authorities and 1,200 1,200 government companies Revenue from other persons or organisations 54,860 49,585

Surplus/deficit from outputs 66,560 63,385

Other expenses 69,289 70,200

Net Surplus/Deficit (2,729) (6,816)

Total Assets 25,508 25,853

Total Liabilities 69,956 65,571

Net Worth (42,448) (39,719)

Cash flows from operating activities 2,372 (715)

Cash flows from investing activities 6,017 (3,517)

Cash flows from financing activities (1,845) 675

Change in cash balances 6,544 (3,557)

2008/9 2007/8 Financial Performance Ratio Target Forecast $ $ Current Assets: Current Liabilities 1:4.3 1:2.5

Total Assets: Total Liabilities 1:2.7 1:2.5

2008/9 Ownership Agreements 11

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 378 384

Staff turnover (%) 7% 10%

Average length of service (Number) 7.5 years 7 years Senior management Professional staff Administrative staff

Significant changes to personnel management system None None

2008/9 2007/8 Physical Capital Measures Target Forecast

Value of total assets $25,508 $25,853

Asset replacements: total assets 0.10:1 0.09:1

Book value of depreciated assets: initial cost of those assets 0.54:1 0.51:1

Depreciation: Cash flow on asset purchases 0.91:1 0.47:1

Changes to asset management policies None None

Major Capital Expenditure Projects 2008/9 Target $ Infrastructure 950 Aircraft 300 1,250

Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk Fuel Prices Risk profile increased Given difficulty in hedging due to volatility in fuel this is managed primarily prices through negotiating Capital Structure Slight improvement over Better cash management prior year and improved financial performance targeted

12 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Cayman Airways Limited is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $’000s $’000s Revenue 66,560 63,385 Operating Expenses (69,289) (70,201) Net Surplus/Deficit (2,729) (6,816)

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 25,508 25,853

Liabilities 65,956 65,571 Net Worth (42,448) (39,719)

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 2,372 (715)

Net cash flows from investing activities 6,017 (3,517)

Net cash flows from financing activities (1,845) 675

2008/9 Ownership Agreements 13

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Transaction Amount for 2008/9 $ Equity Investments into Cayman Airways Limited 0

Capital Withdrawls from Cayman Airways Limited 0

Dividend or Profit Distributions to be made by Cayman Airways Limited 0

Government Loans to be made to Cayman Airways Limited 0

Government Guarantees to be issued in relation to Cayman Airways Limited No New Guarantees

Related Party Payments (Non Remuneration) made to Key Management 0 Personnel1

Remuneration2 Payments made to Key Management Personnel 1,134

Remuneration Payments made to Senior Management 1,134

Number for 2008/9

No of Key Management Personnel 17

No of Senior Management 8

1 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 2 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

14 2004/5 Ownership Agreements 7. Agreement

Scope of this Agreement

In signing this document: • Cayman Airways Limited undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Cayman Airways Limited will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Charles E. Clifford, JP Minister of Tourism, Environment, Investment and Commerce on behalf of Cabinet

------Angelyn Hernandez Chairman of the Board Cayman Airways Limited

June 25, 2008

2008/9 Ownership Agreements 15

Appendix: Forecast Financial Statements

CAYMAN AIRWAYS LIMITED STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Cayman Airways Limited for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------

Angelyn Hernandez Chairman of the Board Cayman Airways Limited

June 25, 2008

16 2004/5 Ownership Agreements CAYMAN AIRWAYS LIMITED STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

The Company’s financial statements have been prepared under the historical cost convention and in accordance with International Accounting Standards (“IAS”). The financial results include the consolidated results of the Company’s wholly- owned subsidiary Cayman Airways Express (inter-island service). The preparation of financial statements in conformity with International Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant accounting policies are:

Passenger revenue: Passenger ticket sales are initially recorded as a current liability in an unearned transportation liability account until transportation is provided. This current liability is released as revenue is earned, sales are refunded, or billings from other airlines are received.

Aircraft maintenance:

(a) Routine maintenance and annual periodic maintenance

All routine aircraft maintenance is provided on a continuous basis and the related costs are expensed as incurred. Accounts payable and accrued expenses include accruals made for the estimated costs of periodic maintenance ("C" checks). These estimated costs are recorded as maintenance reserves in the income statement.

(b) Periodic major maintenance and overhauls

Liability for overhauls and periodic major maintenance is recognised at the time the Company becomes obligated for such costs. The actual cost of periodic major maintenance and overhauls is capitalized and depreciated over the estimated useful life (which will normally be the expected interval to the next scheduled major maintenance or overhaul).

Property, plant and equipment: Property, plant and equipment is initially recorded at cost. Cost includes all direct attributable costs of bringing the asset to working condition for its intended use. The Company capitalises borrowing costs which are directly attributable to the acquisition of an asset and which are incurred in respect of the period of time before an asset is introduced in to use or service.

Property, plant and equipment and other long lived, non-current assets, are reviewed annually at each balance sheet date for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets whose carrying values exceed their recoverable amount are written down to the recoverable amount being the higher of market value or value in use (on a discounted cash flow basis) and the resulting impairment loss recorded in the statement of operations. To the extent that a previously recognised impairment loss no longer exists or decreases, the carrying amount of the asset will be increased to the lower of recoverable amount or depreciated cost and the resulting reversal of impairment loss will be recorded in the statements of operations.

Depreciation: Property, plant and equipment are depreciated to estimated residual value using the straight-line method over their estimated useful lives as follows:

Where impairment losses have been recorded against property, plant and equipment, the recoverable amount is depreciated to estimated residual value using the straight-line method over the remaining estimated useful life.

2008/9 Ownership Agreements 17 CAYMAN AIRWAYS LIMITED STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Type of Property, plant and equipment Estimated Useful life

Aircraft airframe and related overhauls: Airframe and related components 113 - 162 months D checks and landing gear 21,000 flight hours or 105 months

Aircraft engines and related overhauls: Engine shop visit 1 9,000 flight hours Engine shop visit 2 4,500 flight hours Limited life parts 20,000 cycles

Other property, plant and equipment: Buildings 20 - 50 years Flight equipment 10 years Other property, plant and equipment 3 - 5 years

The estimated residual value for the airframes is CI$250,000 per aircraft. The residual value for the aircraft engines is CI$42,000 per engine. The residual value for flight equipment is 5%. All other property, plant and equipment have no salvage value.

Flight equipment held for sale: Flight equipment held for sale is carried at the lower of cost and management's estimate of net realisable value. No depreciation is taken on the flight equipment held for sale.

Cash and cash equivalents: For the purpose of the statement of cash flows, cash and cash equivalents includes balances with bankers, all of which are on demand or at short notice, net of short-term overdrafts.

Foreign currency translation: The accounting records of the Company are maintained in United States dollars. The Budget has been prepared in Cayman Islands Dollars. The rate of exchange between United States dollars and Cayman Islands Dollars is fixed at US$1.00: CI$0.84.

Note 1 – General

The Budget represents the expected results for the year ending June 30th, 2009. The estimations are based upon the strategic plan for the airline and management’s best estimates of the future events.

The budget includes the consolidated results of both Cayman Airways and Cayman Express (Cayman Airways Express is the wholly-owned subsidiary of Cayman Airways that operates inter-island service utilizing Twin Otter aircrafts).

All amounts are stated in CI Dollars (‘000) unless otherwise noted.

18 2004/5 Ownership Agreements CAYMAN AIRWAYS LIMITED FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast Note 000 000 Revenue Sale of Outputs to Cabinet 10,500 12,600 Passenger (Sched.) 3 48,586 43,808 Cargo 4 4,426 3,327 Passenger (Charter) 5 0 56 Handling 6 2,175 2,570 Other 7 874 1,023 TOTAL REVENUES 66,560 63,385

Operating Expenses Salaries 8 16,255 15,906 Benefits and Other Staff Costs 9 3,473 4,328 Fuel and Oil 10 19,062 16,650 Maintenance Reserves 11 828 1,026 Landing and Parking 12 2,280 1,710 Aircraft Services 13 5,246 7,417 Meal and Beverage 14 1,152 1,034 Commissions and CC 15 4,049 3,518 Navigation and Overfly 16 1,073 1,032 Other Maintenance 17 2,227 2,724 Aircraft Rental 18 4,878 2,957 Facilities Rental 19 515 770 Communications 20 433 513 Depreciation 21 1,142 1,664 General and Admin. 22 1,820 1,972 Advertising and Promo 23 884 883 Customs 24 420 435 Other 25 1,285 3,444 Total Operating Expenses 67,021 67,983

Surplus from Operating Activities (461) (4,598)

Financing Expense 26 (2,268) (2,218) Gains/(losses) on foreign exchange transactions Other Non-Operating revenues or expenses

Total Non-Operating Revenue and Expenses (2,268) (2,218)

Surplus before extraordinary items (2,729) (6,816) Extraordinary expenses 0 0 Total Extraordinary Items 0 0

Net Surplus/(Deficit) after extraordinary items (2,729) (6,816)

2008/9 Ownership Agreements 19 CAYMAN AIRWAYS LIMITED FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast Opening balance net worth (39,719) (32,903) Net Surplus (2,729) (6,816) Property Revaluation 0 0 Closing balance net worth (42,448) (39,719)

20 2004/5 Ownership Agreements CAYMAN AIRWAYS LIMITED FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Budget Forecast Current Assets Cash and cash equivalents 3,780 (2,764) Accounts receivable 8,670 8,568 Prepaid Expenses 1,848 1,680 Parts Held for Resale 38 38 Total Current Assets 14,336 7,521

Non-Current Assets Property, plant and equipment 11,172 18,331 Other non-current assets 0 0 Total Non-Current Assets 11,172 18,331

Total Assets 25,508 25,853

Current Liabilities Accounts payable 20,406 18,060 Unearned Transport Liability 10,781 9,660 Unearned Subsidy 0 0 Current Portion of LTD 1,932 1,932 Cayman Departure Tax 3,146 2,810 Total Current Liabilities 36,265 32,462

Non-Current Liabilities Borrowings 30,280 32,125 Maintenance Reserve 1,411 984 Total Non-Current Liabilities 31,691 33,109

Total Liabilities 67,956 65,571

TOTAL ASSETS LESS TOTAL LIABILITIES (42,448) (39,719)

NET WORTH Contributed Capital 50,891 50,891 Asset revaluation reserve 0 0 Accumulated surpluses (93,338) (90,609) Total Net Worth (42,448) (39,719)

2008/9 Ownership Agreements 21 CAYMAN AIRWAYS LIMITED FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast CASH FLOWS FROM OPERATING ACTIVITIES Operating Surplus/(Deficit) (2,729) (6,816)

Add Back Depreciation 1,142 1,664 Reserves 0 0

Changes in Working Capital Current Assets (271) 3,269 Output Payment Current Liabilities 4,230 1,168

Net cash flows from operating activities 2,372 (715)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of non-current assets 6,017 (3,517) Net cash flows from investing activities 6,017 (3,517)

CASH FLOWS FROM FINANCING ACTIVITIES Repayment of borrowings (1,845) 675 Net cash flows from financing activities (1,845) 675

Net increase/(decrease) in cash and cash equivalents 6,544 (3,557) Cash and cash equivalents at beginning of period (2,764) 793

Cash and cash equivalents at end of period 3,780 (2,764)

22 2004/5 Ownership Agreements CAYMAN AIRWAYS LIMITED NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

Note 1 – General

The Budget represents the expected results for the year ending June 30, 2009. The estimations are based upon the strategic plan for the airline and management’s best estimates of the future events. Actual results will differ from estimates and the differences could be significant.

The budget includes the consolidated results of both Cayman Airways and Cayman Express (Cayman Airways Express is the wholly-owned subsidiary of Cayman Airways that operates inter-island service utilizing Twin Otter aircraft).

All amounts are stated in CI Dollars (‘000) unless otherwise noted.

Note 2 – Flights and Block Hours

The number of flights and block hours for the year ending June 30, 2009 are based upon the proposed 2008- 09 schedule. While it may vary slightly, there should be no significant changes.

The following table summarizes the number of flights by route for 2008/9 with comparative figures for 2007/8:

Note 3 – Passenger Revenue

Passenger Revenue is expected to be $48,586K. Increased passenger revenue is based on ability to better utilize aircraft. Better revenue management and some new flexibility to influence pricing means a higher average fare. In addition by using all 737-300s the ability to collect on excess baggage is significantly increased.

Note 4 – Cargo Revenue

Cargo Revenue includes fees for carrying cargo on both scheduled passenger flights (belly freight) and all-cargo freighter flights.

Cargo Revenue for the year ending June 30, 2009 is expected to be $4,426K, a fairly substantial increase over the projected results for 2007/8. The increase will be achieved through more available belly capacity on passenger flights by using all 737-300s while maintaining the number of dedicated cargo flights

A new cargo system, developed in-house, is expected to provide greater control at point of sale and provide better accounting information.

2008/9 Ownership Agreements 23 CAYMAN AIRWAYS LIMITED NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 5 – Charter Passenger Revenue

Charter Passenger Revenue represents the fees derived from renting the aircraft and crew to a charter operator. The charter operator takes the risk of selling the tickets to passengers.

The planned reduction is due to a decrease in the availability of aircraft as the company plans to reduce its jet fleet to 3 jet aircraft and increase the utilisation of the aircraft. The demand for charter flights tends to be during periods when the scheduled flights are busiest. While there may be some Charter Revenue during the period, it is not possible to forecast.

Note 6 – Handling Revenue

Cayman Airways provides handling services for British Airways, US Airways, Air Canada, Continental Airlines, Air Atlantic and Air Jamaica at Owen Roberts International Airport in Grand Cayman.

Handling Revenue for the year ending June 30, 2009 is expected to be $2,175K, a decrease from the $2,570K projection for 2007/8. This is due to basing our budget on the other carrier’s published schedules.

Note 7 – Other Income

Other Income includes Bar Sales, Maintenance services, penalties, revenue from the In-Flight Magazine, Butterfield credit card mile payments and Membership Fees for frequent flyer programme.

Other Income for the year ending June 30, 2009 is expected to be $874K, a slight decrease over the $1,023 projection for 2007/8.

Note 8 – Salaries

Salaries and Wages for the year ending June 30, 2009 are expected to be $16,255, a slight increase over the $15,906k projection for 2007/8.

The budget assumes that overall salary cost will increase in by 4%. The implementation of this increase is being offset by focusing on maintaining a steady headcount with full justification being required to replace.

Note 9 – Other Staff Costs

Other Staff Costs include overtime, work permits, travel, pension, uniforms, training and health insurance. Other Staff Costs for the year ending June 30, 2009 is expected to be $3,473K, a decrease over the $4,328 projection for 2007/8.

The planned decrease in expenses is due to a reduction in overtime and tighter controls. A reduction in overnight flights results in a decrease for staff overnight costs.

24 2004/5 Ownership Agreements CAYMAN AIRWAYS LIMITED NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 10 – Fuel

Fuel expense for the year ending June 30, 2009 is expected to be $19,062k, a significant increase over the budgeted results for 2007/8 of $16,650k. The budget assumes an average fuel price of USD3.625/gallon. Fuel prices are largely dependent on world oil prices so fluctuations are possible.

Note 11 – Maintenance Reserves

The company has to pay monthly reserves for scheduled maintenance items in addition to the annual airframe (engines, disks, landing gear, etc) for the leased aircraft.

Overhaul Reserves for the year ending June 30, 2009 is expected to be $828K, a slight decrease over the budgeted results for 2007/8 of $1,026k. This is driven by the schedule and better negotiated monthly reserve rates.

Note 12 – Landing and Parking

Landing and Parking expenses are the charges that the airports impose on carriers for use of the runways and parking the aircraft.

Landing and Parking for the year ending June 30th, 2009 is expected to be $2,280K, an increase over the budgeted results for 2007/08 of $1,710K. The increase is due primarily to annual increases at airports overseas, addition of new routes and frequency to more expensive destinations such as JFK.

Note 13 – Aircraft Services

Aircraft Services includes the costs of services we have contracted out to other companies as well as some terminal access charges at certain airports. Charges include customer service, baggage handling, maintenance inspection, grooming, lavatory, security, porter fees, and lounge usage charges. These charges vary significantly for each airport.

Aircraft Services for the year ending June 30th, 2009 is expected to be $5,246K, a decrease over the results for 2007/8 of $2,171K.

Note 14 – Meal and Beverage

Meal and Beverage expense for the year ending June 30, 2009 is expected to be $1,125K, an increase over the results for 2007/8 of $118k.

Increased passenger load will drive much of this increase.

2008/9 Ownership Agreements 25 CAYMAN AIRWAYS LIMITED NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 15 – Commissions and Credit Card Expense

Commissions and Credit Card expense includes commissions paid to travel agents, fees for processing credit card charges, and booking fees.

Commission and Credit Card expense for the year ending June 30, 2009 is expected to be $4,049K, an increase over the results for 2007/8 of $531K.

This increase reflects an increase in the commission, booking fees, and credit card expense due to increased sales.

Note 16 – Navigation and Overfly

Navigation and Overfly are the fees incurred for flying through certain airspace (for example Cuba).

Navigation and Overfly expense for the year ending June 30, 2009 is expected to be $1,073K, a slight increase over the budget results for 2007/8 of $41K.

Note 17 – Other Maintenance

Other Maintenance expense includes the cost of repairing rotable (reusable) parts for the aircraft, the cost of purchasing expendable (single use only) parts, and the cost of leasing parts.

Other Maintenance expense for the year ending June 30, 2009 is expected to be $2,227K, a decrease over the results for 2007/8 of $497K.

This cost is budgeted to decrease as a result of going to an all 737-300 jet fleet.

Note 18 – Aircraft Rental

Aircraft Rental expense is the cost of renting an aircraft during any periods that Cayman Airways own aircraft is not available as well as the lease payments related to the fourth and fifth aircraft.

Aircraft Rental expense for the year ending June 30th, 2009 is expected to be $4,878K, an increase over the results for 2007/8 of $1,921K

The increase is the result of an increase in lease rates on the existing 737-300s and the addition of a third 737-300. Also, takes into account leased service to provide cargo flights.

Note 19 – Facilities Rental

Facilities Rental for the year ending June 30, 2009 is expected to be $515K, a decrease over the results for 2007/08 of $255K.

Budget year is first full year that the full benefit of the new headquarters building will be realized. In addition, we plan to vacate much (if not all) of the Blue Lagoon facility in Miami.

26 2004/5 Ownership Agreements CAYMAN AIRWAYS LIMITED NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 20 – Communications

Communication costs include local and long distance telephone charges, line charges for the reservation system, and messaging costs.

Communication costs for the year ending June 30, 2009 are expected to be $433K, a decrease over the results for 2007/8 of $80K.

The decrease, despite an increase in the number of passengers, is due to cost saving measures including:

1. consolidation of staff within a single facility will allow the airline to purchase equipment - thereby offering better control over phone usage and reduced equipment rental rates. 2. modifications to the CRS agreement will significantly reduce the messaging costs. 3. modifications to the online booking process will significantly reduce the messaging costs. 4. improved staff training will reduce the messaging costs. 5. changes to the cellular contract will permit reduced costs for calls within the company and eliminate roaming charges. 6. Switching phone service to an IP Based system through a new provider in Grand Cayman has saved a tremendous amount of money and will be fully realized in the budget year.

Note 21 – Depreciation

Depreciation expense through the end of 2007/8 is driven largely by the operation of the 737-200 aircraft and the associated spares owned by the airline. This will change for the budget year by including only non-aircraft assets and spares associated with the 737-300.

Depreciation Expense for the year ending June 30, 2009 is expected to be $1,142K, a decrease over the results for 2007/8 of $533.

Note 22 – General and Administration

General and Administrative expenses include postage, stationary, utilities, equipment rental, bank fees and other similar expenses. Some expenses (such as bad debt and insurance costs) which were included in other expense in prior years are now classified in this heading.

General and Administrative expenses for the year ending June 30, 2009 is expected to be $1,820K, a slight decrease over the results for 2007/8.

Note 23 – Advertising and Promotion

Advertising and Promotion expense for the year ending June 30, 2009 is expected to be $884K, a slight increase over the results for 2007/08 of $1K.

The assumption in the budget is that this cost will be driven down through joint advertising with the DOT and striving for better value for money.

2008/9 Ownership Agreements 27 CAYMAN AIRWAYS LIMITED NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 24 – Customs Overtime

Customs Overtime represents the charges levied by the Customs service in Grand Cayman, Cayman Brac, and Kingston for flights that operate outside of normal office hours.

Customs Overtime expense for the year ending June 30, 2009 is expected to be $420K.

Note 25 – Other

Other Expenses are mostly accounted for by legal and professional fees and other similar expenses.

Other Expenses for the year ending June 30, 2009 is expected to be $1,285K, a significant decrease over the results for 2007/8. The completion of the Lufthansa contract and other contracts associated with the turnaround exercise that are expected to be finished before the budget year drive much of the decrease.

Note 26 – Interest Expense

Interest Expense for the year ending June 30, 2009 is expected to be $2,268K, an increase over the results for 2007/8 of $50K,

The increase in interest expense is due to additional borrowing required, but is expected to be repaid through the sale of the 737-200s.

28 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Cayman Islands Airports Authority

For the year ending 30 June 2009

2008/9 Ownership Agreements 29

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

30 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of Cayman Islands. Airports Authority have agreed that Cayman Islands Airports Authority will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which Cayman Islands Airports Authority is to operate during the year.

General Nature of Activities

The Cayman Islands Airports Authority activities involve providing a safe and efficient environment for the movement of aircraft and people in accordance with international and national practices.

Scope of Activities

The scope of Cayman Islands Airports Authority activities is as follows:

• Operation including security, rentals, advertising and maintenance of two international airports to international standards

• Provision of air traffic services including telecommunications services

• Provision of National Weather services

Customers and Location of Activities

The services provided by the Cayman Islands Airports Authority are provided in various locations.

The operation of the airports and air traffic services are provided in two locations – Grand Cayman at Owen Roberts International Airport (ORIA) and Cayman Brac at Gerard Smith International Airport (GSIA). These services are provided to a variety of customers including various international airlines, Cayman Airways, local and international charter aircraft, private aircraft, local businesses, various government departments, and the general public.

The National Weather service is provided mainly in Grand Cayman at ORIA with observations from Cayman Brac at GSIA. The customers of this service include the government of the Cayman Islands, various media outlets, various tourist businesses, and the general public.

2008/9 Ownership Agreements 31

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The Cayman Islands Airports Authority for the 2008/9 financial year are as follows:

• To continue the expansion of Owen Roberts International Airport in order to meet the current and future capacity requirements of the Cayman Islands.

• To continue to develop the construction of an airfield in Little Cayman to ensure safe travel at that destination.

• To update and act upon the Master Plan document for Owen Roberts International Airport

• To continue to develop commercial opportunities at Owen Roberts International Airport in advertising, concessions, and telecommunications.

• To further develop the CIAA website to provide more useful information to customers.

32 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for Cayman Islands Airports Authority for the 2008/9 financial year are as follows: -

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $

Revenue from Cabinet 4,915,474 4,915,474

Revenue from ministries, portfolios, statutory authorities and 7,500,000 6,050,000 government companies

Revenue from other persons or organisations 11,356,000 12,445,000 Surplus/deficit from outputs 4,109,004 4,605,054 Other expenses 4,020,000 520,054 Net Surplus/Deficit 89,004 4,085,000 Total Assets 136,202,004 59,113,000 Total Liabilities 87,945,000 10,945,000 Net Worth 48,257,004 48,168,000

Cash flows from operating activities 6,789,004 6,685,000 Cash flows from investing activities (25,000,000) (2,050,420)

Cash flows from financing activities 73,210,996 (464,580) Change in cash balances 55,000,000 4,170,000

Financial Performance Ratio 2008/9 2007/8 Target Forecast Current Assets: Current Liabilities 1809% 9066%

Total Assets: Total Liabilities 155% 174%

2008/9 Ownership Agreements 33

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 130 148

Staff turnover (%) 7% 7% Average length of service (Number) Senior management 19 18 Professional staff N/A incl. above N/A incl. above Administrative staff Significant changes to personnel management system N/A N/A

2008/9 2007/8 Physical Capital Measures Target Forecast Value of total assets $136,202,004 $120,865,000

Asset replacements: total assets 18% 6.15%

Book value of depreciated assets: initial cost of those assets 88% 82.3%

Depreciation: Cash flow on asset purchases 10.8% 35.3%

Changes to asset management policies None None

2008/9 Major Capital Expenditure Projects Target $ ORIA Terminal Expansion $25M

Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk Lack of war and terrorism No change as it is cost- May be able to obtain Unknown but insurance prohibitive property insurance for this likely in the but liability remains cost millions of restrictive dollars

34 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Cayman Islands Airports Authority is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows:

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 23,771,474 23,287,970

Operating Expenses 19,662,470 18,805,420

Net Surplus/Deficit 4,109,004 4,482,500

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 136,202,004 120,865,000

Liabilities 87,945,000 69,497,450

Net Worth 48,257,004 51,367,550

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 6,789,004 4,062,000

Net cash flows from investing activities (25,000,000) (7,435,000)

Net cash flows from financing activities 73,210,996 63,650,000

2008/9 Ownership Agreements 35

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into C. I. Airports Authority 0

Capital Withdrawls from C. I. Airports Authority 0

Dividend or Profit Distributions to be made by C. I. Airports Authority 0

Government Loans to be made C. I. Airports Authority 0

Government Guarantees to be issued in relation to C. I. Airports Authority 0 Related Party Payments (Non Remuneration) made to Key Management None Personnel3 Remuneration4 Payments made to Key Management Personnel 690,000

Remuneration Payments made to Senior Management 650,000

Number for 2008/9 No of Key Management Personnel 18

No of Senior Management 7

3 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 4 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

36 2004/5 Ownership Agreements 7. Agreement

Scope of this Agreement In signing this document: • Cayman Islands Airports Authority undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Cayman Islands Airports Authority will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Charles E. Clifford, JP Minister of Tourism, Environment, Investment and Commerce on behalf of Cabinet

------Harding Watler Chairman of the Board Cayman Islands Airports Authority

June 25, 2008

2008/9 Ownership Agreements 37

Appendix: Forecast Financial Statements

CAYMAN ISLANDS AIRPORTS AUTHORITY STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Cayman Islands Airports Authority for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Harding Watler Chairman of the Board Cayman Islands Airports Authority

June 25, 2008

38 2004/5 Ownership Agreements CAYMAN ISLANDS AIRPORTS AUTHORITY STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

The significant accounting policies adopted by the Civil Aviation Authority in these financial statements are as follows:

Basis of accounting: The financial statements of the Civil Aviation Authority are prepared on the accrual basis under the historic cost convention in accordance with International Financial Reporting Standards.

Depreciation: Fixed assets, other than land, are depreciated by the straight-line method at the following rates estimated to write off the cost of the assets over their expected useful lives:

Buildings, Runways, Apron, Car Parks 20 – 40 years Other Assets 4 – 10 years

Foreign currency translation: Assets and liabilities denominated in currencies other than Cayman Islands dollars are translated at exchange rates in effect at the balance sheet dates. Revenue and expense transactions denominated in currencies other than Cayman Islands dollars are translated at exchange rates ruling at the time of those transactions. Gains and losses on exchange are credited or charged in the statement of income.

Provision for doubtful debts: The provision for doubtful debts is provided through a provision charged to expenses. Accounts receivable are written off against the provision when management believes that the collectibility of the account is unlikely. The provision is an amount that management believes will be adequate to cover any bad debts, based on an evaluation of collectibility and prior bad debts experience.

Use of estimates: The preparation of financial statements, in conformity with International Financial Reporting Standards, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents: Cash and cash equivalents include cash on demand and at short notice and all deposits placed for not more than three months.

Revenue recognition: The Authority recognizes revenues in the period in which they are earned. For example, taxes, rent and aircraft handling revenues are recognized when the related service is provided.

Financial Instruments:

Classification: A financial asset is classified as any asset that is cash, a contractual right to receive cash or another financial asset, exchange financial instruments under conditions that are potentially favourable or an equity instrument of another enterprise. Financial assets comprise of cash and cash equivalents and accounts receivables.

A financial liability is any liability that is a contractual obligation to deliver cash or another financial instrument or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. Financial liabilities comprise long and short-term debt.

2008/9 Ownership Agreements 39 CAYMAN ISLANDS AIRPORTS AUTHORITY STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Financial Instruments: continued

Recognition: The Authority recognises financial assets and financial liabilities on the date it becomes party to the contractual provisions of the instrument. From this date, any gains and losses arising from changes in fair value of the assets or liabilities are recognised in the statements of operating revenues and expenses.

Derecognition: A financial asset is derecognised when the Civil Aviation Authority realises the rights to the benefits specified in the contract or loses control over any right that comprise that asset. A financial liability is derecognised when it is extinguished, that is when the obligation is discharged, cancelled, or expires.

Measurement: Financial instruments are measured initially at cost, which is the fair value of the consideration given or received. Subsequent to initial recognition all financial assets are measured at their estimated fair value.

Financial liabilities are subsequently measured at amortized cost, being the amount at which the liability was initially recognized less any principal repayments plus any amortization (accrued interest) of the difference between that initial amount and the maturity amount.

40 2004/5 Ownership Agreements CAYMAN ISLANDS AIRPORTS AUTHORITY FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

Note 2008/9 2007/8 Budget Forecast Revenue Operations 1 23,571,474 23,210,474 Interest 200,000 200,000 Total Operating Revenue 23,771,474 23,410,474

Operating Expenses Personnel 6,760,000 6,213,000 Depreciation 4 2,700,000 2,600,000 Supplies and consumables 10,202,470 9,965,420 Total Operating Expenses 19,662,470 18,778,420

Surplus/Deficit from Operating Activities 4,109,004 4,605,054

Gain/(Losses) on foreign exchange 20,000 20,054 Financing Expense 4,000,000 500,000 Total Non-Operating Revenue and Expenses 4,020,000 520,054

Surplus/Deficit from Ordinary Activities 89,004 4,085,000

Extraordinary Items - - Net Surplus/Deficit after Extraordinary Items 89,004 4,085,000

2008/9 Ownership Agreements 41 CAYMAN ISLANDS AIRPORTS AUTHORITY FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

Budget 2008/9 2007/8 Budget Forecast

Opening balance net worth 48,168,000 44,083,000

Surplus 89,004 4,085,000 Net revaluations during the period - - Total recognised revenues and expenses 48,257,004 48,168,000

Distribution of surplus - - Capital withdrawl - - Closing balance net worth 48,257,004 48,168,000

42 2004/5 Ownership Agreements CAYMAN ISLANDS AIRPORTS AUTHORITY FORECAST BALANCE SHEET AS AT 30 JUNE 2009

Note 2008/9 2007/8 Budget Forecast

Current Assets Cash and cash equivalents 2 68,802,000 13,802,000 Accounts receivable 8,716,000 11,197,000 Other Current assets 4,270,004 0 Total Current Assets 81,788,004 24,999,000

Long-term Assets Fixed Assets 4 54,414,000 34,114,000 TOTAL ASSETS 136,202,004 59,113,000

Current Liabilities Accounts payable and accruals 3,784,000 2,049,000 Other Current liabilities 735,000 1,735,000 Total Current Liabilities 4,519,000 3,784,000

Long-term Liabilities Long-term debt 80,982,000 4,717,000 Unfunded Pension Obligation 2,444,000 2,444,000 Total Long-term Liabilities 83,426,000 10,945,000

Shareholder’s Equity Contributed capital 32,285,000 32,285,000 Retained earnings 15,972,004 15,883,000 Total Shareholder’s Equity 48,257,004 48,168,000

TOTAL LIABILITIES AND EQUITY 136,202,004 59,113,000

2008/9 Ownership Agreements 43 CAYMAN ISLANDS AIRPORTS AUTHORITY FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast

Cash Flows from Operating 6,789,004 6,685,000

Cash Flows from Investing Purchase of fixed assets (25,000,000) (2,050,420) Proceeds from sale of fixed asset - - Net Cash Flows from Investing (25,000,000) (2,050,420)

Cash Flows from Financing Distribution of surplus - - Capital Injections - - Proceeds from Long-term debt 80,000,000 - Payment of Long-term debt (6,789,004) (464,580) Proceeds from Bond debt - Net Cash Flows from Financing 73,210,996 (464,580)

Opening Balance Cash and Cash Equivalents 13,802,000 9,632,000 Net change in cash and cash equivalent 55,000,000 4,170,000 Closing Balance Cash and Cash Equivalents 68,802,000 13,802,000

44 2004/5 Ownership Agreements CAYMAN ISLANDS AIRPORTS AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

NOTE 1. OPERATING REVENUES 2008/9 2007/8 Budget Forecast

Aircraft Movement 3,329,000 3,097,000 Passenger Movement 11,165,000 10,847,000 Concessions 2,330,000 2,751,000 Advertising 190,000 350,000 Parking/Fuel 1,500,000 1,150,000 Govt Contribution (MET and FIRE) 4,915,474 4,915,474 Misc. Income 342,000 100,000 Total Operating Revenue 23,771,474 23,210,474

NOTE 2. CASH AND CASH EQUIVALENTS 2008/9 2007/8 Budget Forecast

Cash register floats 1,600 1,000 Current accounts 163,107 1,672,000 Short-Term fixed deposits 68,637,293 12,129,000 Total Cash and Cash Equivalents 68,802,000 13,802,000

2008/9 Ownership Agreements 45 CAYMAN ISLANDS AIRPORTS AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

NOTE 3. DEPRECIATION AND FIXED ASSETS 2008/9 2007/8 Budget Forecast

Land Opening Book Value/Cost 8,937,000 8,937,000 Additions - - Accumulated Depreciation - - Closing Book Value 8,937,000 8,937,000

Buildings Opening Book Value/Cost 22,258,142 22,158,142 Additions - 100,000 Depreciation (8,617,000) (6,617,000) Closing Book Value 13,641,142 15,641,142

Plant and Equipment Opening Book Value/Cost 4,155,600 3,655,600 Additions 1,500,000 500,000 Accumulated Depreciation (2,527,000) (2,027,000) Closing Book Value 3,128,600 2,128,600

Motor Vehicles Opening Book Value/Cost 558,000 558,000 Additions - - Accumulated Depreciation (325,000) (225,000) Closing Book Value 233,000 333,000

Furniture and Office Equipment Opening Book Value/Cost 743,000 708,000 Additions 35,000 Accumulated Depreciation (478,000) (378,000) Closing Book Value 265,000 365,000

Other Assets Under Construction Opening Book Value/Cost 6,709,258 5,293,838 Additions 23,000,000 1,415,420 Accumulated Depreciation - - Closing Book Value 29,709,258 6,709,258

46 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Cayman Islands Development Bank

For the year ending 30 June 2009

2008/9 Ownership Agreements 47

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

48 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of the Cayman Islands Development Bank have agreed that the Cayman Islands Development Bank will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Cayman Islands Development Bank is to operate during the year.

General Nature of Activities

The activities of the Cayman Islands Development Bank remains the same in regards to economic development of the Cayman Islands; mobilisation, providing financing, promoting and facilitating expansion and strengthening overall performance.

Scope of Activities

The scope of the lending activities of the Cayman Islands Development Bank is primarily to:

• Provide finance in order to promote and facilitate development in the Islands, with particular reference to Small Businesses especially in industry, construction, electronics, commerce, tourism, housing and human resource development.

• Provide an advisory service to give advice and disseminate Information about matters relating to: i. Housing, mortgage finance and the maintenance of dwellings ii. Advice in education and counselling in education iii. Agricultural, industrial and tourism development.

• Promote agricultural, tourism and industrial development in the Islands.

Act as administering agent for the CI Government for the Government Guaranteed Student Loan Scheme, Government Guaranteed Home Mortgage Scheme and Disbursement of Scholarship Funds.

Customers and Location of Activities

The services provided by the Cayman Islands Development Bank are provided in Grand Cayman, Cayman Brac and Little Cayman.

2008/9 Ownership Agreements 49

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for the Cayman Islands Development Bank for the 2008/9 financial year are as follows:

Strategic Goals

• To continue to operate as a prudently managed, efficiently operated and highly respected development financial institution while producing solid financial and operating results.

• To focus on the development of the Islands by identifying, funding and implementing programmes, projects and services that will assist Caymanians of all walks of life in improving themselves and their communities especially those with bankable propositions who do not have ready access to conventional financing.

Objectives

The Objectives of the Cayman Islands Development Bank during the fiscal year 2008/9 are to:

• Continue to enlarge the lending portfolio by adding new quality loans especially in the areas of small business and housing, such that its investment will be sound and that the income generated will be able to contribute significantly to meeting the Bank’s operating costs.

• Effect a programme of training that will focus on further enhancing the level of customer service currently being offered.

• Seek out sustainable funding from various sources to fund its lending programmes, in particular in the area of small businesses and low income housing.

• Ensure that the programmes administered on behalf of the CI Government and other agencies are also managed in an efficient and effective manner.

• Assist in the development of the Sister Islands by providing increased financing for housing, small businesses and human resources training.

50 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for the Cayman Islands Development Bank for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 577,875 577,872 Revenue from ministries, portfolios, statutory authorities and - government companies Revenue from other persons or organisations 3,602,069 3,490,574

Surplus/deficit from outputs - -

Other expenses 3,829,883 4,072,635

Net Surplus/Deficit 350,061 (4,186)

Total Assets 39,308,450 38,981,579

Total Liabilities 31,756,584 32,974,922 Net Worth 7,5551,866 6,006,657

Cash flows from operating activities 93,325 (506,583)

Cash flows from investing activities (1,304,301) (4,682)

Cash flows from financing activities 542,616 (370,550)

Change in cash balances (668,360) (452,898)

2008/9 2007/8 Financial Performance Ratio Target Forecast $ $ Current Assets: Current Liabilities 1.34:1 5.14:1

Total Assets: Total Liabilities 1.23:1 1.18:1

2008/9 Ownership Agreements 51

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 13 12

Staff turnover (%) 0% 8.4% Average length of service (Number) Senior management 5 25 Professional staff 4 12 Administrative staff 3 5

Yes. New Head of Significant changes to personnel management system No Credit/Consultant hired Dec. 07

2008/9 2007/8 Physical Capital Measures Target Forecast $ $ Value of total assets 39,308,450 38,981,579

Asset replacements: total assets 0:1 0:1

Book value of depreciated assets: initial cost of those assets 796,376:1,238,072 236,626:553,072

Depreciation: Cash flow on asset purchases 125,250 76,680

Changes to asset management policies Nil Nil

Major Capital Expenditure Projects 2008/9 Target $ NIL

Risk Management

Change in status from Key risks Actions to manage risk Financial value of risk previous year Default on loan Planned decrease to 10% Increased focus on Reduced Loan Interest payments delinquency ratio approving loans that are Income beneficial to the portfolio and an increased focus on the various collections methods.

52 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for the Cayman Islands Development Bank is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 4,179,944 4,068,446

Operating Expenses 3,829,883 4,072,635

Net Surplus/Deficit 350,061 (4,189)

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 39,308,450 38,981,579

Liabilities 31,756,584 32,974,922

Net Worth 7,551,866 6,006,657

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 93,325 (506,586)

Net cash flows from investing activities (1,304,301) (4,682)

Net cash flows from financing activities 542,616 (370,550)

2008/9 Ownership Agreements 53

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into the Cayman Islands Development Bank - Capital Withdrawls from the Cayman Islands Development Bank -

Dividend or Profit Distributions to be made by the Cayman Islands - Development Bank Government Loans to be made to the Cayman Islands Development Bank. - Government Guarantees to be issued in relation to the Cayman Islands - Development Bank. Related Party Payments (Non Remuneration) made to Key Management - Personnel5 Remuneration6 Payments made to Key Management Personnel 465,021

Remuneration Payments made to Senior Management 450,621

Number for 2008/9 No of Key Management Personnel 11

No of Senior Management 5

5 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 6 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

54 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement In signing this document: • The Cayman Islands Development Bank undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Cayman Islands Development Bank will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Charles E. Clifford, JP Minister of Tourism, Environment, Investment and Commerce on behalf of Cabinet

------Andre Iton Chairman of the Board Cayman Islands Development Bank

June 25, 2008

2008/9 Ownership Agreements 55

Appendix: Forecast Financial Statements

THE CAYMAN ISLANDS DEVELOPMENT BANK STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Cayman Islands Development Bank for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Andre Iton Chairman of the Board Cayman Islands Development Bank

June 25, 2008

56 2004/5 Ownership Agreements THE CAYMAN ISLANDS DEVELOPMENT BANK STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

Incorporation and principal functions: The Cayman Islands Development Bank (CIDB) was established under the Cayman Islands Development Bank Law, 2001 (Law 34 of 2001) which came into force on 1 March, 2002.

The principal function of the CIDB is “to mobilise and provide financing for and promote and facilitate the expansion and strengthening of the economic development of the Islands”.

Significant accounting policies: The financial statements of the CIDB have been prepared in accordance with International Accounting Standards under the historical cost convention. The significant accounting policies adopted by the Bank are as follows:

Cash and Cash Equivalents: Cash and cash equivalents consist of cash on hand, cash at bank and deposit accounts with terms of maturity within three months or less from the date of acquisition.

Deposit Accounts: Deposit accounts reflect term deposits, which are placed with approved financial institutions. Such deposits have maturity between three (3) months and twelve (12) months from the date of acquisition.

Loans Receivable and Provision for Loan Losses: Loans receivable is generally stated in the amount of the outstanding principal balance. This is reduced by a provision for possible loan losses. Management first takes into account the overall portfolio quality in the context of various factors, including current economic conditions, in order to arrive at a general provision that appears adequate to reflect possible losses on the portfolio as a whole. In addition, specific provisions for loan losses can be determined for problem loans that may be likely to become uncollectible in the light of the borrowers' inability to service the debt, assessment of security held and the possible risk of further default.

Income Recognition: Interest income is recorded on the accrual basis for all loans. The CIDB's policy is to cease accruing interest on loans when the principal and interest payments are contractually 90 days in arrears (classified as non-performing loans). Any accrued and uncollected interest on non-performing loans is reversed against income for the current period. Thereafter, interest income is recognised on a cash basis, but only after prior write-offs and specific provisions for losses have been recovered.

Depreciation of Fixed Assets: Fixed assets are recorded at acquisition cost and are depreciated using the straight- line method at rates considered adequate to write off the cost of the assets over their estimated useful lives as follows:

Furniture 5 years Office equipment 5 years Leasehold Improvements 5 years Computer Equipment 3 years Real Property 20 years

Foreign Currency Transactions: Transactions in currencies other than the Cayman Islands dollar are converted at exchange rates ruling at the date of the transactions. Also, assets and liabilities denominated in foreign currencies are translated at the rate of exchange prevailing at the balance sheet date. Resulting gains and losses on exchange are recognized in the Statement of Income and Expenses at the end of the period.

2008/9 Ownership Agreements 57

THE CAYMAN ISLANDS DEVELOPMENT BANK FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast NOTE $ $ Revenue

Outputs Funded by Cabinet 577,875 577,875 Operations 1 3,602,069 3,490,574 Total Operating Revenue 4,179,944 4,068,449

Operating Expenses

Personnel 974,615 1,194,692 Accommodation Costs 122,070 120,507 Office Expenses 150,765 154,931 Directors Fees 16,200 16,200 Computer Maintenance and Licensing Fees 42,171 42,171 Marketing, Advertising and Promotions 31,650 31,650 Depreciation and Amortization 125,250 76,680 Professional Fees/Consultancy 104,500 104,500 Provision for Loan Losses 138,000 138,000 Insurance 21,150 21,150 Other Operating Expenses 17,756 16,910 Loss on Foreign Exchange Conversion 20,000 47,085 Interest Expense 2,065,756 2,108,159 Total Operating Expenses 3,829,883 4,072,635

Net Income from Operations 350,061 (4,186) - - Total Other Revenue - - Surplus/Deficit from Ordinary Activities 350,061 (4,186)

58 2004/5 Ownership Agreements THE CAYMAN ISLANDS DEVELOPMENT BANK FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast NOTE $ $

Opening Balance Net Worth 7,201,805 7,205,991 Net Income for Year 350,061 (4,186) Transfer to Reserve Fund - - Total Recognized Revenues and Expenses 7,551,866 7,201,805

Reserve for Sinking Fund - - Reserve Fund - - Closing Balance Net Worth 7,551,866 7,201,805

2008/9 Ownership Agreements 59 THE CAYMAN ISLANDS DEVELOPMENT BANK FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Budget Forecast NOTE $ $

Current Assets Cash and Cash Equivalents 2 200,000 868,360 Deposit Accounts 800,000 8,025,528 Loans and Deposit Interest Receivable 862,679 712,244 Total Current Assets 1,862,679 9,606,132

Loans Receivable 3 36,649,395 28,257,566 Office Building 650,750 685,000 Fixed Assets 4 145,626 236,626

TOTAL ASSETS 39,308,450 38,785,324

Current Liabilities Overdraft 500,000 - Accounts and Other Payables 499,891 869,442

Current Portion of Long -Term Debt 388,000 388,000 Total Current Liabilities 1,387,891 1,257,442

Long -Term Liabilities

Loans from CDB 5 3,783,093 3,740,477 Loan from Other External Agencies 6 - - Note Payable - Bonds #1 9,969,600 9,969,600 Notes Payable - Bonds #2 6 16,616,000 16,616,000 Total Liabilities 31,756,584 31,583,519

Capital Equity Capital 7 3,289,185 3,289,185 Reserve Fund 8 50,000 50,000 Reserve for Sinking Fund 1,392,318 1,392,318 Retained Earnings 2,820,363 2,470,302

TOTAL LIABILITIES AND EQUITY 39,308,450 38,785,324

60 2004/5 Ownership Agreements THE CAYMAN ISLANDS DEVELOPMENT BANK FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast NOTE $ $

Net Cash Flows from Operating Activities 93,325 975,284

Net Cash Flows from Investing Activities (1,304,301) 27,876

Net Cash Provided by Financing Activities 542,616 (891,800)

Opening Balance Cash and Cash Equivalents 868,360 757,000 Net Change in Cash and Cash Equivalents (668,360) 111,360

Closing Balance Cash and Cash Equivalents 2 200,000 868,360

2008/9 Ownership Agreements 61

THE CAYMAN ISLANDS DEVELOPMENT BANK NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

Note 1 - OPERATING REVENUES 2008/9 2007/8 Budget Forecast $ $ Interest Income 3,390,069 2,663,574 Other Income 212,000 1,136,000 3,602,069 3,799,574

Note 2 - CASH and CASH EQUIVALENTS 2008/9 2007/8 Budget Forecast $ $

Current and Call Accounts 100,000 868,360

Short -Term Fixed Deposits within 3 months 100,000 8,025,528 200,000 8,893,888

Note 3 - LOANS RECEIVABLE 2008/9 2007/8 Budget Forecast $ $

Principal Amount Owed by Borrowers 37,950,895 29,421,066 Less: Provision for Loan Losses (1,301,500) (1,163,500) Net Balance 36,649,395 28,257,566

62 2004/5 Ownership Agreements THE CAYMAN ISLANDS DEVELOPMENT BANK NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 4 - LEASEHOLD IMPROVEMENTS AND FIXED ASSETS

2008/9 2007/8 Budget Forecast $ $ Leasehold Improvements Opening Book Value/Cost 96,184 148,975 Additions - - Depreciation (35,740) (52,791)

Closing Book Value 60,444 96,184

Office Furniture and Equipment Opening Book Value/Cost 76,338 43,774 Additions - 45,000 Depreciation (26,000) (12,436)

Closing Book Value 50,338 76,338

Computer Hardware and Software Opening Book Value/Cost 42,804 34,257 Additions - - Depreciation (25,000) (11,453)

Closing Book Value 17,804 42,804

Motor Vehicle Opening Book Value/Cost 21,300 21,300 Additions - - Depreciation (4,260) -

Closing Book Value 17,040 21,300

Real Property – Office Space Opening Book Value/Cost 640,000 - Additions 45,000 640,000 Depreciation 34,250 -

Closing Book Value 650,750 640,000

2008/9 Ownership Agreements 63 THE CAYMAN ISLANDS DEVELOPMENT BANK NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 5 - LOANS FROM CARIBBEAN DEVELOPMENT BANK (CDB) The CIDB acts as executing agent for two (2) lines of credit from the Caribbean Development Bank (CDB). Of these, one is currently being repaid and drawdowns are being made under the second which is specifically earmarked for mortgage financing. Repayments under the second line of credit did not commence until 2007.

2008/9 2007/8 Budget Forecast $ $ Opening Balance for Period 4,128,477 2,697,737 Drawdowns - 1,788,540

Repayments 42,616 (357,800) Closing Balance for Period 4,171,093 4,128,477

Note 6 - OTHER LONG TERM LIABILITIES On June 30, 2005, the CIDB issued two (2) Variable Rate Development Bonds totaling US$12 million /CI$10 million. The offering was fully subscribed. The additional funding of CI$16.5 million was secured in the fiscal year 2007 for on-lending. 2008/9 2007/8 Budget Forecast $ $ US$6 Million Variable Rate Dev. Bonds at 6-month Libor + .75% Due 2010 4,984,800 4,984,800 US$6 Million Variable Rate Dev. Bonds at 6-month Libor + 1.0% Due 2015 4,984,800 4,984,800 New Credit Facility @ 6.85% per annum (20 years - fixed) 16,616,000 16,500,000

Closing Balance for Period 26,585,600 26,469,600

64 2004/5 Ownership Agreements THE CAYMAN ISLANDS DEVELOPMENT BANK NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 7 - EQUITY CAPITAL The authorized capital of the Cayman Islands Development Bank is CI$50 million. The paid-up capital is exclusively subscribed for by the Cayman Islands Government as follows

2008/9 2007/8 Budget Forecast $ $ Opening Balance 3,289,185 3,289,185 Additions - - Closing Balance 3,289,185 3,289,185

Note 8 - Reserve Fund Under Section 20 of the CIDB Law, 2001, the Bank is required to maintain a Reserve Fund equivalent to 20% of its net income until the total amount standing to the credit of such reserve is equivalent to the paid-up portion of the authorized capital of the Bank. The Reserve Fund is comprised as follows: 2008/9 2007/8 Budget Forecast $ $ Balance at Beginning of Year 50,000 43,345 Transfer from Net Income for Year 0 6,655 Balance at End of Year 50,000 50,000

2008/9 Ownership Agreements 65 66 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Cayman Islands Monetary Authority

For the year ending 30 June 2009

2008/9 Ownership Agreements 67

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

68 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of Cayman Islands Monetary Authority have agreed that the Cayman Islands Monetary Authority will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Cayman Islands Monetary Authority is to operate during the year.

General Nature of Activities

The Cayman Islands Monetary Authority activities involve monetary, regulatory, co-operative and advisory services.

Scope of Activities

The scope of the Cayman Islands Monetary Authority activities are:

• The issue and redemption of currency notes and coins

• The management of the currency reserve

• The regulation and supervision of financial services business

• The monitoring of compliance with money laundering regulations

• The provision of assistance to overseas regulatory authorities

• Advising Government on the Authority’s monetary, regulatory and cooperative functions

• Advising Government whether the Authority’s regulatory functions and cooperative functions are consistent with functions discharged by an overseas regulatory authority

• Advising Government whether the regulatory laws are consistent with the laws and regulations of foreign jurisdictions

• Representing the interest of the Cayman Islands at international forums and advising Government on recommendations of those organizations.

Customers and Location of Activities

The services provided by the Cayman Islands Monetary Authority are provided mainly in the Cayman Islands and occasionally outside the Islands on locations in Europe, USA and Latin America. These services are mainly funded by the sale of the Authority’s Outputs to the Government of Cayman Islands.

2008/9 Ownership Agreements 69

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for the Cayman Islands Monetary Authority for the 2008/9 financial year are as follows:

GOAL 1: Create and maintain a high quality and effective regulatory environment to attract users and providers of financial services.

Objective 1: To ensure that the laws, regulations and scope of supervision are in line with international standards that are appropriate for the Cayman Islands.

Objective 2: To assist overseas regulators in a manner consistent with Cayman Islands laws and appropriate international standards.

Objective 3: To be responsive to appropriate needs of stakeholders.

GOAL 2: To operate the Monetary Authority in the most efficient way possible.

Objective 1: To secure and retain adequate financial resources in the fulfilment of the Monetary Authority’s mandate.

Objective 2: To secure and retain appropriate staff to fulfil the Authority’s mandate at the least cost to the Authority.

Objective 3: Establish and maintain appropriate physical and technical resources for optimum staff efficiency.

GOAL 3: To preserve the value and integrity of the Cayman Islands’ Currency.

Objective 1: Maintain and safeguard adequate reserves.

Objective 2: Deter counterfeiting.

Objective 3: Provide adequate stock, and facilities for the physical safeguarding of the currency.

GOAL 4: To raise the profile in order to increase understanding of the Monetary Authority both locally and internationally.

Objective 1: Strengthen relations with regulatory counterparts, and all other stakeholders (the Government, industry and the public).

Objective 2: Forge/enhance relationships with local and international media.

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision) for the Cayman Islands Monetary Authority for the 2008/9 financial year are as follows.

70 2004/5 Ownership Agreements

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 14,500,000 14,500,000 Revenue from ministries, portfolios, statutory authorities and 0 00 government companies 4,700,000 Revenue from other persons or organisations 3,250,000

Surplus/deficit 19,090 3,573,508

Other expenses 0 0

Net Surplus/Deficit 19,090 3,573,508

Total Assets 117,536,673 112,293,918

Total Liabilities 89,490,000 84,266,335

Net Worth 28,046,673 28,027,583

Cash flows from operating activities 19,090 9,596,002

Cash flows from investing activities 293,990 (1,512,073)

Cash flows from financing activities (1,066,335) (6,782,067)

Change in cash balances (753,255) 1,301,862

2008/9 2007/8 Financial Performance Ratio Target Forecast Current Assets: Current Liabilities 1.29 1.24

Total Assets: Total Liabilities 1.31 1.33

2008/9 Ownership Agreements 71

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 153 141

Staff turnover (%) 10% 10% Average length of service (Number) b Senior management 5.0 6.0 Professional staff 5.0 4.0 Administrative staff 6.0 5.0

Significant changes to personnel management system None None

2008/9 2007/8 Physical Capital Measures Target Forecast Value of total assets $2,232,758 $2,686,775

Asset replacements: total assets 40% 60%

Book value of depreciated assets: initial cost of those assets 37% 45%

Depreciation: Cash flow on asset purchases 104% 33%

Changes to asset management policies N/A N/A

2008/9 Major Capital Expenditure Projects Target $ E-Reporting 781,312

Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk Continuing negative impact New Regular monitoring of the unquantifiable; of the current financial performance and poorer market crisis composition of the performance on Investment Portfolio the Investment Portfolio. Loss and absence of Critical On-going Regular training, succession unquantifiable staff planning, regular performance assessments and recognition

72 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for the Cayman Islands Monetary Authority is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Target Forecast $ $ Revenue 17,750,000 19,200,000

Operating Expenses 17,730,910 15,626,492

Net Surplus/Deficit 19,090 3,573,508

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 117,536,673 112,293,918

Liabilities 89,490,000 84,266,335

Net Worth 28,046,673 28,027,583

2008/9 2007/8 Statement of Cash Flows Target Forecast $ $ Net cash flows from operating activities 19,090 9,596,002

Net cash flows from investing activities 293,990 (1,512,073)

Net cash flows from financing activities (1,066,335) (6,782,067)

2008/9 Ownership Agreements 73

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into the Cayman Islands Monetary Authority 0

Capital Withdrawls from the Cayman Islands Monetary Authority 0 Dividend or Profit Distributions to be made by the Cayman Islands Monetary 0 Authority Government Loans to be made to the Cayman Islands Monetary Authority 0 Government Guarantees to be issued in relation the Cayman Islands 0 Monetary Authority Related Party Payments (Non Remuneration) made to Key Management 0 Personnel7 Remuneration8 Payments made to Key Management Personnel 463,640

Remuneration Payments made to Senior Management 1,463,237

Number for 2008/9

No of Key Management Personnel 10

No of Senior Management 12

7 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 8 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

74 2004/5 Ownership Agreements 7. Agreement

Scope of this Agreement In signing this document: • The Cayman Islands Monetary Authority undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that the Cayman Islands Monetary Authority will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

______

Hon. Kenneth Jefferson, JP Financial Secretary on behalf of Cabinet

______

Carlyle McLaughlin Chairman of the Board Cayman Islands Monetary Authority

June 25, 2008

2008/9 Ownership Agreements 75

Appendix: Forecast Financial Statements

CAYMAN ISLANDS MONETARY AUTHORITY STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for the Cayman Islands Monetary Authority for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Carlyle McLaughlin Chairman of the Board Cayman Islands Monetary Authority

June 25, 2008

76 2004/5 Ownership Agreements CAYMAN ISLANDS MONETARY AUTHORITY STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

Organization and Objectives: The Cayman Islands Monetary Authority (the “Authority”) was established under The Monetary Authority Law, 1996 (the “Law”) on 1 January 1997. Under the Monetary Authority Law (2004 Revision) (the “Law (2004 revision)”), the primary objectives of the Authority are (a) to issue and redeem currency notes and coins and to manage the Currency Reserve, (b) to regulate and supervise the financial services business (c) to provide assistance to overseas regulatory authorities, and (d) to advise the Cayman Islands Government on regulatory matters.

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 financial statements of the Authority are prepared on the accrual basis under historical cost convention and are in accordance with International Financial Reporting Standards. The reporting currency is Cayman Islands Dollars.

Investments: Short-term investments are valued, on a monthly basis at amortized cost and long term investments are valued at quoted market value. Unrealized gains or losses are recorded in the income statement.

Foreign Currency: Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Assets and liabilities are translated at the exchange rate in effect at the Balance Sheet date.

Revenue Recognition: The Authority depends on the sale of its Outputs to the Cabinet of the Government of the Cayman Islands, as its main source of income to meet its obligations. The Authority’s other sources of income are generated from its investments, bank balances, and other currency transactions. The Authority recognizes revenue as it is earned.

Fixed Assets: Fixed Assets are stated at historical cost less accumulated depreciation. Depreciation is calculated on the straight-line method of 20% per annum for Furniture and Fixtures, Leasehold Improvements, Office Equipment (with the exception of Bank Note Sorting machine calculated at 15% and DRC Equipment calculated at 33.3%) and Motor Vehicle; and 25% to 50% for Computer Hardware and Software, which is sufficient to write-off the cost of the assets over their estimated useful lives.

Stocks: Stocks consist of silver bullion arising from the melt-down of numismatic coins, the gold and silver bullion content of the following categories of numismatic coins: coins for resale, museum items and coins awaiting melt-down and unissued currency notes. Bullion stocks are stated at year-end market values for gold and silver bullion and unrealised gain/loss are recorded in the Income Statement. The stock of unissued currency notes is stated at cost. Only the cost of notes issued into circulation is expensed on a “first in first out” basis. (See also Note 6).

Numismatic Coins: No liability for redeeming numismatic coins is recognized in the financial statements, since the amount of redemption cannot be reasonably estimated and the probability of material redemption is remote. Redemption costs and sales proceeds are recorded in the income statement as incurred.

Cash and cash equivalents: For the purposes of the cash flow statement, cash and cash equivalents consist of current and call deposits and fixed deposits maturing within 90 days from the date of acquisition. (See also Note 3).

2008/9 Ownership Agreements 77 CAYMAN ISLANDS MONETARY AUTHORITY STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Employee Benefits:

Pension Plans: The Authority makes pension contributions for its eligible employees to the Public Service Pensions Fund, which is administered by the Public Service Pensions Board. The Fund has both a defined benefit and a defined contribution element. There are a small number of employees who participate in other private plans, which are all defined contribution schemes.

Under defined contribution plans, the Authority pays fixed contributions and has no obligation to pay further contributions if the fund does not have sufficient assets to pay employee benefits relating to employee service in the current and prior periods. The Authority recognises contributions to a defined contribution plan when an employee has rendered services in exchange for those contributions.

A defined benefit plan is one that defines an amount of benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation. The asset or liability in respect of defined benefit plans is the difference between the present value of the defined benefit obligation at the balance sheet date and the fair value of plan assets, adjusted for unrecognised actuarial gains/losses and past service cost. Where a pension asset arises, the amount recognised is limited to the net total of any cumulative unrecognised net actuarial losses and past service cost and the present value of any economic benefits available in the form of refunds from the plan or reduction in future contributions to the plan. The pension costs are assessed using the Projected Unit Credit Method. Under this method the cost of providing pensions is charged in the Income Statement so as to spread the regular cost over the service lives of employees in accordance with advise of the actuary, (who is due to carry out a full valuation of the plans every year). The pension obligation is measured at the present value of the estimated future cash outflows using discount estimated rates based on market yields on high quality corporate bonds at the time of the accounting date which have terms to maturity approximating the terms of the related liability. Obligations for contributions to defined contribution and defined benefits pension plans are recognized as an expense in the income statement as incurred. (See also Note 7).

Other Benefits: Other employee benefits include maternity leave, sick leave, vacation days and performance awards. Vacation days accumulate and vest and therefore a liability is accrued each year. The accrued vacation liability is included in the other liabilities and payables.

78 2004/5 Ownership Agreements

CAYMAN ISLANDS MONETARY AUTHORITY FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

Note 2008/9 2007/8 Target Forecast $ $ REVENUE Outputs 9 14,500,000 14,500,000 Operations 750,000 700,000 Investment/Interest Income 2b 2,500,000 4,000,000 Total Operating Revenue 17,750,000 19,200,000

OPERATING EXPENSES Personnel 10,640,114 9,692,687 Depreciation 3 935,165 501,243 Legal and Professional fees 1,522,002 1,175,960 Other Operating Expenses 4,633,629 4,256,602 Total Operating Expenses 17,730,910 15,626,492

Surplus/Deficit from Operating Activities 19,090 3,573,508

Gain/Loss on assets sales 0 0

Surplus/Deficit from Ordinary Activities 19,090 3,573,508

Extraordinary Expense 0 Net Surplus/Deficit after Extraordinary Items 19,090 3,573,508

2008/9 Ownership Agreements 79 CAYMAN ISLANDS MONETARY AUTHORITY FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Target Forecast $ $ Opening balance net worth 28,027,583 25,580,517 Surplus 19,090 3,573,508 Paid up Capital contribution 0 0

Total recognised revenues and expenses 19,090 3,573,508

Distribution of Surplus 0 (1,066,335) Capital withdrawal/Currency reserve (60,107) Closing balance net worth 28,046,673 28,027,583

80 2004/5 Ownership Agreements CAYMAN ISLANDS MONETARY AUTHORITY FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Note Budget Forecast $ $ ASSETS Currency Reserve Assets Call Deposits 3b 2,500,000 2,500,000 Fixed Deposits 3b 1,532,040 1,487,418 Interest Receivable , Deposits 295,000 290,000 Short/Long-Term Investments 1 107,000,000 101,000,000 Stocks 1,800,000 1,775,000 Total Currency Reserve Assets 113,127,040 107,052,418

Operating Assets Current and Call Deposits 759,869 1,557,748 Accounts Receivable 1,000,000 1,000,000 Other Receivables and Prepayments 95,005 95,004 Fixed Assets 3 2,232,758 2,266,748 Retirement Benefit Assets 322,000 322,000

Total Other Assets 4,409,633 5,241,500 TOTAL ASSETS 117,536,673 112,293,918

LIABILITIES

Demand Liabilities, Currency in Circulation 4a, 6 88,140,000 81,900,000

Due to the CI Government 6b (0) 1,066,335

Other Liabilities and Payables 1,350,000 1,300,000

Total Liabilities 89,490,000 84,266,335

RESERVES and CAPITAL General Reserve 6a 13,221,000 12,285,000 Currency Issue Reserve 6c 375,000 375,000 Capital Expenditures Reserve 6e 870,631 1,696,806 Operational Expenditure Reserves - 752,800 Total Reserves 14,466,631 15,109,606 Paid Up Capital 6d 13,580,042 12,917,977 Total Reserves and Capital 28,046,673 28,027,583

TOTAL LIABILITIES, RESERVES and CAPITAL 117,536,673 112,293,918

2008/9 Ownership Agreements 81

CAYMAN ISLANDS MONETARY AUTHORITY FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

Note 2008/9 2007/8 Target Forecast $ $

Cash Flow from Operating 19,090 9,596,002

Cash Flow from Investing Net purchase of investments (6,000,000) - Acquisition of fixed assets (901,175) (1,512,073) Proceeds from sale of non-current assets 6,260,000 Proceeds from sale of investments 935,165

Net Cash Flow from Investing 293,990 (1,512,073)

Cash Flow from Financing Contribution received from CI Government - - Contribution paid to CI Government (1,066,335) (6,782,067)

Net Cash Flow from Financing (1,066,335) (6,782,067)

Opening Balance - Cash and Cash Equivalents 1,301,862 - Net Change in cash (753,255) 1,301,862

Closing Balance - Cash and Cash Equivalents 548,607 1,301,862

82 2004/5 Ownership Agreements CAYMAN ISLANDS MONETARY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS AS AT 30 JUNE 2009

Note 1 - Investments

The principal investment objectives of the Authority are security, liquidity and income. The investment portfolio is managed by independent fund managers in accordance with investment guidelines established by the Board of Directors, in accordance with the Law (2004 Revision). Management fees are calculated based on the market value of the portfolio and are payable quarterly in arrears. Either party may terminate the agreement with thirty days notice.

Short/Long-term investments: Short-term investments are made up of Discount Notes/Treasury bills and Repurchase Agreements with the Federal Reserve. Long-term investments are made up of Mortgage-backed Securities stated at market value.

2009 Short-term investments $74,900,000 Long-term investments $32,100,000

Total Investments $107,000,000

Note 2 - Bank Deposits

Currency Reserve Assets: The Authority maintains current, call and fixed deposits with domestic and foreign banks. Under the Law, domestic deposits cannot exceed 25% of demand liabilities. At 30 June 2009 domestic deposits represent 4% of demand liabilities.

a) Current and Call Deposits 2009 Domestic Deposits Operations CI$ Call deposits/Current/Cash on Hand KYD 759,871

b) Currency Reserve Deposits Currency Call deposits KYD 2,000,000

Foreign Deposits Currency U.S. Federal Reserve call account USD 1,375,000 Investment portfolio, call account USD 2,500,000

Domestic Fixed Deposits Currency Fixed deposits USD 1,532,040

Total Operating Cash and Currency Reserve 4,791,912

Interest is paid on domestic call and fixed deposits at rates ranging from 1.75% to 4% per annum. Deposits with the Federal Reserve are non-interest bearing; however, excess deposit balances are invested daily in repurchase agreements. Interest of 3% p.a. is paid on foreign call deposits.

2008/9 Ownership Agreements 83 CAYMAN ISLANDS MONETARY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued AS AT 30 JUNE 2009

Note 3 - Depreciation and Fixed Assets 2008/9 2007/8 Budget Forecast Leasehold Improvement Opening cost 50,000 - Opening Depreciation 56,105) - Additions - 50,000 Depreciation (64,285) (56,105) Closing Cost 50,000 50,000 Closing depreciation (120,390) (56,105) Closing Book Value (70,390) (6,105) Furniture and Fixtures Opening cost 40,000 - Opening Depreciation (49,670) - Additions 25,000 40,000 Depreciation (60,345) (49,670) Closing Cost 65,000 40,000 Closing depreciation (110,015) (49,670) Closing Book Value (45,015) (9,670) Computer Equipment Opening cost 1,337,073 - Opening Depreciation (331,591) - Additions 831,312 1,337,073 Depreciation (732,668) (331,591) Closing Cost 2,168,385 1,337,073 Closing depreciation (1,064,259) (331,591) Closing Book Value 1,104,126 1,005,482 Office Equipment Opening cost 60,000 - Opening Depreciation (62,630) - Additions 44,863 60,000 Depreciation (72,866) (62,630) Closing Cost 104,863 60,000 Closing depreciation (135,496) (62,630) Closing Book Value (30,633) (2,630) Motor Vehicle Opening cost 25,000 - Opening Depreciation (1,247) - Additions - 25,000 Depreciation (5,000) (1,247) Closing Cost 25,000 25,000 Closing depreciation (6,247) (1,247) Closing Book Value 18,753 23,753 Total NBV 976,841 1,010,830 Total Cost 2,413,248 1,512,073 NBV : COST 40% 67% Depreciation (Current Period) 935,164 501,243 Cash Flow on Asset Purchases 901,175 1,512,073 Depreciation : Cash flow on asset purchases 104% 33%

84 2004/5 Ownership Agreements CAYMAN ISLANDS MONETARY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued AS AT 30 JUNE 2009

Note 4 - Liabilities

Demand Liabilitie:. Demand Liabilities represents the value of notes and coins in circulation. These liabilities are fully funded by the Currency Reserve Assets. Under the Law, the Currency Reserve Assets represent external and local assets that: shall only be used to satisfy demand liabilities; shall be segregated from all other assets of the Authority; and shall not be chargeable with any liability arising from any other business of the Authority.

Total demand liabilities comprise: 2009

i. Currency notes in circulation $79,326,000

ii. Currency coins in circulation $8,814,000

Total $88,140,000

At 30 June 2009, the value of Currency Reserve Assets is projected to be $113,127,040 representing 128% of total demand liabilities. After all demand liabilities are extinguished, any surplus Currency Reserve Assets would form, in part, the assets of the General Reserve – see Note 6.

Note 5 - Lease Obligation

The Authority leases the premises used by the Authority. The lease for 24,126 sq. ft. at $27-$30 per sq. ft, is for one year and is payable monthly in advance. Rental payments under operating leases are charged to the income statement in equal installments over the period of the lease.

Note 6 - Reserves and Capital

General Reserve: The Authority maintains a General Reserve in accordance with Section 8 of the Law (2004 revision). The Authority shall maintain the General Reserve at 15% of demand liabilities to provide additional funding, if necessary, for demand liabilities and obligations arising from other business of the Authority. Reserve assets are held predominantly in United States dollars, with minimal holdings in Cayman Islands dollars and British Pound Sterling.

Reserve Allocation: Under Section 10 of the Law (2004 revision), the net profits of the Authority, after provision for all expenditure and reserves, shall be allocated such that the Currency Reserve Assets represent at least 100% of demand liabilities and the General Reserve does not exceed 15% of demand liabilities. Any surplus, not allocated in accordance with the above, shall be transferred to the general revenue of the Cayman Islands Government.

2008/9 Ownership Agreements 85 CAYMAN ISLANDS MONETARY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued AS AT 30 JUNE 2009

Note 6 - Reserves and Capital continued

2008/9 2007/8 $ $ Target Forecast General Reserve Opening Balance: 854,210 0 Transfers in: Transfer from Net Income 19,090 3,573,508 Transfer from Paid-up Share Capital 991,910

Transfers out: To Paid-up Share Capital (525,000) To Capital Expenditure Reserve (75,000) (375,163) To Operational Expenditure Reserve (752,800) Excess Payable to CI Govt (1,066,335)

Closing Balance 1,790,210 854,210

Demand Liabilities (closing balance) 88,140,000 81,900,000

15% of Demand Liabilities 13,221,000 12,285,000

Currency Issue Reserve: Prior to 1 January 2003 the cost of printing of notes or minting of coins (unissued and issued) was recorded against the Currency Issue Reserve. The Currency Issue Reserve was set at a level deemed necessary to meet an estimated future printing or minting cost. This effectively expensed the cost of printing or minting in that period. After 1 January 2003 the cost of printing and minting is set up as a Stock of unissued currency and only the cost of currency issued into a circulation is expensed. The Currency Issue Reserve will remain at $375,000 in 2008/9.

Capital: The capital of the Authority is $100,000,000. The Cayman Islands Government is the sole subscriber and has contributed Paid-Up Capital of $13,580,042 as at 30 June 2009.

Capital Expenditure and Operational Expenditure Reserves: Under Section 9 of the Law (2004 revision), the net profits of the Authority for any financial year shall include, but shall not be limited to, the income from the investments of the Authority, and the profit from the sales of investments belonging to the Authority, and shall be determined by the Authority after meeting or providing for all expenditure for that year and making such provisions for contingencies and the establishment of such additional reserves as it may consider desirable. This Reserve has been created to provide for key new capital projects, in particular the E-Reporting and the Currency Vault at the new Government Administration Building. The Operational Reserve has been established in order to ensure that the Basel II, E-Reporting and other IT initiatives (Document Management, K-Review, CoBIT) can be undertaken and completed by the established deadlines

86 2004/5 Ownership Agreements CAYMAN ISLANDS MONETARY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued AS AT 30 JUNE 2009

Note 7 - Pensions

Pension contributions are paid for all eligible employees on their pensionable emoluments. The majority of the employees are participants in the Public Service Pensions Plan, with a small number participating in other private plans, which are all defined contribution schemes.

Public Service Pensions Plan

Pension contributions for eligible employees of the Authority are paid to the Public Service Pensions Fund (the “Fund”). The Fund is administered by the Public Service Pensions Board (“the Pensions Board”) and is operated as a multi-employer. Prior to 1 January 2000 the scheme underlying the Fund was a defined benefit scheme. With effect from 1 January 2000 the Fund had both a defined benefit and a defined contribution element, with participants joining after 1 January 2000 becoming members of the defined contribution element only.

Using the projected Unit Credit method of measuring costs and obligations, the actuarial assessment for the Authority assessed the minimum normal annual contribution to be 13 % in 2006-7 (13% in 2005-6). This rate included a 1% for the cost of all of the benefits that are provided over and above those related to the participant’s total account balance. Certain participants are reimbursed for their contributions.

The Plans are funded at rates of:

2007 2006 2005 Defined Contribution Plans Employee 6% 6% 6% Employer 7% 7% 7%

Defined Benefited Plans Employee 6% 6% 6% Employer 7% 7% 7%

The assessment on the Authority’s position in the Fund based on the 1 January 2005 Actuarial Valuation Report (dated March 2007) indicated that contribution rates should continue at 13% for the defined benefit scheme and 13% for the defined contribution scheme.

The pension plan has been accounted for under paragraphs 44-46 of International Accounting Standard 19 as if it were a defined contribution plan, as sufficient information is not available on the Fund to fully use defined benefit accounting. The Actuary to the Pensions Board has valued the Fund. The defined contribution part of the Fund is not subject to the special actuarial valuations due to the nature of the benefits provided therein.

2008/9 Ownership Agreements 87

CAYMAN ISLANDS MONETARY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued AS AT 30 JUNE 2009

Note 7 - Pensions (continued)

The total amount recognised as a pension expense during 2008/9 was $849,410. The actual amount of pension expense relating to the defined benefits for staff should also include the effect of the changes in the actuarial determined liability. However, since such information is not yet available from the actuary of the Pensions Board, management is unable to determine the impact on the recorded expense for the years ended 30 June 2006 and 2007.The schemes are valued by independent Actuaries.

The latest actuarial valuation (of the defined benefit plan) was done as at 1 July 2004.

1 July 2004 $ Net Present Value of Funded Obligation (1,870,000) Fair Value of Plan Assets 2,192,000

322,000

Unrecognised Past Service Cost 0 Unrecognised Actuarial Gains/(Losses) 0

Net Assets in Balance Sheet 322,000

The Actuary to the Pensions Board is of the opinion that it is likely that the Authority will still have a positive defined benefit asset as of 30 June 2006, based on the discount rate as at 30 June 2006 (which was 6.25%), the liability experience and the asset performance during the two years, and the relationship between the pension expense and contribution for these two years. However, the amount of the positive defined benefit asset at 30 June 2009 cannot be determined by management at this time, as there has been no update to the actuary’s report since 1 July 2004.

The Distribution of the Plan Assets, at 1 July 2004, based on the share of the total Fund allocated to the Authority was as follows: -

Global Equities 25.3%

US Equities 1.2%

Bonds 46.6%

Other 3.3%

Cash 4.1%

Cash - Term Deposits 19.5%

88 2004/5 Ownership Agreements CAYMAN ISLANDS MONETARY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued AS AT 30 JUNE 2009

Note 7 - Pensions continued

The principal Actuarial Assumptions at the date of valuation

A. Cost Method - Projected Unit Credit B. Economic Assumptions: • Discount Rate: 6.50% • Expected long-term rate of return (net of Expense): 7.00% • Salary Increase: 4.00% • Future Pension Increases: 2.50% • Expected remaining working lives (years):15.92 • Inflation Rate: 2.5% C. Other Assumptions: • Mortality: Standard U.S. mortality rates • Retirement Age: completion of age 57 and 10 years of service D. Asset Valuation: Fair (Market) Value

There has been no further actuarial valuation (of the defined benefit plan) received since 1 July 2004.

Note 9 - Financial Instruments

Credit risk: Financial assets that potentially subject the Authority to credit risk consist principally of current, call and fixed deposits, long and short-term investments, accounts and interest receivable, and other receivables and prepayments. The Authority’s current, call, and fixed deposits are placed with high credit quality institutions. Credit risk with respect to long and short-term investments, accounts and interest receivable, and other receivables and prepayments is limited because the Authority only transacts business with counterparts it believes to be reputable and capable of performing their contractual obligations. Accordingly, the Authority has no significant concentrations of credit risk.

Interest rate risk: The Authority’s investments and deposits are at fixed interest rates. The ranges of interest rates and maturity dates are presented in Note 1.

Fair values: The carrying amount of current, call, and fixed deposits, accounts and interest receivable, other receivables and prepayments, demand liabilities, and other liabilities and payables approximated their fair value due to the short-term maturities of these assets and liabilities. The market value of investments is presented in Note 1. The fair values of other assets and liabilities are not materially different from the carrying amounts.

2008/9 Ownership Agreements 89 CAYMAN ISLANDS MONETARY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued AS AT 30 JUNE 2009

Note 10 - Related Party Transactions

The board of directors of the Authority is appointed by the Cayman Islands Government and consists of ten directors.

The following Government departments/entities provided services to the Authority during 2008/9:

i) Audit Office ii) Internal Audit Office Formatted: Bullets and Numbering iii) Cayman Islands Investment Bureau iv) Computer Services Department Deleted: Public Service Pension Board (see Note 7) v) Legal Department. vi) Public Service Pension Board Formatted: Bullets and Numbering vii) The Public Works Department Formatted: Bullets and Numbering viii) Department of Environmental Health ix) The Royal Cayman Islands Police Services Deleted: <#>Internal Audit Office¶

The Authority acts as the Government’s custodian of the Cayman Islands currency as well as collector of the Deleted: <#>The Public Works annual license fees and issuer of licenses relating to the financial industry. These services form a part of the Department¶ Computer Services Dept. outputs purchased by Government. Deleted: ¶ The Authority’s main source of revenue is from the sale of its Outputs to the Cabinet of the Government of the ¶ Cayman Islands, which is used to cover the Authority’s recurrent expenditure. In 2005/6 a Grant from the Deleted: A Government funded the Authority’s capital expenditures. In 2006/7 the Authority’s capital expenditure was funded from the Capital Expenditure Reserve, which was created from an allocation of the June 2006 surplus. At the end Deleted: s th of each financial year the Authority contributes to the Government the net operating surplus after fulfilling reserve Deleted: C requirements. Deleted: E Deleted: (see Note 3 for fixed asset purchases) Deleted: At the end o Deleted: f each finan Deleted: cial year Deleted: g

90 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Cayman Islands National Insurance Company Limited

For the year ending 30 June 2009

2008/9 Ownership Agreements 91

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

92 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of The Cayman Islands National Insurance Company Ltd. (“CINICO”) have agreed that “CINICO” will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which CINICO is to operate during the year.

General Nature of Activities

CINICO’s activities involve both the provision of health insurance and the administration of health benefits on behalf of the Ministry of Health and Human Services.

CINICO is a licensed Class A insurance company, and as such, must abide by the relevant laws for health insurance companies in the Cayman Islands. All Class A insurance companies are regulated by the Cayman Islands Monetary Authority, which includes the submission and approval of a business plan. In the Cayman Islands National Insurance Company Ltd. business plan is a commitment that the Company will maintain capitalization at $3 million. The Cayman Islands Government guarantees this commitment.

Scope of Activities

The scope of CINICO’s activities are as follows:

• Provision of health insurance to civil servants, pensioners, other government entities, seamen and veterans and individuals qualifying as elderly, health impaired or low income residents; and

• Administration on behalf of the Ministry of Health and Human Services for local and overseas health benefits of indigents since February 1, 2004. Administration on behalf of the Ministry of Health and Human Services for overseas health benefits of seamen and veterans since July 1, 2007. Administration on behalf of the Portfolio of Finance and Economics for health benefits of Advance Patients since February 1, 2004.

• Government is charged a premium for the provision of health insurance and a fee for administration of health benefits.

Customers and Location of Activities

The services provided by CINICO are provided to civil servants, pensioners, other government entities, seamen and veterans, indigents, advance patients and individuals qualifying as elderly, health impaired and low income residents. The services are provided from offices at the Cayman Centre, George Town.

2008/9 Ownership Agreements 93

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for CINICO for the 2008/9 financial year are as follows:

• To provide health insurance to civil servants, pensioners, seamen and veterans and individuals qualifying as elderly, health impaired or low income residents;

• To administer on behalf of the Ministry of Health and Human Services the provision of health benefits to indigents.

• To administer on behalf of the Ministry of Health and Human Services the provision of overseas health benefits to seamen and veterans.

• To administer on behalf of the Portfolio of Finance and Economics the provision of health benefits to advance patients.

• To advise Ministry of Health and Human Services, supported by empirical evidence, of recommendations to improvements in the delivery of health care to the population of the Cayman Islands.

• To undertake development of a claim administration system as an alternative to the outsourcing of this function.

• To undertake the development of CINICO’s own provider network.

94 2004/5 Ownership Agreements 4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for Cayman Islands National Insurance Company Ltd. for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Budget $ $ Revenue from Cabinet 17,385,600 13,380,971 Revenue from ministries, portfolios, statutory authorities and 30,661,323 20,268,446 government companies Revenue from other persons or organisations 945,127 1,091,845

Surplus/deficit from outputs

Other expenses 47,441,313 34,608,800

Net Surplus/Deficit 1,550,738 132,462

Total Assets 9,792,484 11,081,982

Total Liabilities 13,761,254 10,497,732

Net Worth (3,968,769) 584,248

Cash flows from operating activities 2,600,248 801,673

Cash flows from investing activities (48,000) (59,000)

Cash flows from financing activities 1,500,000 500,000

Change in cash balances 5,595,274 1,242,673

2008/9 2007/8 Financial Performance Ratio Target Budget % % Current Assets: Current Liabilities 71% 105%

Total Assets: Total Liabilities 72% 106%

2008/9 Ownership Agreements 95

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Budget Total full time equivalent staff 10 9 Staff turnover (%) 0 0 Average length of service (Number) Senior management 4.3 3.3 Professional staff 4.3 3.3 Administrative staff 3.5 3.5

Significant changes to personnel management system None None

2008/9 2007/8 Physical Capital Measures Target Budget Value of total assets $9,792,484 $11,081,982

Asset replacements: total assets 65% 98%

Book value of depreciated assets: initial cost of those assets 28% 29%

Depreciation: Cash flow on asset purchases 89% 37%

Changes to asset management policies None None

2008/9 Major Capital Expenditure Projects Target $ Network upgrade 27,000

96 2004/5 Ownership Agreements Risk Management

Key risks Change in status from Financial value Actions to manage risk previous year of risk Claim losses higher than Change in care Care Management company Not quantifiable. what can be supported by management company (Care Guide) engaged to revenues from CMN to Care Guide. manage Overseas cases. CINICO will negotiate its CINICO to negotiate its own own provider contracts provider contracts and cut out costs of the “middle man” Revision of overseas referral protocols and analysis of the CMO’s role. Reinsurance arrangement in place to limit the Company’s risk to large claims. Improvement of forecasts through predictive modeling. Incomplete or missing Improvements made to Working with the Cayman Not quantifiable. claims from our major HSA’s timely filing Islands Health Services provider, The Cayman Authority to improve claim Islands Health Services submission controls. Authority The Cayman Islands Heath n.a. Since premium can not be Not quantifiable. Services Authority increases changed mid year, CINICO’s services in their charge only recourse is applying for master and thus driving up an equity injection. claims. Note this has not been accounted for in premium

NOTE: The development of CINICO’s premium rates for 2008/9 do not include any provision for the possibility that the Cayman Islands Health Services Authority (HSA) would increase their charge master rates, either via a percentage increase or adding additional services not traditionally billed. If HSA increases rates in 2008/9 then CINICO’s premium rates will be insufficient

2008/9 Ownership Agreements 97

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for the Cayman Islands National Insurance Company Ltd. is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 48,992,051 34,741,262

Operating Expenses 47,441,313 34,608,800

Net Surplus/Deficit 1,550,738 132,462

As at 30 June As at 30 June

2009 2008 Balance Sheet $ $ Assets 9,792,484 11,081,982

Liabilities 13,761,254 10,497,733

Net Worth (3,968,769) 584,248

2008/9 2007/8

Budget Forecast Statement of Cash Flows $ $ Net cash flows from operating activities 4,143,274 801,673

Net cash flows from investing activities (48,000) (59,000)

Net cash flows from financing activities 1,500,000 500,000

98 2004/5 Ownership Agreements

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into CINICO 1,500,000

Capital Withdrawls from CINICO

Dividend or Profit Distributions to be made by CINICO.

Government Loans to be made to CINICO.

Government Guarantees to be issued in relation to CINICO.* 2,000,000 Related Party Payments (Non Remuneration) made to Key Management

Personnel9 Remuneration10 Payments made to Key Management Personnel

Remuneration Payments made to Senior Management 356,179

* Additional $2M letter of credit (LOC) required to maintain statutory capital requirement. In 2007/8 a $10M LOC issued and $5.0M was drawn down in 2007/8. The LOC balance at the end of 2008/9 is $7.0M.

Number for

2008/9 No of Key Management Personnel No of Senior Management 3

9 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 10 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

2008/9 Ownership Agreements 99

7. Agreement

Scope of this Agreement In signing this document: • Cayman Islands National Insurance Company Ltd., undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that CINICO will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Anthony Eden, OBE, JP Minister of Health and Human Services on behalf of Cabinet

------Sheridan Brooks-Hurst Chairman of the Board Cayman Islands National Insurance Company Ltd.

June 25, 2008

100 2004/5 Ownership Agreements

Appendix: Forecast Financial Statements

CAYMAN ISLANDS NATIONAL INSURANCE COMPANY LTD. STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) Complete and reliable; (b) Fairly reflect the forecast financial position as at 30 June 2009 and performance for CINICO for the year ended 30 June 2009; (c) Comply with generally accepted accounting practice.

------Sheridan Brooks-Hurst Chairman of the Board Cayman Islands National Insurance Company Ltd.

June 25, 2008

2008/9 Ownership Agreements 101 CAYMAN ISLANDS NATIONAL INSURANCE COMPANY LTD. STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

These financial statements are prepared on the historical cost basis and in accordance with United States Generally Accepted Accounting Principles ("US GAAP"). It is also stated that these financial statements are prepared in compliance with International Financial Reporting Standards ("IFRS") promulgated by the International Accounting Standards Board ("IASB"). The significant accounting policies are as follows:

Critical accounting estimates and judgements The development of estimates and the exercise of judgment in applying accounting policies may have a material impact on the Company's reported assets, liabilities, revenues and expenses. The item which may have the most effect on the Company's financial statements is set out below.

The ultimate liability arising from claims made under insurance contracts The estimation of the ultimate liability arising from claims made under insurance contracts is the Company's most critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimate of the liability that the Company will ultimately pay for such claims.

The provision for claims incurred is necessarily based on estimates due to the fact that the ultimate disposition of claims incurred prior to the balance sheet date, whether reported or not, is subject to the outcome of events that have not yet occurred. Any estimate of future events, consequently, the amounts recorded in respect of unpaid losses may change significantly in the short term. Management engage independent actuaries to assist them in making such estimates, based on the Company's own loss history and relevant industry data.

Insurance and reinsurance contracts - classification Insurance and reinsurance contracts are those contracts that transfer significant insurance risk. As a general guideline, the Company defines as significant insurance risk the possibility of having to pay benefits on the occurrence of an insured event that are at least 10% more than the benefits payable if the insured event did not occur.

Contracts entered into by the Company with reinsurers under which the Company is compensated for losses on policies issued by the Company and that meet the classification requirements for insurance contracts are classified as reinsurance contracts held.

The benefits to which the Company is entitled under its reinsurance contracts held are recognized as reinsurance assets. Amounts recoverable from or due to reinsurers are measured consistently with the amounts associated with the reinsured insurance contracts and in accordance with the terms of each reinsurance contract.

The Company assesses its reinsurance assets for impairment on a regular basis, and if there is objective evidence that the reinsurance asset is impaired, the Company reduces the carrying amount of the reinsurance asset to its recoverable amount. The impairment loss is recognized in the income statement.

Claims Claims paid and outstanding claims are recorded based on claims reported to the Company by it's third party administrator and case manager and includes amounts for all losses reported but not settled and loss adjustment expenses. The Company records its estimated liability gross of any amounts recoverable under its own reinsurance. Recoverable amounts if any, under the reinsurance contract are estimated and reported separately as assets. The reinsured portion, if any, of reserves for losses is estimated in a manner consistent with the estimation of reserves for losses on the reinsured policies.

Cash at bank Cash at bank is comprised of cash and interest bearing deposits with original maturities of three months or less.

102 2004/5 Ownership Agreements CAYMAN ISLANDS NATIONAL INSURANCE COMPANY STATEMENT OF ACCOUNTING POLICIES (continued) FOR THE YEAR ENDING 30 JUNE 2009

Premiums Premiums are accounted for on a pro-rata basis over the periods covered by the insurance policy. Premiums for privately insured persons are payable monthly in advance on the first day of the month. Premiums for Government insured persons are payable monthly in advance on the last day of the month prior to that being insured. As a result, at the end of any given month, no amounts for unearned premiums are required to be recognized. Premiums received in advance are deferred and included in Premiums received in advance in the balance sheet. Reinsurance premiums ceded are similarly recognized on a pro-rata basis based on the contractual premium rate and number of insureds covered under the reinsurance policy. It is the Company's policy to lapse any policies where the premiums are unpaid for forty five days after the due date.

Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over of the period of the lease.

Disclosures about fair value of financial instruments With the exception of balances in respect of insurance contracts, the carrying amounts of all financial instruments approximate their fair values due to their short-term maturities.

Depreciation Fixed assets are depreciated on a straight line basis over their expected useful lives. The following depreciation rates have been estimated by management to approximate the expected useful life of each class of assets:

Office Equipment 5 years Computer and Telecommunications Equipment 3 years Leasehold Improvements over the term of the lease

Income taxes There is presently no taxation imposed on the Company by the Government of the Cayman Islands. As a result, no tax liability or

Changes in IFRS In order for these financial statements to comply with IFRS as well as US GAAP, the Company has applied the following new and revised IFRSs and revised International Accounting Standards (IASs) that are effective for the 2007 reporting year:

• IFRS 1 First-time Adoption of International Financial Reporting Standards • IFRS 7, Financial Instruments: Disclosures • IAS 39 (Amendment), The Fair Value Option; Cash Flow Hedge Accounting of Forecast IntraCompany Transactions; • IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts;

None of the above changes have a significant effect on the presentation, disclosure or accounting in the Company’s financial statements.

In order for future financial statements of the Company to comply with IFRS as well as US GAAP, the Company will need to apply the following standards, interpretations and amendments to published standards that are not yet effective:

IFRS 7, Financial Instruments: Disclosures, and a complementary Amendment to IAS 1, Presentation of Financial Statements - Capital Disclosures (effective from January 1, 2007). IFRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. The amendment to IAS 1 introduces disclosures about the level of an entity’s capital and how it manages capital. The Company assessed the impact of IFRS 7 and the amendment to IAS 1 and concluded that the main additional disclosures will be the sensitivity analysis to market risk and the capital disclosures required by the amendment of IAS 1. The Company will apply IFRS 7 and the amendment to IAS 1 from annual periods beginning July 1, 2007.

2008/9 Ownership Agreements 103 CAYMAN ISLANDS NATIONAL INSURANCE COMPANY LTD. FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

Budget 2008/9 Forecast 2007/8 Earned Premium:

Revenue from Civil Servants and Dependents 30,661,324 20,322,914 Revenue from Ministry of Health – Seamen and Veterans 4,500,000 4,457,546 9,178,102 Revenue from Portfolio of Civil Service - Pensioners 12,885,600 1,252,563 Revenue from Other 945,127

Total Income 48,992,051 35,211,126 Incurred Claims 43,024,019 39,054,886

Administrator Fees 2,556,176 1,765,691 Indigent Fund Fees 586,263 564,070

Salaries 665,105 637,090 Other Employee Exp. 106,408 87,510 Rent /Utilities/Maintenance 164,513 179,777 Office Equip / Supplies 20,000 17,000 Legal costs 24,350 18,000 Class A licence fees/other 30,000 30,000 Director fees 17,850 14,700 Marketing/Sales/Promotion 52,000 53,000 Actuarial consulting 48,000 82,540 Audit fees 57,629 55,154 Currency exchange losses - (18,000) Bad debt expense 30,000 50,000 Training expenses 8,000 8,000 Bank charges 15,000 20,000 48,081 Other 36,000 Total 4,417,294 3,612,614

Total Expenses 47,441,313 42,667,500

Underwriting Income/(Loss) 1,566,960 (7,456,374) 87,200 Investment Income 90,000

Net Loss/Income 1,656,961 (7,369,174)

104 2004/5 Ownership Agreements CAYMAN ISLANDS NATIONAL INSURANCE COMPANY LTD. FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/09 2007/08 Net Income/(loss) 1,656,960 (7,369,174)

Equity - Beginning of Year (7,019,507) (6,150,333)

Equity received 1,500,000 6,500,000

Equity – End of Year (3,862,547) (7,019,507)

Required minimum capital 3,000,000 3,000,000 Accumulated Deficit (23,798,387) (25,455,347)

Additional Paid-in-Capital 16,935,840 15,435,840

Equity - End of Year (3,862,547) (7,019,507)

Off Balance Sheet Equity (1) 7,000,000 5,000,000

Equity - End of Year for Statutory 3,137,453 (2,019,507)

purposes

(1) Off balances sheet equity is provided in the form of a letter of credit (LOC) guaranteed by government. LOC's are accepted forms of capital for regulatory purposes.

2008/9 Ownership Agreements 105 CAYMAN ISLANDS NATIONAL INSURANCE COMPANY LTD. FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/09 2007/08 Assets Cash 4,790,210 631,739 Receivables/Prepaids 5,034,484 4,001,362 Fixed assets 74,013 68,525

Total Assets 9,898,707 4,701,626

Liabilities Accounts payable 50,000 40,000 Premiums received in advance 65,044 59,131 Accruals and other liabilities 4,334,858 3,150,000 Provision for claims incurred but not reported 9,311,353 8,472,003

Total Liabilities 13,761,255 11,721,133

Equity Initial Paid-in-Capital 3,000,000 3,000,000 Additional Paid-in-Capital 16,935,840 15,435,840 Retained Earnings (23,798,387) (25,455,347)

Total Equity (3,862,547) (7,019,507)

Total Liabilities & Equity 9,898,707 4,701,626

106 2004/5 Ownership Agreements CAYMAN ISLANDS NATIONAL INSURANCE COMPANY LTD. FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/09 2007/08 Operating activities:

Net Income/(Loss) 1,656,960 (7,369,174) Non Cash adjustments 1,049,511 (1,520,036)

Cash flows from operating activities 2,706,471 (8,889,210)

Investing activities: Purchase on fixed assets (48,000) (77,372)

Cash flows from investing activities (48,000) (77,372)

Financing activities:

Equity investment 1,500,000 6,500,000 Additional paid-in capital - -

Cash flows from financing activities 1,500,000 6,500,000

Net cash inflow 4,158,471 (2,466,582)

Opening cash balances 631,740 3,098,322

Closing cash balances 4,790,210 631,740

2008/9 Ownership Agreements 107 CAYMAN ISLANDS NATIONAL INSURANCE COMPANY LTD. NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

The tables below illustrate CINICO’s equity position for statutory purposes, and its letter of credit balances. At the time of preparation of this budget the Company anticipates that government would grant the Company a $10 million letter of credit in addition to a $1.5 million equity injection already approved. It is estimated that $5 million of the total $10 million LOC would be drawn down by the end of the fiscal year June 30, 2008.

In order to maintain the required $3 million equity, and due to losses attributed in the 2007/8 forecast year, during the 2008/9 budget year the Company’s equity needs are as follows:

• The Company is anticipating a $1.0 million draw down of the 2007/8 LOC. • The Company requires a $500,000 cash equity injection, • An additional $3.0M LOC.

Assuming the above injections the Company will contain $3.1 million in Statutory Equity and within the $3.0 million requirement. However the Company will have negative $3.9 million in equity, and may need to draw down additional equity for the LOC over and above what is anticipated in 2008/9.

Equity for Statutory Purposes 2006/7 Actual 2007/8 Forecast 2008/9 Budget

Opening shareholders equity (3,883,214) (6,150,333) (7,019,507)

Net income/(loss) for the period (6,267,119) (7,369,174) 1,656,960

Equity Injection Cash 4,000,000 1,500,000 500,000 Drawdown of Letter of Credit 5,000,000 1,000,000 subtotal 4,000,000 6,500,000 1,500,000

Closing shareholders equity (6,150,333) (7,019,507) (3,862,547)

Off balance sheet equity Letter of Credit balance - 5,000,000 7,000,000

Equity for Statutory Purposes (6,150,333) (2,019,507) 3,137,453

Minimum required equity 3,000,000 3,000,000 3,000,000

Surplus/(Gap) in equity (9,150,333) (5,019,507) 137,453

2007/8 Letter of Credit Forecast 2008/9 Budget Total

Opening balance 5,000,000 -

New letter of credit 10,000,000 3,000,000 13,000,000 Drawdown (5,000,000) (1,000,000) (6,000,000)

Closing balance 5,000,000 7,000,000 7,000,000

108 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Cayman Islands National Museum

For the year ending 30 June 2009

2008/9 Ownership Agreements 109

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

110 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that Cabinet and the Board of the Cayman Islands National Museum have agreed that the Cayman Islands National Museum will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Cayman Islands National Museum is to operate during the year.

General Nature of Activities

The Cayman Islands National Museum celebrates the unique natural and cultural heritage of our three Islands. Through our dynamic programmes, exhibits, and collections, we nurture a living connection with the nation’s past and its future quality of life.

Scope of Activities

The scope of the Cayman Islands National Museum activities is as follows:

• Collection and preservation of material evidence to our culture, history and heritage, including: i. collection, documentation and preservation of material ii. protection, scientific research of, and limited public access to Museum collections, and materials of Caymanian heritage

• Public access to, and educational services from, displays, exhibitions, library, publications research collections and programmes of the Museum including: i. providing exhibitions and displays and general public access to them and Museum facilities ii. provision of a land-based Maritime Heritage Trail and Shipwreck Preserves iii. provision of restaurants, shops and other facilities for the use by the public and in furtherance of the mission and purposes of the Museum iv. Liaising with local and international groups having similar objectives, for loan or exchange of artifacts and exhibits, and the exchange of knowledge and information

• Services to the Ministry and to Government generally in: i. overseeing that the Museum fulfils its mission and purposes ii. providing requests for information to further the cultural well being of the Cayman Islands iii. assisting in the creation of National Culture Policies and plans; and any necessary legislation iv. providing reports and other documentation requested specifically by our Ministry, Cabinet and other Government Departments generally

Customers and Location of Activities

The services provided by the Cayman Islands National Museum are provided only in the Cayman Islands.

2008/9 Ownership Agreements 111 3. Strategic Goals

The key strategic goals (from an ownership perspective) for the Cayman Islands National Museum for the 2008/9 financial year are as follows:

• Continue to collect material evidence of artistic, historic, or scientific significance to the Cayman Islands, both terrestrial and underwater.

• Ongoing conservation of 45% (approximately 3,000+ artifacts) of the National Collection affected by seawater flooding during Hurricane Ivan.

• Provide exhibitions and displays and general public access to them.

• Incorporate research findings on collections, terrestrial and underwater archaeological sites into public exhibitions, programmes and publications when possible.

• Continue to provide with our partners a land-based Maritime Heritage Trail.

• Develop with our partners the Cayman Islands first Shipwreck Preserves.

• Provide a cafe, shop and other facilities for the use by the public.

• Create with our expanded Heritage One Partners a new product.

• Liaise with local and international groups having similar objectives, for loan or exchange of artifacts and exhibits, and the exchange of knowledge and information.

• Provide a Traditional Arts Programme (including Traditional Thatch Work Apprenticeship Programme) for Caymanian masters and apprentices.

• Resume the following special events: Looky Ya (monthly), International Museums Day (May), Anniversary (Nov), Museum Friends Christmas Party (Dec).

• Assist the Sister Islands and the districts in Grand Cayman with Museum related issues and activities as needed.

• Continue to partner with National Archive, National Trust and the Deptartment of Environment on maritime related issues and programmes.

• Resume partnering with the Turtle Farm, Botanic Gardens and Pedro St. James on the Heritage Passport Programme.

• Continue to partner with various organizations in the protection, research, legislation, and educational activities relating to the Islands’ maritime heritage e.g. shipwrecks.

• Assist the Deptartment of Tourism and other related organizations/institutions in marketing the cultural product of these Islands.

• Continue to prepare and support government’s requests for information to further the cultural well being of the Cayman Islands.

• Assist the Ministry in creating national cultural policies and plans; and any necessary legislation.

• Provide reports and other documents requested by the Ministry.

• Establish a new organizational structure, review current staff roles/responsibilities, fill new/vacant posts and implement appropriate decision-making structures, etc. in support of the Museum’s vision, mission, and core values.

• Enhance the effectiveness of the Board in support of the vision, mission and goals.

• Research and pursue the designation of the ‘Old Courts Building’ as a ‘World Heritage Site’.

112 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for the Cayman Islands National Museum for the 2008/9 financial year are as follows.

Financial Performance

2008/9 Financial Performance Measure $ Revenue from Cabinet 853,000 Revenue from ministries, portfolios, statutory authorities and government 0 companies Revenue from other persons or organisations 247,000

Ownership expenses 1,100,000

Surplus/deficit from outputs 0

Net Surplus/Deficit 0

Total Assets 2,812,064

Total Liabilities 5,000

Net Worth 2,807,064

Cash flows from operating activities 9,619

Cash flows from investing activities (809,000)

Cash flows from financing activities 475,000

Change in cash balances (324,381)

2008/9 Financial Performance Ratio Target $ Current Assets: Current Liabilities 79.6:1

Total Assets: Total Liabilities 562.4:1

2008/9 Ownership Agreements 113

Maintenance of Capability

2008/9 Human Capital Measures Target Total full time equivalent staff 15

Staff turnover (%) 50%

Average length of service (Number) Senior management 12 years Professional staff 12 years Administrative staff 3 years Some reorganisation of duties, Significant changes to personnel management system realisation of proper staffing levels

2008/9 Physical Capital Measures Target $2,812,064 Value of total assets

Asset replacements: total assets 0

Book value of depreciated assets: initial cost of those assets 13:1

Depreciation: Cash flow on asset purchases -

Changes to asset management policies See notes in risk management

2008/9 New Major Capital Expenditure Projects Target $ Museum Refurbishment Project (809,000)

Existing Major Capital Expenditure Projects Project Status

None 0

114 2004/5 Ownership Agreements

Risk Management

Change in Financial value of Key risks status from Actions to manage risk risk previous year 1. Loss or damage to the N.B. see note (h) non renewable National on accounting Collection by: policies regarding the Collection a) Fire No Sufficient fire extinguishers that are regularly serviced. Replacement or

restoration of items Hired security during after-hours lost or damaged as events i.e. street dances a result of the The age and configuration of the event historic building housing the Museum does not permit the installation of fire sprinklers

Annual hurricane preparedness Replacement or b) Hurricane or Severe No exercises restoration of items Storm lost or damaged as Removal and safe storage of a result of the Due to the close proximity to artifacts when a hurricane is event the water the National approaching Collection is at risk throughout the year Continuous internal and external building maintenance

Continue to Regular pest control management implement planned c) Pest infestation No action.

The building’s materials and

construction increase its Basic insurance coverage is in vulnerability place for the building and its Financial loss of

contents. replacing or d) Insurance No restoring artifacts

Seek the expertise of a certified not fully

valuer to establish the replacement valued

cost of the National Collection for

insurance purposes

The collection is in new rental

storage post Ivan

Monthly rental cost Land has been vested by Govt. for

2. Inadequate storage a purpose-built facility to No facilities result in accommodate the current and

deterioration of National future needs of the National Collection. Collection

2008/9 Ownership Agreements 115 5. Summarised Forecast Financial Statements

A full set of forecast financial statements for the Cayman Islands National Museum is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 Operating Statement Target $ Revenue 1,100,000

Operating Expenses 1,100,000

Net Surplus/Deficit 0

2008/9 Balance Sheet Target $ Assets 2,812,064

Liabilities 0

Net Worth 2,812,064

2008/9 Statement of Cash Flows Target $ Net cash flows from operating activities 9,619

Net cash flows from investing activities (809,000)

Net cash flows from financing activities 475,000

116 2004/5 Ownership Agreements

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Transaction Amount for 2008/9 $ Equity Investments into Cayman Islands National Museum 475,000 Capital Withdrawls from Cayman Islands National Museum Nil

Dividend or Profit Distributions to be made by Cayman Islands National Museum Nil

Government Loans to be made to Cayman Islands National Museum Nil Government Guarantees to be issued in relation to Cayman Islands National Nil Museum Related Party Payments (Non Remuneration) made to Key Management Personnel11 None

Remuneration12 Payments made to Key Management Personnel 89,958

Remuneration Payments made to Senior Management 130,164

Number for

2008/9 No of Key Management Personnel 1

No of Senior Management 2

11 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 12 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

2008/9 Ownership Agreements 117 7. Agreement

Scope of this Agreement

In signing this document: • The Cayman Islands National Museum undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and

• Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that the Cayman Islands National Museum will seek to achieve for the 2008/9 financial year and that the Executive Council will monitor performance against.

------Hon. Alden M. McLaughlin Jr., JP Minister of Education, Training, Employment, Youth, Sports and Culture/ International Financial Services Policy on behalf of Cabinet

------Harris McCoy Chairman of the Board The Cayman Islands National Museum

June 25, 2008

118 2004/5 Ownership Agreements

Appendix: Forecast Financial Statements

THE CAYMAN ISLANDS NATIONAL MUSEUM STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for the Cayman Islands National Museum for the year ended 30 June 2009. (c) comply with generally accepted accounting practice.

------Harris McCoy Chairman of the Board The Cayman Islands National Museum

June 25, 2008

2008/9 Ownership Agreements 119 THE CAYMAN ISLANDS NATIONAL MUSEUM STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

Financial statements are prepared in accordance with United States generally accepted accounting principles. The following is a summary of the significant accounting policies adopted by the Museum:

Use of estimates: The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the year. Actual results could differ from those estimates.

Admissions, membership dues, fundraising income and donations: Income earned on admissions, membership dues, fundraising, and donations are recorded in the period in which the payment is received

Government grants: Government grants are provided on a quarterly basis for financial support and are recorded when received. Certain grants cover staff costs and related expenditures of the Museum. Grant income and expenditures are recorded gross in the financial statements

Product sales, rental income, interest and other income: Income on the sale of goods is recognised in the statements of activities at the point of the sale. Rental income, interest and other income are recognised on an accrual basis.

Inventories: Inventories consist of products sold in the Museum Shop and valued on an average cost basis less an allowance for obsolete and slow moving items

Fixed assets: Fixed assets are recorded at cost and depreciated on a straight line basis over an expected future life of five years

Cash and cash equivalents: Cash and cash equivalents include cash at bank and fixed deposits with original maturities of three months or less.

Collections, exhibits and artifacts: Consistent with the practice followed by many museums, collections, exhibits and artifacts purchased and donated are not recorded in the statements of financial position. The cost of all objects purchased is recorded as an expense in the statements of activities. Objects acquired by gift or donations are not recorded in these financial statements since it is difficult to obtain an objective measurement or valuation of these items. Proceeds from the sale of collections, exhibits and artifacts are used exclusively for the purchase of other objects.

Donated services: A substantial number of unpaid volunteers make significant contributions of their time to develop the Museum’s programmes. The value of this contributed time is not reflected in these financial statements since objective measurement or valuation is not considered practicable

Foreign exchange: Revenue and expense transactions involving currencies other than Cayman Islands dollars are translated at the exchange rates ruling at the time of those transactions. Assets and liabilities included in these financial statements are translated at the rates of exchange prevailing at the date of the statements of financial position. Gains and losses on exchange are taken to the statements of activities

120 2004/5 Ownership Agreements CAYMAN ISLANDS NATIONAL MUSEUM FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast Note $ $ Revenue Outputs to Cabinet 853,000 827,000 Outputs to other government agencies Outputs to others 247,000 206,044 Interest revenue Total Operating Revenue 1,100,000 1,033,044

Operating Expenses Personnel costs 1 511,618 449,944 Supplies and consumables 2 389,132 472,152 Depreciation 3 0 39,000 Capital charge 0 0 Other operating expenses 199,250 0 Total Operating Expenses 1,100,000 961,096

Surplus from operating activities and before extraordinary items - 71,948 - Extraordinary items - - Net Surplus - 71,948

2008/9 Ownership Agreements 121 CAYMAN ISLANDS NATIONAL MUSEUM FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Opening balance net worth 2,332,064 2,273,127 Net surplus - 71,948 Property revaluations - - Investment revaluations - - Net revaluations during the period - - Total recognised revenues and expenses 2,332,064

Equity investment 475,000 - Repayment of surplus - - Capital withdrawl - -

Closing balance net worth 2,807,064 2,345,072

122 2004/5 Ownership Agreements THE CAYMAN ISLANDS NATIONAL MUSEUM FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Current Assets Cash and cash equivalents 119,374 443,755 Accounts receivable 218,250 211,368 Inventories 60,591 111,501

Total Current Assets 398,215 766,624

Non-Current Assets Property, plant and equipment 2,413,849 1,604,849 Other non-current assets -

Total Non-Current Assets 2,413,849 1,604,849

Total Assets 2,812,064 2,371,473

Current Liabilities Accounts payable 5,000 26,401 Unearned revenue Employee entitlements Other current liabilities

Total Current Liabilities 5,000 26,401

Non-Current Liabilities Employee entitlements Other non-current liabilities -

Total Non-Current Liabilities -

Total Liabilities 5,000 26,401

TOTAL ASSETS LESS TOTAL LIABILITIES 2,807,064 2,345,072

NET WORTH Contributed capital 1,362,117 887,117 Asset revaluation reserve Accumulated surpluses 1,444,947 1,457,955

Total Net Worth 2,807,064 2,345,072

2008/9 Ownership Agreements 123 CAYMAN ISLANDS NATIONAL MUSEUM FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts Outputs to Cabinet 851,118 804,125 Outputs to other government agencies Outputs to others 258,501 206,044 Interest received Payments Personnel costs (511,618) (449,944) Suppliers (588,382) (472,152) Other payments (39,000) Changes in operating assets and liabilities 9,628

Net cash flows from operating activities 9,619 58,701

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of non-current assets (809,000) (1,100,000) Proceeds from sale of non-current assets - -

Net cash flows from investing activities (809,000) (1,100,000)

CASH FLOWS FROM FINANCING ACTIVITIES Equity investment 475,000 - Repayment of surplus Insurance Proceeds - -

Net cash flows from financing activities 475,000 -

Net increase/(decrease) in cash and cash equivalents (324,381) (1,041,299) Cash and cash equivalents at beginning of period 443,755 1,648,204

Cash and cash equivalents at end of period 119,374 606,905

124 2004/5 Ownership Agreements

Appendix: CAYMAN ISLANDS NATIONAL MUSEUM

Vision Statement

• Cultivate pride and celebrate Caymanian cultural heritage and natural history by educating Caymanians, residents and visitors of all ages about the uniqueness and commonalities of the three Cayman Islands.

• Nurture children to become the caretakers and architects of Caymanian culture and the natural history of the Cayman Islands.

• Present the many voices of the people of the Cayman Islands in order to reflect the Islands’ diverse cultures and cultural values.

• Participate in an honest and open dialogue with community and visitors.

• Synthesise and present the diverse influences impacting Caymanian culture including the natural history, prehistoric and early historic eras, as well as contemporary issues.

• Aid the inevitable evolution of Caymanian society by helping people to understand the importance of interpreting cultural values and beliefs in order to make decisions for the future.

2008/9 Ownership Agreements 125 126 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Cayman Islands Stock Exchange Limited

For the year ending 30 June 2009

2008/9 Ownership Agreements 127 Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

128 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of the Cayman Islands Stock Exchange Ltd. have agreed that The Cayman Islands Stock Exchange Ltd. will seek to achieve during the 2008/9 financial year. The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Cayman Islands Stock Exchange Ltd. is to operate during the year.

General Nature of Activities

The Cayman Islands Stock Exchange Ltd. activities involve establishing and operating a securities market for the listing and trading of securities in the Cayman Islands.

Scope of Activities

The scope of the Cayman Islands Stock Exchange Ltd. activities are as follows:

• Operation of the Exchange for the trading of securities, including the operation of an electronic trading platform and related trading and clearance tracking processes and the operation of a crossing market.

• Admission of persons (brokers) as Exchange members.

• Listing of securities on the Exchange and the appointment of Listing Agents.

• Regulate listed issuers and broker members through the establishment and monitoring of Listing Rules and Membership Rules.

• Promote listing, membership and use of the Exchange.

Customers and Location of Activities

The services provided by the Cayman Islands Stock Exchange Ltd. are provided only in the Cayman Islands. The customers of the stock exchange are issuers of securities, corporate entities acting as listing agents, and broker members.

2008/9 Ownership Agreements 129

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for the Cayman Islands Stock Exchange Ltd for the 2008/9 financial year are as follows:

• Continue the development and implementation of a strategy for maintaining a sustainable growth in CSX listings.

• Examine eligibility and suitability of applications for admission to listing within the targeted turnaround times and approve those applications that comply with the requirements of the listing rules.

• Examine eligibility and suitability of applications made to the CSX for authorisation of listing agents and broker members and grant such authorisation to listing agents and broker members who meet the eligibility criteria set out in the listing and membership rules.

• Monitor compliance of listed issuers with continuing obligations of the CSX and regulate conduct of broker members and listing agents.

• Monitor all price movements in CSX listed securities in accordance with its membership rules.

• Continue providing the crossing market services for transaction reporting by the CSX broker members authorised for that purpose.

• Progress as far as possible in the field of achieving recognitions by international regulatory bodies.

• Provide exclusive CUSIP numbering agency services for issuing CUSIP/ISIN numbers to issuers and securities registered in the Cayman Islands and the British Virgin Islands.

• Continue encouraging Caymanian employees’ progression through sponsorship and training programmes.

130 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for the Cayman Islands Stock Exchange Ltd for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Budget Forecast $ $ Revenue from Cabinet 0 0 Revenue from ministries, portfolios, statutory authorities and 0 0 government companies Revenue from other persons or organisations 2,308,116 1,674,820

Surplus/deficit from outputs 0 0

Other expenses 1,499,247 1,307,032

Net Surplus/Deficit 808,869 367,788

Total Assets 2,088,291 890,073

Total Liabilities 167,469 161,093

Net Worth 1,920,822 728,980

Cash flows from operating activities 915,378 286,266

Cash flows from investing activities (29,518) (37,158)

Cash flows from financing activities (606,652) (275,841)

Change in cash balances 279,208 (26,732)

2008/9 2007/8 Financial Performance Ratio Budget Forecast $ $ Current Assets: Current Liabilities 12:1 5:1

Total Assets: Total Liabilities 12:1 6:1

2008/9 Ownership Agreements 131

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Budget Forecast $ $ Total full time equivalent staff 8 9

Staff turnover (%) (Equal to one person) 12.5%

Average length of service (Number) Senior management 4.0 years 4.9 years Professional staff 8.6 years 3.78 years Administrative staff 3.8 years 4.6 years 1 new staff: Senior Significant changes to personnel management system Listings Executive

2008/9 2007/8 Physical Capital Measures Budget Forecast $ $ Value of total assets 25,545 34,314

Asset replacements: total assets 0.01:1 0

Book value of depreciated assets: initial cost of those assets 0.02:1 0.23:1

Depreciation: Cash flow on asset purchases 1.30:1 3.4:1

Changes to asset management policies N/A 0

2008/9 2007/8 Major Capital Expenditure Projects Budget Forecast $ $ None N/A N/A

132 2004/5 Ownership Agreements

Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk Loss of key personnel Risk unchanged Creating incentives to retain Unquantifiable such personnel Loss of international Risk increased Active programme to Potentially equal reputation proportionally as maintain reputation including to the total Exchange has grown in management of suitability of assets of the size and trading activity applications for listing, Exchange increases monitoring of ongoing compliance with listing rules and gaining and maintaining international recognitions Loss of listed issuers Risk reduced due to Establishment and Loss of attempts to diversify and maintenance of relationships associated as Exchange has grown with issuers and programme revenue substantially and is of diversification becoming less and less dependent on individual issuers Loss of crossing market Risk unchanged Programme of diversification Loss of into different business associated activities revenue Inability to obtain Risk unchanged due to Active programme to Unquantifiable international recognitions relevant jurisdictional persuade international issues affecting regulatory bodies to grant Exchange business recognitions and diversification into different geographical markets Loss of CUSIP agency Risk unchanged Programme of diversification Loss of into different business associated activities revenue

2008/9 Ownership Agreements 133

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for the Cayman Islands Stock Exchange Ltd. is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 2,308,116 1,674,820

Operating Expenses 1,499,247 1,307,032

Net Surplus/Deficit 808,869 367,788

2008/9 2007/8 Balance Sheet Budget Forecast $ $ Assets 2,088,291 890,073

Liabilities 167,469 161,093

Net Worth 1,920,822 728,980

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 915,378 286,267

Net cash flows from investing activities (29,518) (37,158)

Net cash flows from financing activities (606,652) (275,841)

134 2004/5 Ownership Agreements

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Amount for Transaction 2008/9 2007/8 $ $ Equity Investments into The Cayman Islands Stock Exchange Ltd Nil Nil

Capital Withdrawals from The Cayman Islands Stock Exchange Ltd Nil Nil Dividend or Profit Distributions to be made by The Cayman Islands Stock Exchange 606,652 275,841 Ltd Government Loans to be made to The Cayman Islands Stock Exchange Ltd Nil Nil Government Guarantees to be issued in relation to The Cayman Islands Stock Nil Nil Exchange Ltd Related Party Payments (Non Remuneration) made to Key Management Nil Nil Personnel13 Remuneration14 Payments made to Key Management Personnel 505,200 399,200

Remuneration Payments made to Senior Management 505,200 399,200

Number for Number for

2008/9 2007/8 No of Key Management Personnel 4 3

No of Senior Management 4 3

13 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 14 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

2008/9 Ownership Agreements 135

7. Agreement

Scope of this Agreement

In signing this document:

• The Cayman Islands Stock Exchange Ltd. undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that The Cayman Islands Stock Exchange Ltd will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Kenneth Jefferson, JP Financial Secretary on behalf of the Cabinet

------Anthony Travers Chairman of the Board The Cayman Islands Stock Exchange Ltd

June 25, 2008

136 2004/5 Ownership Agreements

Appendix: Forecast Financial Statements

THE CAYMAN ISLANDS STOCK EXCHANGE LTD. STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for The Cayman Islands Stock Exchange Ltd. for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Anthony Travers Chairman of the Board The Cayman Islands Stock Exchange Ltd.

June 25, 2008

2008/9 Ownership Agreements 137

THE CAYMAN ISLANDS STOCK EXCHANGE LTD. FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

THE CAYMAN ISLANDS STOCK EXCHANGE

STATEMENT OF INCOME

For the year ended June 30, 2009 2008/09 2007/08 (Expressed in Cayman Islands dollars) BUDGET FORECAST

Note Revenues Operations 2 1,446,480 1,111,769 Cusip 823,749 523,446 Interest 37,887 37,537 Amortisation of capital grant - 2,068 Consultancy and miscellaneous - -

2,308,116 1,674,820

Operating expenses Personnel 3 929,840 867,767 Lease of office 4 68,000 65,800 Utilities 5 51,652 58,989 Cusip 6 164,750 104,689 Legal and professional fees 7 40,846 33,296 Marketing, travel and subsistence 8 69,700 23,288 Memberships and subscriptions 9 26,370 26,370 Lease of Bloomberg terminals 10 21,420 21,420 Printing, courier, postage and stat'y 23,947 15,559 Technology 11 31,100 26,106 Insurance 12 4,579 8,791 Depreciation 38,287 34,409 Training 1,500 1,500 Other office and miscellaneous 27,257 19,048

1,499,247 1,307,033

Operating (loss)/profit for the period 808,869 367,788

Government operating grant: - -

Net profit for the period 808,869 367,788

Dividend payable to Government (606,652) (275,841)

Net surplus/(deficit) after dividend CI$ 202,217 91,947

138 2004/5 Ownership Agreements

THE CAYMAN ISLANDS STOCK EXCHANGE LTD. FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

THE CAYMAN ISLANDS STOCK EXCHANGE LTD.

Forecast Statement of Changes in Net Worth

For the years ended June 30, 2009 and 2008

(stated in Cayman Islands dollars)

2008/09 2007/08 BUDGET FORECAST

Opening balance net worth 728,980 637,033

Net income/(loss) for the period 808,869 367,788 Net revaluations during the period - -

Total recognised revenues and expenses 1,537,849 1,004,821

Distribution of surplus (606,652) (275,841) Capital withdrawals - -

Closing balance net worth CI$ 931,197 728,980

2008/9 Ownership Agreements 139 THE CAYMAN ISLANDS STOCK EXCHANGE LTD. FORECAST BALANCE SHEET FOR THE YEAR ENDING 30 JUNE 2009

THE CAYMAN ISLANDS STOCK EXCHANGE LTD.

Forecast Balance Sheet

As at June 30, 2009

(stated in Cayman Islands dollars)

2008/09 2007/08 BUDGET FORECAST

Current assets Cash and cash equivalents 1,623,954 682,194 Accounts receivable 421,991 153,176 Prepayments and other receivables 16,801 20,389 Total current assets 2,062,746 855,759 Long-term assets Fixed assets 25,545 34,314

Total assets CI$ 2,088,291 890,073

Current liabilities Accounts payable 105,940 101,015 Deferred annual fees 21,710 26,937 Current portion of government grant - 1,218 Employee leave entitlement 39,820 31,500 Total current liabilities 167,469 160,670

Long-term liabilities Deferred Government capital grant - 423 Total long-term liabilities - 423

Total liabilities 167,469 161,093 Shareholder's equity Share capital 100,000 100,000 Additional paid-in capital 71,926 71,926 Retained earnings 1,748,896 557,054

Total shareholder's equity 1,920,822 728,980

Total liabilities and shareholder's equity CI$ 2,088,291 890,073

140 2004/5 Ownership Agreements THE CAYMAN ISLANDS STOCK EXCHANGE LTD. FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

THE CAYMAN ISLANDS STOCK EXCHANGE LTD.

Forecast Statement of Cash Flows

As at June 30, 2009

(stated in Cayman Islands dollars)

2008/09 2007/08 BUDGET FORECAST

Cash flows from operating activities Net profit for the period 808,869 367,788

Adjusted for: Depreciation 38,287 34,409 Amortisation of Government capital grant - (2,068) Loss on disposal of fixed assets - - Provision for bad debts - - 847,156 400,129

(Increase)/decrease in accounts receivable 59,069 (120,685) (Increase) in prepayments and other receivables (847) (90) Increase in accounts payable and accrued liabilities 1,115 2,100 Increase in accrued liabilities 4,920 - (Decrease)/increase in deferred annual fees 2,214 Increase in employee leave entitlement 1,896 - Increase/(decrease) in deferred Gov. capital grant 2,068 2,599

Net cash from operating activities 915,378 286,266

Cash flows used in investing activities Proceeds from the disposal of fixed assets - - Purchase of fixed assets (29,518) (37,158) Net cash used in investing activities (29,518) (37,158)

Cash flows from financing activities Proceeds from Government capital grant - - Equity dividend paid (606,652) (275,841) Net cash from financing activities (606,652) (275,841)

Net (decrease)/increase in cash for period 279,208 (26,732)

Cash and cash equivalents at beginning of period 1,344,746 708,926

Cash and cash equivalents at end of period CI$ 1,623,954 682,194

2008/9 Ownership Agreements 141 142 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Cayman National Cultural Foundation

For the year ending 30 June 2009

2008/9 Ownership Agreements 143

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

144 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of Cayman National Cultural Foundation have agreed that Cayman National Cultural Foundation will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Cayman National Cultural Foundation is to operate during the year.

General Nature of Activities

The Cayman National Cultural Foundation’s mission is to stimulate, facilitate and preserve cultural and artistic expression generally, particularly the preservation and exploration of Caymanian performing, visual and literary arts.

Scope of Activities

The Cayman National Cultural Foundation scope of activities are as follows:

• The stimulation and facilitation of culture generally;

• The development, maintenance and management of theatres and other cultural facilities, in particular the F J Harquail Cultural Centre;

• Organising cultural festivals;

• Stimulation of the development of local talent by means of training, workshops, competitions, exhibitions, pageants, parades, displays and other such activities;

• Assisting persons in developing cultural and artistic expression, including the preservation and exploration of Caymanian cultural heritage.

Customers and Location of Activities

The services provided by the Cayman National Cultural Foundation are provided to the community of the Cayman Islands.

2008/9 Ownership Agreements 145

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for the 2008/9 financial year are as follows: • Raise the profile and standards of CNCF’s contributions to cultural development and the arts, and increase opportunities for participation in its work and programmes by the general populace and visitors over a 5- year period.

• Actively participate in and support regional and international initiatives that promote and respect cultural diversity so as to significantly raise the regional and international profile of the arts and culture of the Cayman Islands.

• Develop a disaster response and recovery plan to ensure adequate protection is provided for CNCF relevant documents, products, collections and physical plant.

• Advocate for and facilitate the development of effective partnerships with other cultural groups and Government, to pool information and resources and identify national priorities for culture and the arts.

• Promote and defend the artist’s right to create and express freely, within the boundaries of the laws of the country.

146 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for the Cayman National Cultural Foundation for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 841,000 814,720 Revenue from ministries, portfolios, statutory authorities and - - government companies Revenue from other persons or organisations 309,160 361,095

Surplus/deficit from outputs - -

Ownership expenses 1,150,160 1,175,815

Net Surplus/Deficit - -

Total Assets 4,312,795 4,312,795

Total Liabilities 19,876 19,876

Net Worth 4,262,917 4,262,917

Cash flows from operating activities 74,710 69,688

Cash flows from investing activities - -

Cash flows from financing activities - -

Change in cash balances 74,710 69,688

2008/9 2007/8 Financial Performance Ratio Target Forecast $ $ Current Assets: Current Liabilities 29:1 29:1

Total Assets: Total Liabilities 264:1 264:1

2008/9 Ownership Agreements 147

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 7 7

Staff turnover (%) 0% 0%

Average length of service (Number) Senior management - - Professional staff - - Administrative staff - -

Significant changes to personnel management system None None

2008/9 2007/8 Physical Capital Measures Target Forecast $ $ Value of total assets 4,312,795 4,282,795

Asset replacements: total assets Not available Not available

Book value of depreciated assets: initial cost of those assets - -

Depreciation: Cash flow on asset purchases - -

Changes to asset management policies None None

2008/9 Major Capital Expenditure Projects Target $ None -

148 2004/5 Ownership Agreements

Risk Management

Change in Key risks Financial value of status from Actions to manage risk risk previous year 1. Loss or damage to the Theatrical Equipment and Building

a) Fire No Sufficient fire extinguishers that are Replacement or regularly serviced. restoration of items

lost or damaged as

a result of the

event

Annual hurricane preparedness Replacement or b) Hurricane or Severe No exercises restoration of items Storm lost or damaged as Removal and safe storage of a result of the Equipment when a hurricane is event approaching

Continuous internal and external building maintenance Continue to Regular pest control management implement planned action.

2008/9 Ownership Agreements 149

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Cayman National Cultural Foundation is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 1,150,160 1,175,815

Operating Expenses 1,150,160 1,175,815

Net Surplus/Deficit 0 0

As at 30 June As at 30 June Balance Sheet 2008 2007 $ $ Assets 4,312,795 4,282,795

Liabilities 19,878 19,878

Net Worth 4,292,917 4,262,917

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 74,710 69,688

Net cash flows from investing activities - -

Net cash flows from financing activities - -

150 2004/5 Ownership Agreements

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Amount for Transaction 2008/9 2007/8 $ $ Equity Investments into Cayman National Cultural Foundation Nil Nil Capital Withdrawls from Cayman National Cultural Foundation Nil Nil Dividend or Profit Distributions to be made by Cayman National Nil Nil Cultural Foundation Government Loans to be made to Cayman National Cultural Nil Nil Foundation Government Guarantees to be issued in relation to Cayman National Nil Nil Cultural Foundation Related Party Payments (Non Remuneration) made to Key None None Management Personnel15 Remuneration16 Payments made to Key Management Personnel $153,373 $153,373 Remuneration Payments made to Senior Management $113,676 $113,676

Number for Number for

2008/9 2007/8 No of Key Management Personnel 2 2

No of Senior Management 2 2

15 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 16 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

2008/9 Ownership Agreements 151

7. Agreement

Scope of this Agreement In signing this document: • Cayman National Cultural Foundation undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Cayman Cultural Foundation will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Alden M. McLaughlin Jr., JP Minister of Education, Training, Employment, Youth, Sports and Culture /International Financial Services Policy on behalf of Cabinet

------Martyn C.W. Bould Chairman of the Board Cayman National Cultural Foundation

June 25, 2008

152 2004/5 Ownership Agreements

Appendix: Forecast Financial Statements

CAYMAN NATIONAL CULTURAL FOUNDATION STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Cayman National Cultural Foundation for the year ended 30 June 2009. (c) comply with generally accepted accounting practice.

------Martyn C.W. Bould Chairman of the Board Cayman National Cultural Foundation

June 25, 2008

2008/9 Ownership Agreements 153 CAYMAN NATIONAL CULTURAL FOUNDATION FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Note Revenue Outputs to Cabinet 841,000 814,720 Outputs to other government agencies - - Outputs to others 309,160 361,095 Insurance proceeds - -

Total Operating Revenue 1,150,160 1,175,815

Operating Expenses Personnel costs 427,963 427,963 Supplies and consumables 512,737 663,392 Depreciation 84,460 84,460 Capital charge - - Other operating expenses 125,000 -

Total Operating Expenses 1,150,160 1,115,815

Surplus / (Deficit) from operating activities and before Nil Nil extraordinary items

Extraordinary items - - Net Surplus - -

154 2004/5 Ownership Agreements CAYMAN ISLANDS NATIONAL CULTURAL FOUNDATION FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Note Opening balance net worth 4,262,917 4,262,917 Net surplus - - Property revaluations - - Investment revaluations - - Net revaluations during the period - - Total recognised revenues and expenses - -

Equity investment - - Repayment of surplus - - Capital withdrawl - -

Closing balance net worth 4,262,917 4,262,917

2008/9 Ownership Agreements 155 THE CAYMAN NATIONAL CULTURAL FOUNDATION FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Note Current Assets Cash and cash equivalents 2 314,576 239,866 Accounts receivable 3 275,750 172,500 Inventories 4 92,748 156,248

Total Current Assets 683,074 568,614

Non-Current Assets Property, plant and equipment 5 3,629,721 3,714,181 Other non-current assets - -

Total Non-Current Assets 3,629,721 3,714,181

Total Assets 4,312,795 4,282,795

Current Liabilities Accounts payable 19,878 19,878 Unearned revenue - - Employee entitlements - - Other current liabilities - -

Total Current Liabilities 19,878 19,878

Non-Current Liabilities Employee entitlements - - Other non-current liabilities - -

Total Non-Current Liabilities - --

Total Liabilities 19,878 19,878

TOTAL ASSETS LESS TOTAL LIABILITIES 4,292,917 4,262,917

NET WORTH Contributed capital 4,330,917 4,300,917 Asset revaluation reserve - - Accumulated surpluses (38,000) (38,000)

Total Net Worth 4,292,917 4,262,917

156 2004/5 Ownership Agreements CAYMAN NATIONAL CULTURAL FOUNDATION FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast Note $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts Outputs to Cabinet 831,250 799,948 Outputs to other government agencies - - Outputs to others 309,160 361,095 Insurance proceeds - - Payments - - Personnel costs (427,963) (427,963) Suppliers (512,737) (663,392) Other payments (Other Operating Expense) - -

Net cash flows from operating activities 74,710 69,688

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of non-current assets - - Proceeds from sale of non-current assets - -

Net cash flows from investing activities 0 0

CASH FLOWS FROM FINANCING ACTIVITIES Equity investment - - Repayment of surplus - - Insurance Proceeds - -

Net cash flows from financing activities 0 0

Net increase/(decrease) in cash and cash equivalents 74,710 69,688 Cash and cash equivalents at beginning of period 239,866 170,178

Cash and cash equivalents at end of period 314,576 239,866

2008/9 Ownership Agreements 157 CAYMAN NATIONAL CULTURAL FOUNDATION NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

NOTE 1 - OPERATING REVENUES 2008/9 2007/8 Budget Forecast $ $ OPERATING REVENUES ARE AS FOLLOWS: Government Grant 841,000 814,720

Total Support 841,000 814,720

Fundraising/Productions 309,160 361,095 Insurance proceeds - -

Total Other revenue 309,160 361,095

Total Support and Revenue 1,150,160 1,175,815

NOTE 2 - CASH AND CASH EQUIVALENTS 2008/9 2007/8 Budget Forecast $ $ Current Accounts 314,576 239,866 Total Cash Equivalent 314,576 239,866

NOTE 3 - ACCOUNTS RECEIVABLE 2008/9 2007/8 Budget Forecast $ $ ACCOUNT RECEIVABLES ARE AS FOLLOWS:

Sale of Outputs to Cabinet 182,000 172,500

Prepaid insurance 93,750 93,540

Total Accounts Receivables 275,750 266,040

158 2004/5 Ownership Agreements CAYMAN NATIONAL CULTURAL FOUNDATION NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

NOTE 4 - INVENTORIES 2008/9 2007/8 Budget Forecast $ $ INVENTORIES ARE AS FOLLOWS:

Inventories 92,748 62,708 Total Inventories 92,748 62,708

NOTE 5 - DEPRECIATION and FIXED ASSETS 2008/9 2007/8 Budget Forecast $ $ PROPERTY, PLANT and EQUIPMENT Opening book value 3,778,409 3,778,409 Additions - - Disposals - -

Depreciation 168,920 84,460 Closing Book Value 3,609,489 3,693,949

FURNITURE and FITTINGS Opening book value 598,687 598,687 Additions - - Disposals 578,455 477,330 Depreciation Closing Book Value 20,232 121,357

OTHER ASSETS Opening book value - 298,875 Additions - - Disposals - - Depreciation Closing Book Value 0 298,875

2008/9 Ownership Agreements 159 CAYMAN NATIONAL CULTURAL FOUNDATION NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

NOTE 6 - CASH FROM OPERATIONS 2008/9 2007/8 Budget Forecast $ $

From Operating Activities 0 0 Depreciation 84,460 84,460 Other (9,710) (14,772)

Net Cash Flows from Oper. Activities 74,750 69,688

NOTE 7 - PERSONNEL COSTS 2008/9 2007/8 Budget Forecast $ $

Salaries and Wages 407,584 407,584 Pension Expense 20,379 20,379

TOTAL PERSONNEL COSTS 427,963 427,963

NOTE 8 - SUPPLIES AND CONSUMABLES 2008/9 2007/8 Budget Forecast $ $

Supplies and Consumables 98,800 130,300 Purchase Of Services 155,500 205,092 Operating Lease Rentals 40,000 40,000 Other Supplies and Consumables 218,437 288,000

TOTAL SUPPLIES and CONSUMABLES 512,737 663,392

160 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Cayman Turtle Farm (1983) Limited

For the year ending 30 June 2009

2008/9 Ownership Agreements 161 Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

162 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of have agreed that Cayman Turtle Farm (1983) Ltd. will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which is to operate during the year.

General Nature of Activities

The Cayman Turtle Farm (1983) Ltd. activities involve the rearing of marine turtles both for conservation reasons, as well as the supply of turtle meat to the resident population. The farm also doubles as a tourist attraction, including a gift shop. As of fiscal year, 2004, the Boatswains Beach project increased the scope of operations to that of a theme park, boasting an artificial saltwater and freshwater lagoon and a restaurant.

Scope of Activities

The scope of Cayman Turtle Farm (1983) Ltd. activities are as follows:

• Conservation of Marine Turtles

• Sale of turtle meat to the local population

• Operation of a theme park-styled tourist attraction

• Operation of a gift-shop

• Operation of a deli and a restaurant

• Leasing of space to retail shops and another marine park facility

Customers and Location of Activities

The services provided by Cayman Turtle Farm (1983) Ltd. are to tourists, as well as residents. All services are provided in Grand Cayman.

2008/9 Ownership Agreements 163

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The Cayman Turtle Farm (1983) Ltd. for the 2008/9 financial year are as follows:

• Obtain CITES certification for the conservation works

• Growth in the head-count of the turtle herd by a net 10%

• Achieve a 30% market share of the cruise ship visitors and a 50% market share of all overnight-visitors

164 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for Cayman Turtle Farm (1983) Ltd. for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 0 0 Revenue from ministries, portfolios, statutory authorities and 0 0 government companies Revenue from other persons or organisations 8,980,476 5,129,631

Surplus/deficit from outputs (4,259,524) (3,159,316)

Other expenses 7,400,000 7,600,000

Net Surplus/Deficit (6,859,524) (10,759,316)

Total Assets 40,265,166 44,096,000

Total Liabilities 48,718,300 51,557,583

Net Worth (8,453,134) (7,461,583)

Cash flows from operating activities (5,440,000) (7,005,530)

Cash flows from investing activities 0 (300,000)

Cash flows from financing activities 3,759,148 1,105,530

Change in cash balances (1,180,852) (6,200,000)

2008/9 2007/8 Financial Performance Ratio Target Forecast % % Current Assets: Current Liabilities 94% 14.7% 82% Total Assets: Total Liabilities 85.4%

2008/9 Ownership Agreements 165

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 115 110

Staff turnover (%) 5 10

Average length of service (Number) Senior management 10 9 Professional staff 4 3 Administrative staff 5 4 Significant changes to personnel management system

2008/9 2007/8 Physical Capital Measures Target Forecast Value of total assets $40,265,166 $44,096,000

Asset replacements: total assets 0 23%

Book value of depreciated assets: initial cost of those assets 85% 87%

Depreciation: Cash flow on asset purchases 0 25%

Changes to asset management policies

Major Capital Expenditure Projects 2008/9 Target $

Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk Insufficient cash flows to reduced Obtained equity injection Undefined. service debts from Cabinet to ensure bond Places going payments made; concern risk on Aggressive sales strategies operations to increase cash flows;

166 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Cayman Turtle Farm (1983) Ltd. is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 8,980,476 5,129,631

Operating Expenses 13,240,000 13,088,948

Net Surplus/Deficit (4,259,524) (10,759,316)

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 40,265,166 44,096,000

Liabilities 48,718,300 51,557,583

Net Worth (8,453,134) (7,461,583)

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities (5,440,000) (7,005,530)

Net cash flows from investing activities 0 (300,000)

Net cash flows from financing activities 3,272,561 1,105,530

2008/9 Ownership Agreements 167

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into Cayman Turtle Farm (1983) Ltd 8,064,000

Capital Withdrawls from Cayman Turtle Farm (1983) Ltd 0

Dividend or Profit Distributions to be made by Cayman Turtle Farm (1983) Ltd 0

Government Loans to be made to Cayman Turtle Farm (1983) Ltd 0 Government Guarantees to be issued in relation to Cayman Turtle Farm 0 (1983) Ltd Related Party Payments (Non Remuneration) made to Key Management 0 Personnel17 Remuneration18 Payments made to Key Management Personnel 105,000

Remuneration Payments made to Senior Management 285,000

Number for 2008/9 No of Key Management Personnel 1

No of Senior Management 3

17 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 18 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

168 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement In signing this document: • Cayman Turtle Farm (1983) Ltd. undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Cayman Turtle Farm (1983) Ltd. will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Charles E. Clifford, JP Minister of Tourism, Environment, Investment and Commerce on behalf of Cabinet

------Mr. Joel Walton, JP Chairman of the Board Cayman Turtle Farm (1983) Ltd.

June 25, 2008

2008/9 Ownership Agreements 169

Appendix: Forecast Financial Statements

CAYMAN TURTLE FARM (1983) LTD. STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Cayman Turtle Farm (1983) Ltd for the year ended 30 June 2009. (c) comply with generally accepted accounting practice.

------Joel Walton, JP Chairman of the Board Cayman Turtle Farm (1983) Ltd.

June 25, 2008

170 2004/5 Ownership Agreements CAYMAN TURTLE FARM (1983) LTD. STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

These financial statements have been prepared under the historical cost convention, modified by the valuation of biological assets and investments at fair value, and in accordance with International Financial Reporting Standards (“IFRS”). The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

The significant accounting policies are:

Cash and cash equivalents: Cash consists of cash on hand, balances with banks on demand and at short notice, and short-term highly liquid investments. Fixed deposits held at Wells Fargo Bank Northwest in a segregated account is intended to be used solely for payment of interest on the Notes (Note 6) is reported in the balance sheet as fixed deposits - restricted and is excluded from “Cash and cash equivalents” as reported in the statement of cash flows.

Accounts receivable: Accounts receivable comprise receivables from customers and are reduced by any allowance for doubtful accounts.

Inventories of marketable products: Farm produced marketable products are valued at net realisable value. Products purchased for resale and food and beverage are valued at the lower of cost on the first in, first out basis, and estimated net realisable value.

Inventories of feeds and other supplies: Feed and other supplies are valued using the weighted average cost basis.

Biological assets - Secondary herd: The secondary herd, which is reared for slaughter, is valued at fair value, calculated using market prices and expected yields of each type of product based on historical data. Changes in the carrying amount attributable to physical change in such biological assets and changes attributable to price change are recognised as income or expense in the statement of trading income - farm operations.

Biological assets - Breeder herd: It is management's policy to differentiate between turtles which were acquired from the wild and which management will not slaughter but will release at the end of their breeding lives, and farm-bred turtles which may be slaughtered once they reach the end of their breeding lives. Mature turtles (i.e. those that have reached breeding age) which were acquired from the wild are depreciated on a straight-line basis over their estimated breeding lives of twenty years. Mature farm-bred turtles have an estimated residual value which exceeds cost and, consequently, are not depreciated after attaining their residual value. Those turtles which have not reached maturity are not depreciated.

The direct costs of maintaining the breeder herd are allocated between the mature turtles and those that have not yet reached maturity. The costs allocated to the mature turtles, together with the depreciation of these turtles, are included as expenses in the statement of trading income - farms operations. The costs allocated to those turtles which have not yet reached maturity are capitalised into the value of the breeder herd.

2008/9 Ownership Agreements 171 CAYMAN TURTLE FARM (1983) LTD. STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Property, equipment and exhibits: Property, equipment and exhibits are recorded at cost and, with the exception of land which is not depreciated, are depreciated using the straight line method over their estimated useful lives as follows:

Buildings 10 - 20 years Plant and equipment 4 - 10 years Motor vehicles 3 years Furniture and office equipment 4 - 5 years Exhibits 10-12 years

Cost comprises the purchase price of an asset and any directly attributable costs of bringing the asset to working condition for its intended use such as import duties, site preparation, initial delivery and handling cost, installation cost and professional fees (e.g. architects and engineers). Certain borrowing costs are also included in the cost basis of the related asset; see “Borrowing costs” below. Costs of improvements are included in the cost of the applicable asset.

New and redeveloped assets are not depreciated until the assets are placed into service; (such assets are classified under “Construction in Progress” in the table in Note 5). Capitalized cost includes direct labour and benefits for employees specifically identified with the project. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Repairs and maintenance are charged to production or overhead expenses as incurred. Donated assets are recorded at their estimated fair value at the date of receipt.

Borrowing costs: Borrowing costs that are directly attributable to the acquisition or development of an asset which takes a substantial period of time to ready it for its intended use are capitalised and included as part of the cost of the asset. Such costs include interest, the amortisation of discounts or premiums on issue, and amortisation of transaction costs associated with the arrangement of the borrowings. To the extent funds borrowed for the acquisition or development of a specific asset are invested on a temporary basis, the interest income is netted with the related borrowing costs to determine the amount of borrowing costs eligible for capitalisation. Capitalisation ceases when the related asset, or completed part thereof, is effectively ready for use. All other borrowing costs are expensed in the period in which they are incurred.

Investment income; Term deposit interest is included as investment income in the statement of income on an effective interest method. However, to the extent funds borrowed for the acquisition or development of a specific asset are invested on a temporary basis, the interest income is netted with the related borrowing costs to determine the amount of borrowing costs eligible for capitalisation.

Allocation of expenses: Operating expenses are allocated to the functional trading accounts based on actual usage, specific identification or by judgmental allocation, as appropriate.

172 2004/5 Ownership Agreements CAYMAN TURTLE FARM (1983) LTD. STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Employee benefits

Defined contribution pension plans: The Company’s contributions are charged to the statement of income in the period to which the contributions relate (Note 7(a)).

Defined benefit plans: Pension costs are recognized based upon the results of periodic actuarial assessments conducted in respect of the Cayman Islands Public Service Pension Plan. The cost of providing pensions is charged to the statement of income so as to spread the regular cost over the service lives of employees. The pension obligation is measured as the present value of the estimated future cash outflows using interest rates of government securities which have terms to maturity approximating the terms of the related liability. Actuarial gains and losses are recognised over the average remaining service lives of employees. Changes in the estimate of the amount required to fund past service pension benefits are recognized immediately when advised to the Company.

Severance benefits for long-serving retired employees: Employees with over 25 years of service at retirement are entitled to an additional benefits package comprising a cash payment and payment of medical insurance premiums for a specified period. The costs of the benefits are accrued over the period of employment based on estimated valuations of these obligations determined by the board of directors. (Note 7(c)).

Foreign currencies: These financial statements are presented in CI$. The Company’s transactions occur in US$ and CI$ and the Company records US$ transactions in to CI$ using a rate of US$1.00 to CI$0.84.

Notes issued: The liability under the Guaranteed Senior Notes (the “Notes”) is initially recognized at “cost”, being the issue proceeds net of transaction costs incurred (as defined below). The liability is subsequently stated at amortized cost and the difference between the net proceeds of the issue of the Notes and the principal amount of the Notes is amortized over the term to the maturity of the Notes using the effective yield method and accounted for in accordance with the accounting policy described under “Borrowing costs” below.

Transaction costs include those incremental fees, commissions and payments to agents and advisors that are directly attributable to the Notes issuance. Costs associated with feasibility studies related to possible financing alternatives and with any abandoned financing options are expensed in the period incurred.

2008/9 Ownership Agreements 173

CAYMAN TURTLE FARM (1983) LTD. FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast Coercive Revenue

Non-Coercive Revenue Sale of Outputs to Cabinet 0 0 Sale of Outputs (Goods and Services) to Ministries/Portfolios, Public 0 0 Authorities Sale of Outputs (goods and services) to Others 8,780,476 5,079,631 Investment revenue 0 Donations 200,000 50,000 Other operating revenue

Total Non-Coercive Revenue 8,980,476 5,129,631

Total Operating Revenue 8,980,476 5,129,631

Operating Expenses Personnel costs 5,600,000 5,200,000 Supplies and consumables 440,000 500,000 Depreciation 2,400,000 2,500,000 Other operating expenses 4,800,000 4,888,947

Total Operating Expenses 13,240,000 13,088,947

Surplus from Operating Activities (4,259,524) (7,959,316)

Financing expense 2,600,000 2,800,000 (Gains)/losses on foreign exchange transactions 0 0 (Gains)/losses on disposal or revaluation of non current assets 0 0 Other Non-Operating revenues or expenses

Total Non-Operating Revenue and Expenses 2,600,000 2,800,000

Surplus before extraordinary items (6,859,524) (10,759,316)

Net Gains/(losses) from destroyed assets 0 0 Insurance proceeds-Operational Expenditure

Total Extraordinary Items 0 0

Net Surplus/(Deficit) after extraordinary items (6,859,524) (10,759,316)

174 2004/5 Ownership Agreements CAYMAN TURTLE FARM (1983) LTD. FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast

Opening balance net worth (7,461,583) 6,436,433 Net Surplus (6,859,524) (10,759,316) Property revaluations Investment revaluations

Net revaluations during the period 0

Total recognised revenues and expenses (14,321,107) (4,322,883)

Equity Contributions 5,867,973 3,138,700

Capital Withdrawl Repayment of Surplus/Dividends

Closing balance net worth (8,453,134) (7,461,583)

2008/9 Ownership Agreements 175 CAYMAN TURTLE FARM (1983) LTD. FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Budget Forecast Current Assets Cash and cash equivalents (6,180,834) (4,500,000) Marketable securities and deposits 0 0 Accounts receivable 300,000 250,000 Inventories 125,000 125,000 Other current assets 1,500,000 1,300,000 Total Current Assets (4,255,834) (2,825,000)

Non-Current Assets Property, plant and equipment 44,521,000 46,921,000 Other non-current assets 0 0 Total Non-Current Assets 44,521,000 46,921,000 Total Assets 40,265,166 44,096,000

Current Liabilities Accounts payable 2,400,000 5,400,000 Unearned revenue 0 0 Employee entitlements 0 0 Borrowings 0 0 Other current liabilities 2,109,825 1,500,000 Total Current Liabilities 4,509,825 6,900,000

Non-Current Liabilities Employee entitlements 0 0 Unfunded Pension liability 1,300,000 1,300,000 Borrowings 42,908,475 43,357,583 Currency issued Other non-current liabilities 0 0 Total Non-Current Liabilities 44,208,475 44,657,583 Total Liabilities 48,718,300 51,557,583

TOTAL ASSETS LESS TOTAL LIABILITIES (8,453,134) (7,461,583)

NET WORTH Contributed Capital 10,451,673 4,583,700 Asset revaluation reserve Accumulated surpluses (18,904,807) (12,045,283) Total Net Worth (8,453,134) (7,461,583)

176 2004/5 Ownership Agreements CAYMAN TURTLE FARM (1983) LTD. FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 CASH FLOWS FROM OPERATING ACTIVITIES Budget Forecast Receipts Sale of Outputs to Cabinet

Sale of Outputs (Goods and Services) to Ministries/Portfolios, Public Authorities Sale of Outputs (goods and services) to Others 9,000,000 5,000,000 Interest received Other receipts Extraordinary Income Payments Personnel costs (5,600,000) (5,200,000) Suppliers (6,240,000) (4,005,530) Interest paid (2,600,000) (2,800,000) Other payments Extraordinary Expenses Net cash flows from operating activities (5,440,000) (705,530)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of non-current assets 0 (300,000) Purchase of investments Proceeds from sale of non-current assets Proceeds from sale of investments Net cash flows from investing activities 0 (300,000)

CASH FLOWS FROM FINANCING ACTIVITIES Equity Contributions 5,867,973 3,138,700 Repayment of Surplus/Dividends Proceeds from borrowings 849,196 Repayment of borrowings (2,108,825) (2,882,366) Net cash flows from financing activities 3,759,148 1,105,530

Net increase/(decrease) in cash and cash equivalents (1,680,852) (6,200,000) Cash and cash equivalents at beginning of period (4,500,000) 1,700,000 Cash and cash equivalents at end of period (6,180,852) (4,500,000)

2008/9 Ownership Agreements 177 178 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Children and Youth Services (CAYS) Foundation

For the year ending 30 June 2009

2008/9 Ownership Agreements 179

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

180 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of Children and Youth Services (CAYS) Foundation, have agreed that Children and Youth Services (CAYS) Foundation, will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which Children and Youth Services (CAYS) Foundation is to operate during the year; 2008/9

General Nature of Activities

The Children and Youth Services (CAYS) Foundation activities involve providing 24 hour care and protection residential care to children and youth who are deemed to be at risk and are in need of care and protection.

Scope of Activities

The scope of Children and Youth Services (CAYS) Foundation activities are as follows:

• Policy Advice to the Minister of Health and Human Services on the direction of the CAYS Foundation.

• The formulation and delivery of specific programmes to address the behaviour problems and the educational need of the Youth.

• The operation of the two (2) residential homes, (Bonaventure Boys’ Home, and Frances Bodden Girls’ Home) and any other facility as required, and agreed to by Cabinet and the CAYS Foundation respectively.

• The supervision of the administration services of the CAYS Foundation management and the administrative staff.

Customers and Location of Activities

The services provided by Children and Youth Services (CAYS) Foundation are primarily to the Minister of Health Services. The services are also to provide a selected group of members of the society, namely, the Youth and their parents/families; and other Government Departments and agencies, i.e., Department of Children Services (DCS), the Court, the Counselling Centre, the Department of Education.

The location of the activities is in the Cayman Islands, with the physical location of the residential Homes being in Grand Cayman.

2008/9 Ownership Agreements 181

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for the Children and Youth Services (CAYS) Foundation

• To make Fundraising an integral part of CAYS revenue sources

• CAYS will continue to develop their Scholarship Programme that will be used to assist youth involved with the CAYS Foundation to further their education and vocational opportunities

• In partnership with other agencies and community partners, CAYS will develop and implement proven family Strengthening/Support Programmes that will result in a smoother reintegration of children in Care and the future success of the Family.

• In an effort to expand services and assist more young people, CAYS will develop and implement a Semi-Independent Living Programme for the youth that would “Age Out” of the residential facilities. (the pilot programme with being at Bonaventure Boys’ Home)

• CAYS will continue to implement staff training in order that best practices will be maintained

• A cross-training Programme will be developed and implemented for CAYS staff, with the vision that all Residential Care Workers will be able perform at both Homes as the need may arise.

182 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for Children and Youth Services (CAYS) Foundation for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 2,400,000 2,045,000 Revenue from ministries, portfolios, statutory authorities and 156,095 N/A government companies Revenue from other persons or organisations 50,000 50,000

Surplus/deficit from outputs N/A N/A

Other expenses 2,566,512 2,208,219

Net Surplus/Deficit 39,583 (113,219)

Total Assets 39,583 3,748

Total Liabilities 39,583 (43,331)

Net Worth - (39,583)

Cash flows from operating activities 39,583 N/A

Cash flows from investing activities 0 N/A

Cash flows from financing activities 0 N/A

Change in cash balances 0 N/A

2008/9 2007/8 Financial Performance Ratio Target Forecast Current Assets: Current Liabilities 1:1 N/A

Total Assets: Total Liabilities 1:1 1:12

2008/9 Ownership Agreements 183

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 38 38

Staff turnover (%) 10% 10% Average length of service (Number) 4 yrs 4 yrs Senior management 1 yr 1 yr Professional staff 4 yrs 4 yrs Administrative staff 3.5 yrs 3.5 yrs

Significant changes to personnel management system 1 1

2008/9 2007/8 Physical Capital Measures Target Forecast $ $ Value of total assets - 3,748

Asset replacements: total assets N/A 3,748:3,748

Book value of depreciated assets: initial cost of those assets N/A 3,748:3,748

Depreciation: Cash flow on asset purchases N/A 20,000 : 0

Changes to asset management policies N/A N/A

2008/9 Major Capital Expenditure Projects Target $ N/A N/A

Risk Management

Change in status from Financial value of Key risks Actions to manage risk previous year risk N/A N/A N/A N/A

184 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Children And Youth Services (CAYS) Foundation is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 2,606,095 2,095,000

Operating Expenses 2,566,512 2,208,219

Net Surplus/Deficit 39,583 (113,219)

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 39,583 3,748

Liabilities 39,583 43,331

Net Worth - (39,583)

2007/8 2006/7 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 39,583 0

Net cash flows from investing activities 0 0

Net cash flows from financing activities 0 0

2008/9 Ownership Agreements 185

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Transaction Amount for 2008/9 $

Equity Investments into Children And Youth Services (CAYS) Foundation 0

Capital Withdrawls from Children And Youth Services (CAYS) Foundation 0 Dividend or Profit Distributions to be made by Children And Youth Services (CAYS) Foundation 0 Government Loans to be made to Children And Youth Services (CAYS) Foundation 0 Government Guarantees to be issued in relation to Children And Youth Services (CAYS) Foundation 0 Related Party Payments (Non Remuneration) made to Key Management Personnel19 0 Remuneration20 Payments made to Key Management Personnel 72,000

Remuneration Payments made to Senior Management 72,000

Number for

2008/9 No of Key Management Personnel (Acting CEO) 1

No of Senior Management 5

19 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 20 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

186 2004/5 Ownership Agreements 7. Agreement

Scope of this Agreement

In signing this document: • Children And Youth Services (CAYS) Foundation undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Children And Youth Services (CAYS) Foundation will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Anthony S. Eden, OBE, JP Minister of Health and Human Services on behalf of Cabinet

------Kirkland Nixon Chairman of the Board Children and Youth Services (CAYS) Foundation

June 25, 2008

2008/9 Ownership Agreements 187

Appendix: Forecast Financial Statements

CHILDREN AND YOUTH SERVICES (CAYS) FOUNDATION STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Children And Youth Services (CAYS) Foundation for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Kirkland Nixon Chairman of the Board Children and Youth Services (CAYS) Foundation

June 25, 2008

188 2004/5 Ownership Agreements CHILDREN AND YOUTH SERVICES (CAYS) FOUNDATION STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

Cash and cash equivalents: For the purpose of the cash flow statement, cash and cash equivalents comprise deposits held at call with banks, net of overdrafts.

Income recognition: Income and expenses are recorded on the accruals basis.

Government grants: Grants relating to income are presented as a credit in the income statements. Grants relating to assets are presented as a credit in the income statement and an increase in assets.

Fixed assets: Fixed assets are recorded at cost. Depreciation, which is based on the cost of the asset, is computed using the straight-line method at the following annual rates:

Office equipment 25% Computer equipment 33.3% Motor vehicles 25%

2008/9 Ownership Agreements 189

CHILDREN AND YOUTH SERVICES (CAYS) FOUNDATION FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast Grant income 2,400,000 2,045,000 Other income 206,095 50,000 Total income 2,606,095 2,095,000 Operating expenses (see page 17) 2,566,512 2,208,219

Surplus/(deficit) for year 39,583 (113,219)

190 2004/5 Ownership Agreements CHILDREN AND YOUTH SERVICES (CAYS) FOUNDATION FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast Net worth, beginning of year (39,583) 73,636 Surplus/(deficit) for year 39,583 (113,219) Net worth, end of year - (39,583)

2008/9 Ownership Agreements 191 CHILDREN AND YOUTH SERVICES (CAYS) FOUNDATION FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 June2007/8 Budget Forecast Cash 39,583 - Fixed assets - 3,748 Total Assets - 3,748

Total Liabilities 39,583 43,331

Total Net Worth 0 (39,583)

192 2004/5 Ownership Agreements

CHILDREN AND YOUTH SERVICES (CAYS) FOUNDATION FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast Cash, beginning of year - 56,000 Net cash flows from operating activities 39,583 (56,000) Net cash flows from investing activities - - Net cash flows from financing activities Cash and cash equivalents at end of period 39,583 -

2008/9 Ownership Agreements 193 CHILDREN AND YOUTH SERVICES (CAYS) FOUNDATION NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

Analysis of Operating Expenses

Budgeted Amounts Budgeted Amounts Budget Items 2008/9 2007/8 $ $

Basic Salary 1,424,810 1,343,389 Group Health Insurance Premiums 310,892 246,240 and other staff costs Pension Contribution (PP) 192,382 168,140

Food and Kitchen 57,821 58,000

Programmes 33,000 12,500

Electricity 71,885 58,000

Water 25,867 18,250

Telephone 37,000 33,500

Other Operating Expenses 412,855 270,200

Total 2,566,512 2,208,219

194 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Civil Aviation Authority

For the year ending 30 June 2009

2008/9 Ownership Agreements 195

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

196 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of the Civil Aviation Authority have agreed that the Civil Aviation Authority will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Civil Aviation Authority is to operate during the year.

General Nature of Activities

The Civil Aviation Authority activities involve regulatory oversight of all civil aviation services provided throughout the Cayman Islands, and of aircraft registered in the Cayman Islands.

Scope of Activities

The scope of The Civil Aviation Authority activities is as follows:

• Certification, licensing and regulation of airports, air navigation facilities and air traffic control services

• Certification, licensing and regulation of Air Operator Certificate holders and aircraft maintenance facilities

• Personnel licensing for pilot, air traffic control and aircraft maintenance engineer

• Registration and airworthiness certification of aircraft

• Economic regulation of services provided by airports and airlines

Customers and Location of Activities

The services provided by the Civil Aviation Authority are provided to:

• The Cayman Islands Airports Authority with respect to Owen Roberts International and Gerrard Smith Airports

• The Cayman Islands Government in respect of Edward Bodden Airfield, Little Cayman

• The Cayman Islands Government in respect of the Mosquito Research Control Unit aerial spraying operations

• The Cayman Islands Government in respect of economic regulatory services for airports and airlines

• Cayman Airways Ltd., Cayman Express Ltd. and Island Air Ltd.

• Various Cayman Islands registered aircraft that are operated worldwide.

2008/9 Ownership Agreements 197

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for the Civil Aviation Authority for the 2008/9 financial year are as follows:

• Revise and amend local aviation regulations: i) Air Navigation (Fees) Regulations ii) Air Transport (Licensing of Air Services) Regulations iii) Mortgaging of Aircraft Regulations iv) The Civil Aviation (Investigation of Accidents) Regulations

• Implement new UK Overseas Territories Aviation Regulations

• Certify and licence Owen Roberts International and Gerrard-Smith Airports.

• Promote the development of Little Cayman’s aviation infrastructure to ensure safe air transport operations on that island.

• Increase the CI Aircraft Registry by 10%.

198 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for Civil Aviation Authority for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet Revenue from ministries, portfolios, statutory authorities and 4,325,673 3,280,000 government companies Investment Revenue 42,000 20,000

Surplus/deficit from outputs 655,601 131,698

Other expenses 0 0

Net Surplus/Deficit 655,601 131,698

Total Assets 2,457,501 4,203,436

Total Liabilities 701,000 (15,000)

Net Worth 1,756,501 4,188,436

Cash flows from operating activities 709,602 551,986

Cash flows from investing activities (40,000) 0

Cash flows from financing activities 0 0

Change in cash balances 669,602 551,986

2008/9 2007/8 Financial Performance Ratio Target Forecast $ $ Current Assets: Current Liabilities N/A N/A

Total Assets: Total Liabilities

2008/9 Ownership Agreements 199

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 19 15

Staff turnover (%) 5% 5% Average length of service (Number) Senior management 17 17 Professional staff 4 4 Administrative staff 7 7

Significant changes to personnel management system

2008/9 2007/8 Physical Capital Measures Target Forecast $ $ Value of total assets 227,900 250,000

Asset replacements: total assets 17% 17%

Book value of depreciated assets: initial cost of those assets 90% 90%

Depreciation: Cash flow on asset purchases 48% 48%

Changes to asset management policies None None

Major Capital Expenditure Projects 2008/9 Target $

Risk Management

Key risks Change in status from Actions to manage risk Financial value previous year of risk

200 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Civil Aviation Authority is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 4,367,673 3,300,000

Operating Expenses 3,712,072 3,165,387

Net Surplus/Deficit 655,601 134,613

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 2,457,501 4,206,351

Liabilities 701,000 (15,000)

Net Worth 1,756,501 4,191,351

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 709,602 148,014

Net cash flows from investing activities (40,000) 0

Net cash flows from financing activities 0 0

2008/9 Ownership Agreements 201

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into Civil Aviation Authority. 0

Capital Withdrawals from Civil Aviation Authority. 0

Dividend or Profit Distributions to be made by Civil Aviation Authority 0

Government Loans to be made to Civil Aviation Authority 0

Government Guarantees to be issued in relation to Civil Aviation Authority None Related Party Payments (Non Remuneration) made to Key Management None Personnel21 Remuneration22 Payments made to Key Management Personnel 637,678

Remuneration Payments made to Senior Management 364,840

Number for 2008/9 No of Key Management Personnel 4

No of Senior Management 3

21 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 22 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

202 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement

In signing this document: • The Civil Aviation Authority undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that the Civil Aviation Authority will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. George A. McCarthy, OBE, JP Chief Secretary, Portfolio of Internal and External Affairs on behalf of the Cabinet

------

Chairman of the Board Civil Aviation Authority

June 25, 2008

2008/9 Ownership Agreements 203

Appendix: Forecast Financial Statements

CIVIL AVIATION AUTHORITY STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Civil Aviation Authority for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------

Chairman of the Board Civil Aviation Authority

June 25, 2008

204 2004/5 Ownership Agreements CIVIL AVIATION AUTHORITY STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

Significant accounting policies

The significant accounting policies adopted by the Authority in these financial statements are as follows:

Basis of accounting: The financial statements of the Authority are prepared on the accrual basis under the historic cost convention in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Committee (IASC) and interpretations issued by the Standing Interpretation Committee of the IASC.

Depreciation: Fixed assets are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method at the following rates estimated to write off the cost of the assets over their expected useful lives:

Computer Equipment 3 years

Office Equipment, Vehicles and 5 years Leasehold Improvements

Furniture and Fixtures 10 years

Foreign currency translation: Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transactions. Gains and losses on exchange are credited or charged in the statement of income. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities are recognized in the income statement.

Assets and liabilities denominated in currencies other than Cayman Islands dollars are translated at exchange rates in effect at the balance sheet dates.

Cash and cash equivalents: Cash and cash equivalents include cash held on demand and at short notice and all deposits with an original maturity of three months or less.

Revenue Recognition: The Authority recognizes revenues in the period in which they are earned. All income from short term deposits is credited to the Income and Expense Statement in the period in which it is earned.

Lease of premises: The Authority leases office space from Cayman Grand Harbour, Grand Cayman and the Executive Centre in Brighton, England. Any fit-out costs are classified as a Leasehold Improvement and are depreciated over the life of the leases. The lease of the Grand Cayman office is for five years beginning December 1, 2004 and for three years commencing March 1, 2004 for the Brighton office. The future obligations of lease payments for the two office leases are as follows:

July 2006 to November 2009 Cayman Grand Harbour, Cayman Islands $302,225

2008/9 Ownership Agreements 205

CIVIL AVIATION AUTHORITY FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Budget Note $000 Revenue Outputs to others 4,325,673 Investment revenue 42,000 Total Operating Revenue 4,367,673

Operating Expenses Personnel costs 2,500,039 Supplies and consumables 1,160,532 Depreciation 51,501 Total Operating Expenses 3,712,072

Surplus from Operating Activities and before Financing and 655,601 Extraordinary items

Extraordinary items 0 Net Surplus/(Deficit) after extraordinary items 655,601

206 2004/5 Ownership Agreements CIVIL AVIATION AUTHORITY FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Budget Note $000

Opening balance net worth 1,100,900 Net Surplus 655,601 Total recognised revenues and expenses 1,756,501

Equity Investment 0 Closing balance net worth 1,756,501

2008/9 Ownership Agreements 207 CIVIL AVIATION AUTHORITY FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 Budget Note $000

Current Assets Cash and cash equivalents 1,985,315 Accounts receivable 244,286 Total Current Assets 2,229,601

Non-Current Assets Property, plant and equipment 138,325 Other non-current assets 89,575 Total Non-Current Assets 227,900 Total Assets 2,457,501

Current Liabilities Accounts payable 79,000 Total Current Liabilities 79,000

Non-Current Liabilities Unfunded Pension Liability 622,000 Total Liabilities 701,000

TOTAL ASSETS LESS TOTAL LIABILITIES 1,756,501

NET WORTH Contributed Capital 306,493 Asset revaluation reserve 0 Accumulated surpluses 27 1,450,008 Total Net Worth 1,756,501

208 2004/5 Ownership Agreements CIVIL AVIATION AUTHORITY FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Budget Note $000

CASH FLOWS FROM OPERATING ACTIVITIES Receipts Output to others 4,325,673 Interest received 42,000 Payments Personnel costs (2,621,410) Suppliers (1,036,661) Other payments 0 Net cash flows from operating activities 709,602

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of non-current assets and investments (40,000) Proceeds from sale of non-current assets and investments 0 Net cash flows from investing activities (40,000)

CASH FLOWS FROM FINANCING ACTIVITIES Equity investment 0 Capital Withdrawal 0 Repayment of surplus 0 Proceeds from borrowings 0 Repayment of borrowings 0 Net cash flows from financing activities 0

Net increase/(decrease) in cash and cash equivalents 669,602 Cash and cash equivalents at beginning of period 1,315,713 Cash and cash equivalents at end of period 1,985,315

2008/9 Ownership Agreements 209 CIVIL AVIATION AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

NOTE 1 - PERSONNEL COSTS 2008/9 Budget $000 Salaries and wages (including employee pension contributions) 2,273,066 Employer pension expense 226,973 Total Personnel Costs 2,500,039

NOTE 2 - SUPPLIES AND CONSUMABLES 2008/9 Forecast $000 Supply of goods and services 1,001,965 Operating lease rentals 158,567 Other Total Supplies and Consumables 1,160,532

NOTE 3 - DEPRECIATION 2008/9 Forecast $000 Furniture and fittings 15,348 Computer hardware and software 14,318 Office equipment 21,836 Other plant and equipment 0 Other assets 0 Total Depreciation 51,502

NOTE 4 - CASH AND CASH EQUIVALENTS 2008/9 Forecast $000 Cash on hand 0 Bank accounts 0 Short Term Deposits 1,985,315 Other cash or cash equivalents 0 Total Cash and Cash Equivalents 1,985,315

NOTE 5 - ACCOUNTS RECEIVABLE 2008/9 Forecast $000 Outputs to Cabinet 0 Outputs to other government agencies 0 Outputs to others 244,286 Prepayments 0 Other Receivables 0 Total gross 0 Less provision for doubtful debts 0 Total Net 244,286

210 2004/5 Ownership Agreements

CIVIL AVIATION AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT Closing Accum. Opening Balance Addition Depreciation Balance 2008/9

Forecast $000 $000 $000 $000 Furniture and fittings Computer hardware and software Office equipment Plant and equipment Other assets Work in Progress Total

NOTE 7 - ACCOUNTS PAYABLE 2008/9 Forecast $000 Other Accounts Payable 79,000 Total 79,000

NOTE 8. UNEARNED REVENUE 2008/9 Forecast $000 Revenue received in advance Total 0

NOTE 9 - EMPLOYEE ENTITLEMENTS (CURRENT) 2008/9 Forecast $000 Long service leave and other leave entitlements Other salary related entitlements Total Employee Entitlements 0

NOTE 10 - RECONCILIATION OF OPERATING SURPLUS TO CASH FLOWS FROM OPERATING ACTIVITIES 2008/9 Forecast $000 Operating surplus/(deficit) 655,601 Non-cash movements Depreciation 51,502 Increase in provision for doubtful debts 2,499 Increase in receivables Net cash flows from operating activities 709,602

2008/9 Ownership Agreements 211

212 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Electricity Regulatory Authority

For the year ending 30 June 2009

2008/9 Ownership Agreements 213 Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

214 2004/5 Ownership Agreements 1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of the Electricity Regulatory Authority have agreed that the Electricity Regulatory Authority will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Electricity Regulatory Authority (ERA) is to operate during the year.

The Electricity Regulatory Authority became operational in May 2005 under the Electricity Regulatory Authority Law 2005. The ERA Law was amended in February 2008 when the Electricity Regulatory Authority (Amendment) Law 2008 was Gazatted. It’s activities to date were mainly involved in the monitoring of existing licences granted to Caribbean Utilities Company Ltd (CUC) and Cayman Brac Power & Light (CBPL), and the negotiations to issue two new licences to CUC (one for Generation and one for Transmission and Distribution), which were issued in April 2008. Primary goals will be to monitor the new licences issued during the financial year, as well as the licence issued to CBPL in December 2003, to ensure the continued supply of dependable electricity in the Cayman Islands.

In addition the ERA will be actively involved in the introduction of competition for electrical supply in the Cayman Islands. This will involve the management of the tendering process for the supply of additional generation capacity to Grand Cayman for 2011 and 2012, with the possible issue of new licences to new entrants into the market. During such process the development of generation of electricity from renewable resources will be actively pursued. The ERA will also work closely with the Minister responsible to establish a Utility Authority, which will encompass electricity, gasoline, telecommunications and water, as well as developing environmental and efficiency standards for the electricity industry in the Cayman Islands.

Scope of Activities

The scope of Electricity Regulatory Authority activities is as follows:

• Monitor licences granted to CUC and CBPL, and the reporting requirements under those licences.

• Encourage the introduction of competition within the electricity generation industry within the Cayman Islands, with new licence(s) to be issued to new entrants to the market, including the use of renewable resources.

• Manage the solicitation process for new generating capacity for 2011 and 2012.

• Ensure that all licence fees and regulatory fees (where applicable) are collected in a timely fashion.

• Ensure that all reports due under the ERA Law 2008 from licensees or as detailed under existing licences are received in a timely manner.

• Ensure that the ERA works closely with licensees and the Department of the Environment to ensure that all licensees comply with environmental laws.

Customers and Location of Activities

The services provided by Electricity Regulatory Authority to protect the rights of electricity consumers and to regulate Generation and Transmission and Distribution Licensees are all within the Cayman Islands.

2008/9 Ownership Agreements 215

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for the Electricity Regulatory Authority for the 2008/9 financial year are as follows:

• The introduction of competition within the electricity generation industry within the Cayman Islands, and the use of renewable resources. • The introduction of new environmental standards for electricity licensees • The promotion of the production of electricity from renewable resources

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision) for the Electricity Regulatory Authority for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Budget Forecast $ $ Revenue from Cabinet 210,429 507,611

Revenue from ministries, portfolios, statutory authorities and 0 0 government companies

Revenue from other persons or organisations 600,000 150,023

Surplus/deficit from outputs 0 (22,484)

Other expenses 210,429 530,095

Net Surplus/Deficit 389,571 27,539

Total Assets 606,516 199,018

Total Liabilities 72,537 54,610

Net Worth 533,979 144,408

Cash flows from operating activities 396,016 129,339

Cash flows from investing activities (12,560) 15,859

Cash flows from financing activities 83,456 28,659

Change in cash balances 83,456 28,659

Financial Performance Ratio 2008/9 2007/8 Budget Forecast $ $ Current Assets: Current Liabilities 8.15/1 3.47/1

Total Assets: Total Liabilities 8.36/1 3.64/1

216 2004/5 Ownership Agreements

Maintenance of Capability

Human Capital Measures 2008/9 2007/8 Budget Forecast $ $ Total full time equivalent staff 3 2

Staff turnover (%) NIL NIL Average length of service (Number) Senior management 4.25 3.25 Professional staff NIL NIL Administrative staff 1.5 0.5 Significant changes to personnel management system None None

Physical Capital Measures 2008/9 2007/8 Budget Forecast $ $ Value of total assets 606,516 199,018

Asset replacements: total assets NIL NIL

Book value of depreciated assets: initial cost of those assets 68% 82%

Depreciation: Cash flow on asset purchases 53% 14%

Changes to asset management policies NIL NIL

Major Capital Expenditure Projects 2008/9 Target $ Computers 6,700

Office Furniture 4,025

Office Equipment 1,500 Total 12,225

Risk Management

Key risks Change in status from Actions to manage risk Financial value previous year of risk Appointment of Board of New Board of Directors Appoint new Chairman of NIL Directors Needs to be appointed Board, and New Board Members

2008/9 Ownership Agreements 217

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for the Electricity Regulatory Authority is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 810,429 657,634

Operating Expenses 420,858 530,095

Net Surplus/Deficit 389,571 127,539

Balance Sheet As at 30 As at 30 June 2009 June 2008 $ $ Assets 606,516 199,018

Liabilities 72,537 54,610

Net Worth 533,979 144,408

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 396,016 129,339

Net cash flows from investing activities (12,560) 15,859

Net cash flows from financing activities 83,456 28,659

218 2004/5 Ownership Agreements

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Transaction Amount for 2008/9 $ Equity Investments into Electricity Regulatory Authority NIL

Capital Withdrawals from Electricity Regulatory Authority. NIL

Funds transferred to General Reserve Fund in accordance with Section 18 of 300,000 the Electricity Regulatory Authority Law.

Dividend or Profit Distributions to be made by Electricity Regulatory Authority. NIL

Government Loans to be made to Electricity Regulatory Authority. NIL

Government Guarantees to be issued in relation to Electricity Regulatory NIL Authority.

Related Party Payments (Non Remuneration) made to Key Management NIL Personnel23

Remuneration24 Payments made to Key Management Personnel 15,000

Remuneration Payments made to Senior Management 121,623

Number for 2008/9 No of Key Management Personnel (Directors) 6

No of Senior Management 1

1 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 2 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

2008/9 Ownership Agreements 219

7. Agreement

Scope of this Agreement In signing this document: • Electricity Regulatory Authority undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make. • The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree. • The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties. • The Parties will the sign the amended Ownership Agreement.

The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Electricity Regulatory Authority will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Alden McLaughlin Jr., JP Minister Communications, Works and Infrastructure on behalf of the Cabinet

------Managing Director Electricity Regulatory Authority

June 25, 2008

220 2004/5 Ownership Agreements

Appendix: Forecast Financial Statements

ELECTRICITY REGULATORY AUTHORITY STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Electricity Regulatory Authority for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Managing Director Electricity Regulatory Authority

June 25, 2008

2008/9 Ownership Agreements 221 ELECTRICITY REGULATORY AUTHORITY STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

The forecast financial statements are prepared in accordance with International Accounting Standards. The significant accounting policies adopted by the Authority are as follows.

(a) Revenue from billings to Cabinet is recognised when billed.

(b) Translation of Foreign currencies. There are no revenues or assets anticipated to be in any currency other than Cayman Islands Dollars.

(c) Depreciation. Fixed assets are depreciated using the straight line method over their estimated useful lives as follows: Computer Hardware and Software 5 years Other Equipment 5 years Office Furniture and Equipment 10 years

(d) Leased assets. There are no leased assets

222 2004/5 Ownership Agreements

ELECTRICITY REGULATORY AUTHORITY FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast Revenue Equity funding By Cabinet Outputs billed to Cabinet 210,429 507,611 Regulatory Fees 600,000 150,000 Interest Income 0 23

Total Revenue 810,429 657,634

Operating Expenses

Personnel Costs 229,198 137,179 Supplies and Consumables 82,000 342,310 Other Operating Expenses 103,215 48,806 Depreciation 6,445 1800 Total Operating Expenses 420,858 530,095

Surplus 389,571 (127,539)

2008/9 Ownership Agreements 223 ELECTRICITY REGULATORY AUTHORITY FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast

Balance of Net Worth Balance Forward 144,408 4,069

Operating Surplus (Loss) 389,571 127,539

Equity Injection NIL 12,800

Closing Balance of Net Worth 533,979 144,408

224 2004/5 Ownership Agreements ELECTRICITY REGULATORY AUTHORITY FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Current Assets

Cash and Marketable Securities 418,413 34,949 Accounts Receivable and Prepaids 172,826 154,572 Fixed Assets 15,277 9,497 Other Non Current Assets Total Assets 606,516 199,018

Total Liabilities 72,537 54,610

TOTAL ASSETS LESS LIABILITIES 533,979 144,408

NET WORTH Cumulative Equity Injection 150,225 150,225 Accumulated Profit (Loss) 383,754 (5,817) TOTAL NET WORTH 533,979 144,408

2008/9 Ownership Agreements 225

ELECTRICITY REGULATORY AUTHORITY FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Revenue Billings to Cabinet 210,429 507,611 Regulatory Fees 600,000 150,023 810,429 657,634 Payments Personnel costs 229,198 137,179 Suppliers 82,000 342,310 Other payments 103,215 48,806 414,413 528,295

Net Cash Flow from Operations 396,016 (129,339) Change in Assets and Liabilities (12,560) (113,480)

383,456 15,859 Equity Investment NIL 12,800

Transfer to General Reserve (300,000) NIL

Net Cash Flows 82,456 28,659 Cash Opening 34,949 6,290 Cash Closing 118,405 34,949

226 2004/5 Ownership Agreements ELECTRICITY REGULATORY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

The Electricity Regulatory Authority commenced operations in mid May 2005.

The new T & D license was issued to CUC in April 2008 and will result in income from regulatory fees calculated at ½% of gross T & D revenues (except license and regulatory fees) payable to the Electricity Regulatory Authority, quarterly in arrears.

2008/9 Ownership Agreements 227

228 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Health Services Authority

For the year ending 30 June 2009

2008/9 Ownership Agreements 229 Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

230 2004/5 Ownership Agreements 1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of Health Services Authority have agreed that Health Services Authority will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which Health Services Authority is to operate during the year.

General Nature of Activities

The Health Services Authority is responsible for the provision and administration of health care services in the Cayman Islands.

Scope of Activities

The Health Services Authority (HSA) provides primary and secondary levels of healthcare services, and public health functions for the residents of the Cayman Islands in accordance with the National Strategic Plan for Health as agreed with the Ministry of Health from time to time.

The Health Services Authority provides patient care through the 124-bed Cayman Islands Hospital, and the 18-bed Faith Hospital on Cayman Brac. Primary Health care is offered at district health centres in Grand Cayman and a health centre in Little Cayman. This care being supplemented with dental and eye care services on site at the Health Service Complex in Grand Cayman.

As the nation’s principal health care facility, the Cayman Islands Hospital in George Town provides a full range of inpatient and outpatient medical and specialist services.

Specialist services are available in the fields of: surgery, gynaecology and obstetrics, paediatrics, internal medicine, dermatology, anaesthesiology, public health, orthopaedics, psychiatry, cardiology, gastroenterology, radiology, neurology, ophthalmology, ear, nose and throat, periodontology, reconstructive surgery, faciomaxillary surgery, and urology.

In the Sister Islands, residents and visitors can turn for their health care needs to the Faith Hospital in Cayman Brac and the Little Cayman Clinic. The 18-bed hospital serves both islands and provides primary, secondary and emergency care. It features a modern inpatient unit, as well as an operating theatre, maternity, accident and emergency department, outpatient clinics and a public health department. This service being rendered through a purchase agreement with the Ministry of Health Services.

The Health Services Authority also provides a full range of dental and ophthalmologic services.

The Little Cayman Clinic is a new purpose-built facility, complete with waiting and triage areas, a treatment room, doctors’ office and a dental office. A resident nurse is on call around-the-clock.

The Health Services Authority through the Public Health Department is responsible for public health programmes under a purchase agreement with the Ministry of Health Services. A team of public health nurses, a public health surveillance officer, a health promotion officer, a genetics counsellor, a nutritionist and administrative staff provides this service under the direction of the Medical Officer of Health.

2008/9 Ownership Agreements 231 Public Health services include:

• Health advice and vaccines for international travellers; • Health assessment, including vision and hearing tests for children; • Nutrition and dietary counselling; • Child growth and development monitoring; • Communicable disease screening; and • Disease control programmes, including immunization.

Customers and Location of Activities

The Health Services Authority provides services to all members of the community and visitors. It serves as the primary source of healthcare services to groups of people entitled to healthcare by the Cayman Islands’ Government. This includes civil servants and their dependants, public office pensioners and their dependents, school age children, seamen and veterans, indigents and prisoners.

232 2004/5 Ownership Agreements

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The Health Services Authority for the 2008/9 financial year are as follows:

• Raise the profile of the Cayman Islands Hospital as a medical centre of excellence in the Caribbean by expanding and enhancing the range of services offered and partnering with major international medical centres.

• Increase collaboration with the private sector to provide seamless care and treatment options for all patients in the Cayman Islands

• Ensure the provision of patient focused care that complies with international accepted standards.

i. Improve all customer service aspects by focusing on customer service programs for staff. ii. Improve access to services being offered iii. Improve clinical outcomes of the services by retaining staff who are clinically competent, motivated and caring. iv. Develop clinical protocols and policies for standards of practice v. Upgrade and introduce new equipment and supplies for service enhancement

• Improve Financial/Cost effectiveness of the Health Services Authority and the services it provides. i. Continue to improve the financial independence of the Authority by establishing cost based charges for services currently provided which are not on the Charge Master list. ii. Strengthen the financial management and control functions, utilizing recommendations in audit reports e.g. development of monthly operating statements to enable management to monitor the performance of each section. iii. Upgrade the Hospital IT System, improving data collection and customer service. iv. Development of new cost-effective medical services on island, reducing the need for patients to travel overseas and lowering the cost of overseas medical care paid for by the Ministry and these patients. v. Encourage staff to be actively involved in initiating innovative ways to eliminate inefficiencies with the introduction of the SMART program, which recognises employees for their contributions. vi. Striving to become self-sustainable through yearly upgrading of our fees to reflect market prices and establish a better collection policy. vii. Establish HSA foundation

• Create a stable, motivated and empowered workforce. i. Establish a Human Resource Program, which will ensure recruitment and retention of staff committed to the organisation’s mission. ii. Implement a performance incentive/reward system. iii. Complete the salary review process ensuring the availability of competitive salaries for recruitment and retention of staff. iv. Provide a robust continuing education program for all staff.

2008/9 Ownership Agreements 233

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision) for Health Services Authority for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 18,782,000 17,962,000 Revenue from ministries, portfolios, statutory authorities and 28,928,919 19,299,977 government companies Revenue from other persons or organisations 26,360,740 21,084,844

Surplus/deficit from outputs (7,613,628) (1,551,632)

Other expenses (81,735,287) (69,683,298)

Net Surplus/Deficit (7,613,628) (11,336,476)

Total Assets 59,086,017 56,144,887

Total Liabilities 8,442,296 6,037,166

Net Worth 50,643,721 50,107,721

Cash flows from operating activities (7,570,822) (8,170,847)

Cash flows from investing activities (536,000) (4,859,427)

Cash flows from financing activities 8,149,628 13,300,973

Change in cash balances 42,806 270,700

Financial Performance Ratio 2008/9 2007/8 Target Forecast % % Current Assets: Current Liabilities 166.94% 154.59%

Total Assets: Total Liabilities 699.88% 929.99%

234 2004/5 Ownership Agreements

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 750 730

Staff turnover (%) 13% 13% Average length of service (Number) Senior management 12.8 10.57 Professional staff 6 6.09 Administrative staff 6 6.86

Significant changes to personnel management system None None

2008/9 2007/8 Physical Capital Measures Target Forecast Value of total assets $44,992,622 $63,318,946

Asset replacements: total assets 3.06% 7.2%

Book value of depreciated assets: initial cost of those assets 70.46% 80.2%

Depreciation: Cash flow on asset purchases 50% 71%

Changes to asset management policies None None

2008/9 Major Capital Expenditure Projects Target $ Medical Equipments 536,000

2008/9 Ownership Agreements 235 Risk Management

Change in status Financial Value of Key Risks Actions to manage risk from previous year Risk Key Staff Vacancies Key Staff Recruited 0 Loss of key staff Clinical staff: Nurses, Completion and 0 Physicians and implementation of job Technicians evaluation and revised salary structure Provision of training $2M Loss of Vital Information N/A Reliable paper and electronic due to prolonged power back up for records outage or natural Maintenance, servicing and $300,000 disaster protection of generator from flood waters Adequate document storage Natural Disaster – Loss Health and Safety Maintenance of radios and of Communication Officer satellite phones Ensure maintenance of text 0 messaging system via Cable and Wireless Security Risk Security Officers Improve security of facilities by restricting access and maintaining alarms on exists 0 Improve monitoring system by the installation of close circuit monitoring in certain areas Inadequate financial IT Project Manager Upgrade of the computer information system system 0 Retraining of all staff

Financial Sustainability Charge Master Implementation of charge Analyst master to include additional and existing chargeable items at current market rate Monitoring of expenditure and 0 revenue collections on a monthly basis at departmental levels

Business Interruption N/A Formulation of contingency plans to maintain operations Securing adequate insurance 0 to compensate for unavoidable interruptions in business

236 2004/5 Ownership Agreements 5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Health Services Authority is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 74,121,659 58,346,821

Operating Expenses (81,735,287) (69,683,298)

Net Surplus/Deficit (7,613,628) (11,336,476)

As at 30 As at 30 Balance Sheet June 2009 June 2008 $ $ Assets 59,086,017 56,144,887

Liabilities 8,442,296 6,037,166

Net Worth 50,643,721 50,107,721

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities (7,570,822) (8,170,847)

Net cash flows from investing activities (536,000) (4,859,427)

Net cash flows from financing activities 8,149,628 13,300,973

2008/9 Ownership Agreements 237

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into Health Services Authority 8,149,628

Capital Withdrawls from Health Services Authority 0

Dividend or Profit Distributions to be made Health Services Authority. 0

Government Loans to be made to Health Services Authority. 0

Government Guarantees to be issued in relation Health Services Authority. 0

Related Party Payments (Non Remuneration) made to Key Management Personnel25 0

Remuneration26 Payments made to Key Management Personnel 0

Remuneration Payments made to Senior Management 0

Number for 2008/9 No of Key Management Personnel

No of Senior Management 8

25 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 26 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

238 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement In signing this document: • Health Services Authority undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Health Services Authority will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Anthony S. Eden, OBE, JP Minister of Health and Human Services on behalf of Cabinet

------Pastor Al Ebanks Cert Hon Chairman of the Board Health Services Authority

June 25, 2008

2008/9 Ownership Agreements 239

Appendix: Forecast Financial Statements

HEALTH SERVICES AUTHORITY STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Health Services Authority for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Pastor Al Ebanks Cert Hon Chairman of the Board Health Services Authority

June 25, 2008

240 2004/5 Ownership Agreements HEALTH SERVICES AUTHORITY STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

The Health Services Authority accounts are prepared in accordance with International Accounting Standards

Assumptions

(1) H.S.A. deductions are for employee services, which are deducted from gross revenue because no billing occurs for these services. H.S.A. is approx. 4% of Patient Revenue-excluding Government Programme and Assumed included in Personnel Cost.

(2) Bad Debt is 10% of Gross Patient Revenue.

(3) Patient revenue is based on 10% increase on current fee and additional CPT codes expansion

(4) Government Outputs are based on approved amounts for the 2008-2009 year.

(5) Straight line is used in computing Depreciation on Fixed Assets

2008/9 Ownership Agreements 241

HEALTH SERVICES AUTHORITY FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Budget $ Gross Patient Revenue Commercial and Self Pay Revenue (Note 1) 26,131,840 Cabinet Outputs – Patient Revenue (Note 2) 5,817,043 CINICO and Output to other Ministries (Note 3) 28,928,919 Total Gross Patient Revenue 61,106,702

Revenue Deductions HSA deductions 2,435,112 Net Patient Revenue 58,442,690

Other Revenue Cabinet Outputs (Note 4) 12,964,957 Rental Income 18,900 Donations 50,000 Other Income 210,000 Total Other Revenue 13,243,857 Total Net Revenue 71,686,547 Total Revenue 74,121,659

Expenses Personnel Cost (Note 5) 47,990,787 Supplies and Materials (Note 6) 8,000,000 Utilities 3,597,596 Other Operational Expenses (Note 7) 7,944,827 Insurance 2,424,600 Travel and Subsistence 128,700 Legal and Professional Fees 1,245,000 Training 1,127,181 Reference Materials 108,370 Bad Debt 6,868,226 Depreciation (Note 8) 2,300,000 Total Expense 81,735,287 Net Operating Profit/ (Loss) (7,613,628)

242 2004/5 Ownership Agreements

HEALTH SERVICES AUTHORITY FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Budget $ Net Worth at June 30, 2008 50,107,721 Net Surplus/Deficit (7,613,627) Equity Investment 8,149,628 HSA Foundation - Net Worth at June 30, 2009 50,643,721

2008/9 Ownership Agreements 243

HEALTH SERVICES AUHORITY FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 Budget $ Current Assets Cash and Cash Equivalents 208,807 Prepaid Expense 0 Accounts Receivable (Net) Note 9 11,063,614 Other Receivables 241,440 Inventories 2,579,534 Total Current Assets 14,093,395

Current Liabilities Trade payables 4,201,237 Accruals 2,075,696 Payroll Creditors ( Note 10) 2,032,432 Other Current Liabilities Note 132,931 Total Current Liabilities 8,442,296

Net Current Assets 5,651,099

Fixed Assets All Fixed Assets Net Depreciation (Note 11) 44,992,622

Net Assets 59,086,017

244 2004/5 Ownership Agreements HEALTH SERVICES AUTHORITY FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Budget $ Cash Flow from Operating Activities Receipts Sale of Outputs to Cabinet 18,542,000 Sale of Goods and services 42,490,560 Other receipts 278,900 Payments Personnel costs (47,990,787) Suppliers (8,000,000) Other payments (12,891,495) Net cash flows from operating activities (7,570,822)

Cash Flow from Investing Activities Purchase of non-current assets (536,000) Proceeds from sale of non-current assets Net cash flows from investing activities (536,000)

Cash Flow from Financing Activities Equity Contributions 8,149,628 Net cash flows from financing activities 8,149,628

Net increase/(decrease) in cash and cash equivalents 42,806 Cash and cash equivalents at beginning of period 166,001 Cash and cash equivalents at end of period 208,807

2008/9 Ownership Agreements 245 HEALTH SERVICES AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Budget $ Note 1 - Patient Services Non-Government Commercial Insurance 13,753,600 Self - Pay 12,378,240 Add: Expansion CPT Commercial Insurance 0 Self - Pay 0 Total 26,131,840 Net Total 26,131,840

Note 2 - Cabinet Outputs – Patient Revenue Indigents HSA 7 - HEA 2 - Patient Revenue 4,828,146 Beyond Ins Coverage - HSA 1 - HEA 2 - Patient Revenue 988,897 Total 5,817,043

Note 3 - CINICO and Output to Other Ministries CINICO 28,400,560 Other Ministries 528,359 Add: Expansion CPT CINICO 0 Other Ministries 0 Total 28,928,919

Net Patient Revenue Patient Services Non-Government 26,131,840 Cabinet Outputs – Patient Revenue 5,817,043 CINICO and Output to Other Ministries 28,928,919 Gross Patient Revenue 60,877,802 Contractual Adjustments – HAS (4%) (2,435,112) Net Patient Revenue 58,442,690

Note 4 - Cabinet Outputs Public Health - HSA 10, 11 and 13 HEA 7 - Patient Revenue and Net Operating cost 1,157,003 Forensic Services 240,000 Faith Hospital and LC- HSA 21- HEA 6 - Maintaining the facility 2,475,000 Ambulance Service - Net Operating Cost of the Service 1,807,000 District Clinics Services - Net Operating Cost of the Service 4,810,030 LPN Programme - Operating the entire Programme 435,000 Paediatric Programme - Net Operating Cost of the Service 1,035,924 Mental Health Inpatient and Day Care- Net Operating Cost of the Service 1,005,000

Total 12,964,957

246 2004/5 Ownership Agreements HEALTH SERVICES AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 5 - Personnel Cost Salaries and Wages 36,566,219 Allowances 1,340,716 Pension 2,249,283 Salary Review 3,075,000 Other Staff Cost 3,059,569 Overseas Medical 1,700,000 Total 47,990,787

Note 6 - Supplies and Materials Drugs 3,067,533 Duty 1,744,890 Oxygen 434,395 Cleaning and Utensils 542,455 Lab Supplies 673,497 Medical Instruments-disposables 420,144 Other Supplies 1,117,086 Total 8,000,000

Note 7- Other Operating Expenses Freight and Shipping 975,076 Mail Courier 315,323 Maintenance - Equipment 745,387 Maintenance - Buildings 585,563 Software Maintenance 1,601,999 Software License 1,454,787 Overseas Lab Test 461,425 Public Relations 731,499 Bank Charges 375,445 Other Operating Expenses 940,863 Total 7,944,827

Note 8 - Depreciation Buildings 802,764 Other Infrastructure 4,505 Vehicle 100,461 Furniture and Fittings 86,176 Computer Hardware 393,211 Computer Software 34,673 Office Equipment 13,932 Medical Equipment 831,594 Other Assets 32,684 Total 2,300,000

2008/9 Ownership Agreements 247 HEALTH SERVICES AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 9 - Accounts Receivable, Net Accounts Receivable End Bal (Forecast 2007-08) 33,617,508 Increase in Patient Revenue 61,116,249 Assumed Write offs (3,000,000) Collections during 2008-09 (50,925,880) End Bal 40,807,877 Provision and Reserve for Bad debts End Bal (Forecast 2007-08) 25,876,038 Provision during the Year 6,868,226 Assumed Write offs (3,000,000) End Bal 29,744,264

Net Revenue 11,063,614

Note 10 - Payroll Creditors Accrued Vacation Leave and Pensions Liability 2,032,432 Total 2,032,432

Note 11 - Fixed Asset Net of Depreciation Land 2,303,750 Building 33,937,676 Other Infrastructure 237,103 Vehicles 314,640 Furniture and Fittings 477,196 Computer Hardware 1,256,230 Computer Software 383,060 Office Equipment 667,162 Medical Equipment 2,394,347 Other Assets 33,874 Work In progress 2,987,284 Net Book Value 44,992,622

248 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Information Communications and Technology Authority

For the year ending 30 June 2009

2008/9 Ownership Agreements 249

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

250 2004/5 Ownership Agreements 1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of the Information and Communications Technology Authority have agreed that the Information and Communications Technology Authority will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Information and Communications Technology Authority is to operate during the year.

General Nature of Activities

The Information and Communications Technology (ICT) Authority was established in May 2002 by the Information and Communications Technology Authority Law 2002 (now the Information and Communications Technology Authority Law (2006 Revision). Its powers and functions are specified in Sections 9 and 10 of that Law, and may be summarised as doing all things necessary or convenient to properly regulate and license the ICT sector in the Cayman Islands. The ICT sector includes, but is not limited to, telecommunications, broadcasting, radio, e-business and the .ky Internet domain. The Authority is also to act on any matter referred to it by the Minister responsible for ICT, or the managing director.

It also collects and verifies on behalf of Government the coercive element of all licence fees, and immediately deposits such fees in a Government bank account.

Scope of Activities

The scope of Information and Communications Technology Authority activities are as follows:

(a) allocate the electromagnetic spectrum for facilities and specified services within the Cayman Islands, or between the Cayman Islands and elsewhere;

(b) determine methods for assigning the electromagnetic spectrum;

(c) issue licences authorising the use of specified portions of the electromagnetic spectrum, including those used on any ship, aircraft, vessel, or other floating or airborne contrivance or spacecraft registered in the Islands;

(d) institute procedures for ensuring the compliance by licensees with any obligations regarding the use of the electromagnetic spectrum, imposed by or under the licence, any provisions of the ICTA Law or any regulations made hereunder.

(e) to promote competition in the provision of ICT services and ICT networks where it is reasonable or necessary to do so;

(f) to advise the Minister on ICT matters, including compliance with Government’s international obligations, market liberalisation and competitive pricing;

(g) to investigate and resolve complaints from consumers and service providers concerning the provision of ICT services and ICT networks;

(h) to determine the categories of licences to be issued under the ICTA Law and the Electronic Transactions Law 2000;

2008/9 Ownership Agreements 251

(i) to license and regulate ICT services and ICT networks as specified in the ICTA Law and the Electronic Transactions Law 2000;

(j) to collect all fees, including licence fees, and any other charges levied under the ICTA Law or the Electronic Transactions Law 2000 or regulations made thereunder;

(k) to resolve disputes concerning the interconnection or sharing of infrastructure between or among ICT service providers or ICT network providers;

(l) to promote and maintain an efficient, economic and harmonised ICT infrastructure;

(m) to be the sole person appointed under the ICTA Law to be the Administrative Point of Contact and the only person responsible for the management and control of the top level of the global Internet Domain Name System held in trust for the Internet and the Islands;

(n) to act on any matter referred to it by the Minister or the managing director; and

(o) to carry out such other functions as are conferred on the Authority by or under the ICTA Law or any other Law.

In addition, the Authority may regulate the rate, prices, terms and conditions of any ICT service or ICT network that is required to be licensed where the Authority is of the opinion that it is in the interests of the public to do so.

Customers and Location of Activities

The Authority’s customers are the Government, all residents of and visitors to the Cayman Islands, potential and actual licensees of ICT networks or ICT services originating or terminating in the Cayman Islands, the owners of any ship, aircraft, vessel or other floating or airborne contrivance or spacecraft registered in the Cayman Islands, and all potential or actual registrants in the .ky Internet domain.

252 2004/5 Ownership Agreements

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for the Information and Communications Technology Authority for the 2008/9 financial year are as follows:

• Increase access to a variety of innovative, high-quality ICT services, at reasonable prices, that meet the consumers’ needs and reflect their values.

• Encourage the development of a sustainable competitive ICT industry.

• Enhance existing legislation or assisting with the development of new legislation.

• Maintain and enhance a regulatory environment that is fair, equitable, and transparent by: i. Undertaking public consultation on relevant regulatory issues on a timely basis. ii. Resolving as quickly as possible any disputes between ICT suppliers concerning interconnection, infrastructure sharing, resale tariffs and other technical and economic issues that could adversely impact the development of sustainable competition. iii. Introducing any necessary retail price controls (e.g. price cap and floors), based upon Long Range Incremental Costing, on the incumbent operator to protect the interests of consumers and prevent anti-competitive practices. iv. Continuing the process of updating and validating the licensing information taken over by the Authority, with the aim of ensuring compliance and increasing Government revenue.

2008/9 Ownership Agreements 253

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for the Information and Communications Technology Authority for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 384,690 370,605 Revenue from ministries, portfolios, statutory authorities and Nil Nil government companies Revenue from other persons or organisations 1,228,455 1,355,728

Surplus/deficit from outputs 57,069 32,943

Other expenses (Transfer to Authority’s Reserve) 57,000 Nil

Net Surplus/Deficit 2,069 32,943

Total Assets 2,010,317 1,953,882

Total Liabilities 27,146 27,780

Net Worth 1,983,171 1,926,102

Cash flows from operating activities 77,911 118,578

Cash flows from investing activities (70,505) (3,435)

Cash flows from financing activities NIL NIL

Change in cash balances 7,406 115,143

2008/9 2007/8 Financial Performance Ratio Target Forecast $ $ Current Assets: Current Liabilities 1:71 1:69

Total Assets: Total Liabilities 1:74 1:70

254 2004/5 Ownership Agreements

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 10 10

Staff turnover (%) 10% 10%

Average length of service (Number)

Senior management 3 2 Professional staff 2 1 Administrative staff 3 2

Significant changes to personnel management system None None

2008/9 2007/8 Physical Capital Measures Target Forecast $ $ Value of total assets 2,010,317 1,953,882

Asset replacements: total assets 1:28 1:569

Book value of depreciated assets: initial cost of those assets 1:6 1:9

Depreciation: Cash flow on asset purchases 1:2 1:12

Changes to asset management policies NIL NIL

2008/9 Major Capital Expenditure Projects Target $ None None

Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk Unanticipated failure or None Establishment of a fair, Cannot be amalgamation of major transparent and independent estimated licensees regulatory environment

2008/9 Ownership Agreements 255

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for the Information and Communications Technology Authority is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8

Budget Forecast Operating Statement $ $ Revenue 1,672,848 1,726,333

Operating Expenses 1,615,779 1,693,390

Net Surplus/Deficit 57,069 32,943

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 2,010,317 1,953,882

Liabilities 27,146 27,780

Net Worth 1,983,171 1,926,102

2008/9 2007/8

Budget Forecast Statement of Cash Flows $ $ Net cash flows from operating activities 77,911 118,578

Net cash flows from investing activities (70,505) (3,435)

Net cash flows from financing activities 0 0

256 2004/5 Ownership Agreements

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into the Information and Communications Technology Nil Authority Capital Withdrawals from the Information and Communications Technology Nil Authority. Dividend or Profit Distributions to be made by the Information and Nil Communications Technology Authority. Government Loans to be made to the Information and Communications Nil Technology Authority. Government Guarantees to be issued in relation to the Information and Nil Communications Technology Authority. Related Party Payments (Non Remuneration) made to Key Management Nil Personnel27 Remuneration28 Payments made to Key Management Personnel Nil

Remuneration Payments made to Senior Management 500,061

Number for 2008/9 No of Key Management Personnel Nil

No of Senior Management 4

27 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 28 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

2008/9 Ownership Agreements 257

7. Agreement

Scope of this Agreement In signing this document: • The Information and Communications Technology Authority undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that the Information and Communications Technology Authority will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. V. Arden McLean, JP Minister of Communications, Works and Infrastructure on behalf of Cabinet

------

Chairman of the Board Information and Communications Technology Authority

June 25, 2008

258 2004/5 Ownership Agreements

Appendix: Forecast Financial Statements

THE INFORMATION AND COMMUNICATIONS TECHNOLOGY AUTHORITY STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for the Information and Communications Technology Authority for the year ended 30 June 2009. (c) comply with generally accepted accounting practice.

------

Chairman of the Board Information and Communications Technology Authority

June 25, 2008

2008/9 Ownership Agreements 259 THE INFORMATION AND COMMUNICATIONS TECHNOLOGY AUTHORITY FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

Note 2008/9 2007/8 Budget Forecast CI$ CI$ Revenue Outputs to Cabinet 384,690 370,605 Licence and Regulatory Fees 1 1,228,455 1,207,374 Interest Revenue 59,703 55,240

Total Operating Revenue 1,672,848 1,633,219

Operating Expenses Personnel Costs 2 882,916 851,079 Supplies and consumables 78,220 82,160 Purchase of services 544,184 644,100 Operating lease rentals 69,786 68,171 Depreciation 3 34,584 41,832 Capital Charge Other operating expenses 6,090 6,048

Total Operating Expenses 1,615,780 1,693,390

Surplus from operating activities and before extraordinary 57,069 (60,171) items Extraordinary Items 93,114

Net Surplus before payments to Reserve 57,069 32,943

Transfer to Statutory Reserve 57,000

Net Surplus 69 32,943

260 2004/5 Ownership Agreements THE INFORMATION AND COMMUNICATIONS TECHNOLOGY AUTHORITY FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

Note 2008/9 2007/8 Budget Forecast CI$ CI$

Opening balance net worth 1,926,102 1,893,159

Net Surplus 69 32,943 Net revaluations during the period - Total recognised revenues and expenses 69 32,943

Equity investment - Statutory Reserve 57,000 57,000 -

Closing balance net worth 1,983,171 1,926,102

2008/9 Ownership Agreements 261 THE INFORMATION AND COMMUNICATIONS TECHNOLOGY AUTHORITY FORECAST BALANCE SHEET FOR THE YEAR ENDING 30 JUNE 2009

Note 2008/9 2007/8 Budget Forecast CI$ CI$ Current Assets Cash and cash equivalents 4 1,553,136 1,545,730 Marketable securities and deposits - Accounts receivable 334,482 322,157 Inventories - Other current assets 40,552 39,769 Total Current Assets 1,928,170 1,907,656

Non-Current Assets Loans - Other investments - Property, plant and equipment 5 82,147 46,226 Other non-current assets Total Non-Current Assets 82,147 46,226 Total Assets 2,010,317 1,953,882

Current Liabilities Accounts payable 27,146 27,780 Unearned revenue Employee entitlements - Other current liabilities - Total Current Liabilities 27,146 27,780

Non-Current Liabilities Employee entitlements - Unfunded Pension liability - Borrowings - Currency issued - Other non-current liabilities - Total Non-Current Liabilities - Total Liabilities -

TOTAL ASSETS LESS TOTAL LIABILITIES 1,983,171 1,926,102

NET WORTH Opening Balance Net Worth 1,926,102 1,893,159 Net Surplus 69 32,943 Reserve 57,000 Total Net Worth 1,983,171 1,926,102

262 2004/5 Ownership Agreements THE INFORMATION AND COMMUNICATIONS TECHNOLOGY AUTHORITY FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

Note 2008/9 2007/8 Budget Forecast CI$ CI$

CASH FLOWS FROM OPERATING ACTIVITIES Receipts Sale of Outputs to Cabinet 384,690 370,605 Major ICT Licence Regulatory Fees 1,228,455 1,207,374 Interest received 59,703 55,240 Extraordinary receipt 93,114 Payments Personnel costs 884,916 851,079 Suppliers 710,021 756,676

Net cash flows from operating activities 7 77,911 118,578

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of non-current assets (70,505) (3,435) Purchase of investments Proceeds from sale of non-current assets Proceeds from sale of investments

Net cash flows from investing activities (70,505) (3,435)

CASH FLOWS FROM FINANCING ACTIVITIES Equity Contributions - - Capital Withdrawal - - Repayment of Surplus - - Proceeds from borrowings - - Repayment of borrowings - - Net cash flows from financing activities - -

Net increase in cash and cash equivalents 7,406 115,143 Cash and cash equivalents at beginning of period 1,545,730 1,430,587

Cash and cash equivalents at end of period 1,553,136 1,545,730

2008/9 Ownership Agreements 263 THE INFORMATION AND COMMUNICATIONS TECHNOLOGY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast

NOTE 1 - GOODS AND SERVICES (INCLUDING FEES AND CHARGES) Fees and Charges Major ICT Licence Regulatory Fees 947,239 918,022 Fixed Annual ICT Licence Fees 186,216 206,852 ICT Licence Application Fees 20,000 7,500 .ky Internet Domain Registration Fees 75,000 75,000 Other Fees and Charges -

Total Fees and Charges 1,228,455 1,207,374

General Sales - Rentals - Other -

Total Goods and Services 1,228,455 1,207,374

NOTE 2 - PERSONNEL COSTS Personnel Costs Salaries, wages, allowances and employee pension contribution 835,558 805,240 Employer pension expense 47,358 45,839

Total Personnel Costs 882,916 851,079

NOTE 3 - DEPRECIATION Furniture and fittings 25 29,431 Computer hardware and software 27,910 5,553 Office equipment 6,649 6,848 Other assets -

Total 34,584 41,832

264 2004/5 Ownership Agreements THE INFORMATION AND COMMUNICATIONS TECHNOLOGY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

NOTE 4 - CASH AND CASH EQUIVALENTS Cash on hand (including petty cash) 30 30 Bank accounts 218,783 267,080 Bank overdrafts Short Term Deposits including call accounts (up to 90 days) 1,334,323 1,278,620 Other cash or cash equivalents -

Total Cash and Cash Equivalents 1,553,136 1,545,730

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT Cost or Opening Valuation Furniture and fittings 231,908 231,908 Computer hardware and software 145,263 74,758 Office equipment 90,954 90,954 Other assets

Total Cost or Valuation 468,125 397,620

Accumulated Depreciation Furniture and fittings 230,953 230,928 Computer hardware and software 95,441 67,531 Office equipment 59,584 52,935 Other assets -

Total Depreciation 385,978 351,394

Net Book Value Furniture and fittings 955 980 Computer hardware and software 49,822 7,227 Office equipment 31,370 38,019 Other assets

Total Net Book Value 82,147 46,226

2008/9 Ownership Agreements 265 THE INFORMATION AND COMMUNICATIONS TECHNOLOGY AUTHORITY NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

NOTE 6 - ACCUMULATED SURPLUS Retained Earnings held as general funds 378,671 378,602 Retained Earnings held in Statutory Reserve 715,000 660,000

Total Accumulated Surplus 1,093,671 1,038,602

FROM OPERATING ACTIVITIES Operating surplus/(deficit) 57,069 32,943 Non-cash movements Depreciation 34,584 41,832 Loss on disposal of fixed assets - Increase in provision for doubtful debts - Increase(decrease) in payables/accruals (11,742) (84,200) Personnel - Subsidies, grants and transfers - Increase in borrowings - Net gain/loss from sale of fixed assets - Net gain/loss from sale of investments - Increase(decrease) in other current assets 70,341 Increase in investments due to revaluation - Decrease(increase) in receivables (2,000) 57,662

Net cash flows from operating activities 77,911 118,578

266 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Maritime Authority of the Cayman Islands

For the year ending 30 June 2009

2008/9 Ownership Agreements 267

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

268 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of Maritime Authority of the Cayman Islands have agreed that Maritime Authority of the Cayman Islands will seek to achieve during the 2008/09 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which Maritime Authority of the Cayman Islands is to operate during the year.

General Nature of Activities

The Maritime Authority of the Cayman Islands (MACI) activities involve the national maritime administration for the Cayman Islands, MACI will facilitate the development of Cayman as an international maritime centre and help foster a dynamic environment that supports its clients' efforts to maximise their respective stakeholders' growth opportunities and returns in global shipping; whilst promoting compliance with international standards, regional agreements, and Cayman's legislation in the areas of maritime safety and security, marine environmental pollution prevention, and social responsibility.

Scope of Activities

The scope of Maritime Authority of the Cayman Islands activities is as follows:

• The original CISR's vessel and mortgage Registration, Advisory, and marine Survey and Audit services.

• The overall responsibility for implementing Cayman's marine pollution prevention, maritime safety and security, and seafarers' welfare obligations29 under international Conventions and Codes and under Cayman legislation for Cayman-flagged vessels.

• The responsibility for the implementation of Cayman's obligations under the Caribbean Memorandum of Understanding on Port State Control and for marine Casualty Investigation activities in relation to Cayman- flagged vessels.

• The responsibility for national maritime policy formulation, the provision of advice on maritime-related matters, and the development of Cayman's maritime-related legislation.

• The responsibility to represent Cayman at international fora and to protect its maritime interests.

• The responsibility to help facilitate the development of the Cayman Islands as an international maritime centre.

29 The statutory responsibility for this falls to the Office of the Cayman Islands Shipping Master.

2008/9 Ownership Agreements 269

Customers and Location of Activities

The services provided by Maritime Authority of the Cayman Islands are provided to the following Customers both locally and internationally:

• Vessel Owners/Operators and their Representatives • Vessel Builders • Yacht Designers and related Consultants • Seafarers on Cayman flagged Vessels • Cayman Islands Government

The Maritime Authority of the Cayman Islands is able to offer its services to its Customers from six locations, the head office in George Town, the European Regional Office - United Kingdom, representative offices in Greece, Cote d'Azur, South Florida and Japan and the Cayman Islands Government Office in the United Kingdom.

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The Maritime Authority of the Cayman Islands for the 2008/09 financial year are as follows:

• Position technical (survey/audit) capability in Japan by mid 2008

• Implement Phase 3 of the Cayman Islands Shipping Registry(CISR) Virtual Office Environment, by September 2008

• Expand MACI Consulting, including the implementation of training seminars in Cayman’s registration and technical procedures and the CISR Virtual Office Environment for domestic maritime services providers, international documentation agencies and yacht managers, and for the employees of Cayman-flagged vessel owners/operators that deal with these matters

• Continue to update and streamline relevant domestic legislation

• Participate in the International Maritime Organisation's Flag State Voluntary Audit Scheme (VAS)

• Obtain International Maritime Organization (IMO) associate member status by 2008

• Implement a performance-based pay system and Personal Development Plans for all qualifying employees with effect from July 1, 2008

• Relocate MACI’s Head Office to a more suitable building

• Update and streamline our seven Class agreements

270 2004/5 Ownership Agreements 4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision) for Maritime Authority of the Cayman Islands for the 2008/09 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 1,822,455 1,535,000 Revenue from ministries, portfolios, statutory authorities and 0 0 government companies Revenue from other persons or organisations 5,638,000 5,465,000

Surplus/deficit from outputs 0 0

Other expenses 7,445,000 6,900,000

Net Surplus/Deficit 15,455 100,000

Total Assets 3,197,455 2,422,869

Total Liabilities (436,000) (434,270)

Net Worth 2,761,455 1,988,599

Cash flows from operating activities 45,455 233,632

Cash flows from investing activities (145,000) (300,000)

Cash flows from financing activities 0 500,000

Change in cash balances 99,545 433,632

2008/9 2007/8 Financial Performance Ratio Target Forecast Current Assets: Current Liabilities 6.72 4.56

Total Assets: Total Liabilities 7.33 5.58

2008/9 Ownership Agreements 271 Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 58 59

Staff turnover (%) 4% 5%

Average length of service (Number) Senior management 2.60 1.56 Professional staff 2.59 2.02 Administrative staff 2.55 1.64 Amendments / Revision to Significant changes to personnel management system None Employee Handbook

2008/9 2007/8 Physical Capital Measures Target Forecast Value of total assets $269,000 $443,342

Asset replacements: total assets 61.7% 67.7%

Book value of depreciated assets: initial cost of those assets 48% 69%

Depreciation: Cash flow on asset purchases 23.3% 11.2%

Changes to asset management policies None None

2008/9 Major Capital Expenditure Projects Target $ None

Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk Insurance policy to manage War and Terrorism New Unquantifiable risk Succession planning and develop an organizational structure and environment Loss/absence of critical staff New Unquantifiable which provides challenges, promotes advancement and recognize achievements Back up vital and important documentation on disks and Loss of important data New Unquantifiable hard copy and place in a secure environment Seek alternative office Inadequate Office Space New Unquantifiable accommodation

272 2004/5 Ownership Agreements 5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Maritime Authority of the Cayman Islands is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8

Budget Forecast Operating Statement $ $ Revenue 7,460,455 7,000,000

Operating Expenses 7,445,000 6,900,000 Net Surplus/Deficit 15,455 100,000

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 3,197,455 2,422,869

Liabilities (436,000) (434,270)

Net Worth 2,761,455 1,988,599

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 45,455 233,632

Net cash flows from investing activities (145,000) (300,000)

Net cash flows from financing activities 0 500,000

2008/9 Ownership Agreements 273

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Transaction Amount for 2008/9 $ Equity Investments into Maritime Authority of the Cayman Islands 0

Capital Withdrawals from Maritime Authority of the Cayman Islands 0 Dividend or Profit Distributions to be made by Maritime Authority of the 0 Cayman Islands. Government Loans to be made to Maritime Authority of the Cayman Islands 0 Government Guarantees to be issued in relation to Maritime Authority of the

Cayman Islands Related Party Payments (Non Remuneration) made to Key Management 0 Personnel30 Remuneration31 Payments made to Key Management Personnel 1,236,818

Remuneration Payments made to Senior Management 1,227,314

Number for

2008/9 No of Key Management Personnel 19

No of Senior Management 12

30 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 31 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

274 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement In signing this document: • Maritime Authority of the Cayman Islands undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Maritime Authority of the Cayman Islands will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Kenneth Jefferson, JP Financial Secretary on behalf of the Cabinet

------Sharon Roulstone Chairman of the Board Maritime Authority of the Cayman Islands

June 25, 2008

2008/9 Ownership Agreements 275

Appendix: Forecast Financial Statements

MARITIME AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) Complete and reliable; (b) Fairly reflect the forecast financial position as at 30 June 2009 and performance for Maritime Authority of the Cayman Islands for the year ended 30 June 2009 (c) Comply with generally accepted accounting practice.

------Sharon Roulstone Chairman On behalf of the Board

June 25, 2008

276 2004/5 Ownership Agreements MARITIME AUTHORITY OF THE CAYMAN ISLANDS OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Ownership Agreements 277 MARITIME AUTHORITY OF THE CAYMAN ISLANDS BALANCE SHEET FOR THE YEAR ENDING 30 JUNE 2009

278 2004/5 Ownership Agreements

MARITIME AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Ownership Agreements 279 MARITIME AUTHORITY OF THE CAYMAN ISLANDS CASH FLOW STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

280 2004/5 Ownership Agreements MARITIME AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

Organization and Objectives

The Maritime Authority of the Cayman Islands (MACI) is a statutory corporation formed as a separate legal entity under the Maritime Authority of the Cayman Islands Law (2005) which came into effect on July 1, 2005. The Authority is wholly-owned by the Government of the Cayman Islands but governed by a Board of Directors appointed by the Governor of the Cayman Islands. MACI reports to the Cabinet of the Cayman Islands through the Portfolio of Finance and Economics but is also responsible to the UK Secretary of State via the UK's Maritime and Coastguard Agency (UK MCA) for the effective implementation of the relevant international maritime and related Conventions that have been ratified by the UK Government and extended to Cayman.

The original Cayman Islands Shipping Registry (CISR) maritime administration structure, which is the main forerunner to MACI, was first set-up in 1903 when George Town was established as a British Port of Registry. The CISR obtained British Registry Category 1 Status on July 25, 1991. The Category 1 Group of British Registries includes the UK, Bermuda, Cayman, Gibraltar and the Isle of Man. All of these can register vessels of any size and type provided that they meet international standards. The CISR is now a division of MACI. However, there are a number of other critical responsibilities that have been added to the new Authority. The Authority therefore combines into one body:

• The original CISR's vessel and mortgage Registration, Advisory, and marine Survey and Audit services

• The overall responsibility for implementing Cayman's marine pollution prevention, maritime safety and security, and seafarers' welfare obligations under international Conventions and Codes and under Cayman legislation for Cayman-flagged vessels

• The responsibility for the implementation of Cayman's obligations under the Caribbean Memorandum of Understanding on Port State Control for foreign-flagged vessels entering Cayman Islands ports and for marine Casualty Investigation activities in relation to Cayman-flagged vessels

• The responsibility for national maritime policy formulation, the provision of advice on maritime- related matters, and the development of Cayman's maritime-related legislation

• The responsibility to represent Cayman at international fora and to protect its maritime interests

Basis of preparation

The Financial statements of MACI are prepared in accordance with International Public Sector Accounting Standards (IPSAS) using the accrual basis of accounting. Where there is currently no IPSAS, other authoritative pronouncements such as International Accounting Standards and United Kingdom reporting standards applicable to the public sector have been used. The measurement base applied is historical cost adjusted for revaluations of certain assets. The reporting Currency is Cayman Islands Dollars basis.

Reporting Period

The reporting period is the year ended 30 June, 2009.

2008/9 Ownership Agreements 281 MARITIME AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Significant Accounting Policies

Investments: Short-term investments are valued, on a monthly basis at amortized cost and long term investments are valued at quoted market value. Unrealized gains or losses are recoded in the income statement.

Foreign Currency: Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transaction. Gains and losses resulting from the settlement of such transaction and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Assets and liabilities are translated at the exchange rate in effect at the Balance Sheet date.

Sale of Goods and Services (including user charges and fees): Revenue from the sale of goods and services, including revenue resulting from user charges or fees, is recognised when it is earned. This is generally at time of sale or on delivery of service. Revenue from the rendering of a service is recognised by reference to the stage of completion of contracts or in accordance with agreements to provide services. The stage of completion is determined according to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Government Grants: MACI is semi dependent upon annual operating grants from the Cayman Islands Government to meet its Obligations. The full amount of the grant is treated as income in the year of receipt.

Expenses: Expenses are recognised when incurred.

Receivables and advances: Receivables and advances are recorded at the amounts expected to be ultimately collected in cash.

Inventory: Inventories are recorded at the lower of cost and net current value. Where inventories are valued at cost, specific identification or the FIFO method has been used. Appropriate allowance has been made for obsolescence.

Fixed Assets: Fixed Assets are stated at historical cost less accumulated depreciation. Depreciation is calculated on a straight-line method of 20% per annum for Furniture and Fixtures, Leasehold Improvements and Office Equipment; and 33 1/3% for Computer Hardware and Software, which is sufficient to write-off the cost of the assets over their estimated useful lives.

Cash and cash equivalents: For the purpose of the cash flow statement, cash and cash equivalents consist of current and call deposit and fixed deposit maturing within 90 days from the date of acquisition.

Accounts Payable Account Payables are recorded at the amount owing after allowing for credit notes and other adjustments.

Employee entitlements: Amount incurred but not paid at the end of the reporting period is accrued. Annual leave due, but not taken, is recognised as a liability.

Commitments: Commitments are recorded in the Statement of Commitments at the value of the obligation.

Contingencies: The nature and an estimate of the financial effect of contingent liabilities are disclosed in the Statement of Contingent Liabilities. Contingent liabilities are recognised as liabilities when they are probable.

Employee benefits: Obligation for contribution to defined contribution and defined benefits pension plans are recognized as an expense in the income statement as incurred. (See also Note 19)

282 2004/5 Ownership Agreements MARITIME AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Comparative Information: The Financials for MACI do not provide comparable information due to 30 June 2006 being the first year of operations. (See also Note 21)

Capital

The authorised capital of MACI is $1,500,000. The Cayman Islands Government is the sole subscriber and has contributed Paid-Up Capital of $500,000 as at 30 June 2006. The Cabinet of the Cayman Islands Government has committed to increasing the Paid-Up Capital of MACI to a minimum of $1,500,000 by the year 2008, by yearly equity injections. As of June 2008, the Cayman Islands Government has fully contributed its Paid-Up Capital of $1,500,000.

Lease Obligation

MACI leases the premises used for its operations in George Town and in the United Kingdom for the European Regional Office (ERO). The lease agreement for the George Town offices dated 1 September 2003 for the total office space 4694 sq ft at $23.00 per sq ft. The lease is for 3 years with 1 year option to renew. Lease payments under the operating leases are charged to the income statement in equal instalments over the period of the lease.

The Lease agreement for the ERO lease agreement dated 6 September 2002 for the total office space 2578 sq ft at £14.88 per sq ft. The lease is for 15 years with option to renew. Lease payments under the operating leases are charged to the income statement in equal instalments over the period of the lease.

Pensions

Pension contributions for eligible employees of MACI are paid to either the Pubic Service Pensions Fund (the “Fund”) or the Chamber of Commerce Silver Thatch Pension Fund (Silver Thatch). The Fund is administered by the Public Service Pensions Board (“the Pensions Board) and is operated as a multi-employer non-contributory fund, whereby the employer pays both employer and employees contributions. With effect from 1 January 2000 the Fund had both a defined benefit and a defined contribution element. Participants joining after that date became members of the defined contribution element. MACI therefore funds 6% employee and 6% employers’ contributions for all employees joining MACI prior to 1 January 2006.

MACI has not recognized any of the unfunded Past Service Liability (PSL) due to the fact that there is not an up to date Actuarial review. Pensions Board management also confirmed that the contribution rate would be 13% effective January 1999. This rate includes a 1% non-retirement benefit contribution. MACI began recognizing this contribution rate of 13% from 1 July 2005 for employees under the define contribution element.

For employees joining 1 January 2006 the contribution rate in effect is 5% employer’s contribution and the employees is required to contribute 5% if enrolled with the Silver Thatch or 7% to participate in the Public Service Pension Fund.

2008/9 Ownership Agreements 283 MARITIME AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Related Party Transactions

The Board of Directors of MACI is appointed by the Governor and consists of the Chief Executive Officer, Secretary to the Board as ex-officio members and seven directors as at 30 June 2008.

The following Government department/entities provided services to MACI during 2008:

• Treasury Department • Legal Department • Public Service Pension Board (see Note 9) • Computer Services Department • Immigration Department • Customs Department

MACI is responsible for the registration of vessel and the collection of the related fees which are paid over to the Cayman Islands Government.

284 2004/5 Ownership Agreements MARITIME AUTHORITY OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

NOTE 9 - PERSONNEL COSTS 2008/09 Forecast

$000 Salaries and wages (including employee pension contributions) 4,300 Employer/Government pension expense 353 Total Personnel Costs 4,653

NOTE 10. SUPPLIES AND CONSUMABLES 2008/09 Forecast

$000 Supply of goods and services 2,292 Operating lease rentals 470 Other - Total Supplies and Consumables 2,762

NOTE 11. DEPRECIATION

2008/09 Forecast

$000 Furniture and fittings 7 Computer hardware and software 17 Office equipment 2 Other plant and equipment - Other assets 9 Total Depreciation 35

NOTE 12. CASH AND CASH EQUIVALENTS 2008/09 Forecast

$000 Cash on hand 423 Bank accounts 1,270 Deposits with Portfolio Finance and Economic (Treasury) 0 Other cash or cash equivalents - Total Cash and Cash Equivalents 1,693

NOTE 13. ACCOUNTS RECEIVABLE

2008/09 Forecast

$000 Outputs to Cabinet 76 Outputs to other government agencies - Outputs to others 1,350 Prepayments 49 Other Receivables - Total Gross 1,475 Less provision for doubtful debts 240 Total Net 1,235

2008/9 Ownership Agreements 285

MARITIME AUTHORITY OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

NOTE 14. PROPERTY, PLANT AND EQUIPMENT

Opening Balance Addition Depreciation Closing Expense Balance 2008/09 Budget $000 $000 $000 $000 Furniture and fittings 47 15 7 55 Computer hardware and software 37 120 17 140 Office equipment 31 15 2 44 Plant and equipment 1 01 Other assets 39 10 29

Total 155 150 35 269

NOTE 15. ACCOUNTS PAYABLE 2008/09 Forecast

$000 Trade Creditors (125) Total (125)

NOTE 16. UNEARNED REVENUE 2008/09 Forecast

$000 Revenue received in advance (202) Total (202)

286 2004/5 Ownership Agreements MARITIME AUTHORITY OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

NOTE 17. EMPLOYEE ENTITLEMENTS (CURRENT)

2008/09 Forecast

$000 Long service leave and other leave entitlements (91) Other salary related entitlements - Total Employee Entitlements (91)

NOTE 18. RECONCILIATION OF OPERATING SURPLUS TO CASH FLOWS FROM OPERATING ACTIVITIES

2008/09 Forecast

$000

Operating surplus/(deficit) 15 Non-cash movements Depreciation 35 Net Gain from Sale of Fixed Assets 5 Decrease in Payables / Accruals (10) Net cash flows from operating activities 45

2008/9 Ownership Agreements 287 288 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

National Drug Council

For the year ending 30 June 2009

2008/9 Ownership Agreements 289

Contents Page

1. Purpose 3

2. Nature and Scope of Activities 4

3. Strategic Goals and Objectives 5

4. Ownership Performance Targets 6

5. Summarised Forecast Financial Statements 8

6. Other Financial Information 9

7. Agreement 10

8. Appendix: Forecast Financial Statements 11

290 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of the National Drug Council have agreed that the National Drug Council will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the National Drug Council is to operate during the year.

General Nature of Activities

• The National Drug Council activities involve policy formulation and advice; support and publication of studies, reports and other documentation on drug abuse through collection of data, research and the co-ordination of a system for those persons affected by drugs, through effective evaluation and monitoring.

Scope of Activities

The scope of the National Drug Council activities are as follows:

• Policy and Prevention: To formulate policies intended to prevent or reduce drug abuse and to promote and encourage the implementation of such policies and programmes and to advise the Minister on matters of law reform relating to the misuse of drugs.

• Research and Information: To conduct/support studies and publish reports and other documentation on drug abuse and develop and maintain a database of information on, drug abuse in the Islands;

• Evaluation and Monitoring: To co-ordinate the efforts of drug abuse prevention, treatment and rehabilitation, through evaluation and monitoring of the programmes within the Cayman Islands.

Customers and Location of Activities

The services provided by the National Drug Council are provided only in the Cayman Islands.

2008/9 Ownership Agreements 291

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The National Drug Council for the 2008/9 financial year are as follows:

• Provide policy advice and review matters as it relates to drug abuse and misuse in the Cayman Islands.

• Co-ordinate the National Strategic Plan for Drug Abuse Prevention and Rehabilitation and monitor the implementation of the plan.

• Provide information that is culturally relevant and based on scientific research and local data.

• Ensure best practice and adherence to relevant regional and international policies related to drug abuse matters.

• Evaluate programmes as indicated within the National Drug Abuse Prevention and Rehabilitation Plan to ensure effective programming.

• Encourage and foster affiliations and exchange of information on a local, regional and international level.

292 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision) for the National Drug Council for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 525,000 525,000 Revenue from ministries, portfolios, statutory authorities and 0 0 government companies Revenue from other persons or organisations 0 0

Surplus/deficit from outputs 0 3,805

Other expenses 525,000 521,195

Net Surplus/Deficit 0 3,805

Total Assets 182,275 88,175

Total Liabilities 215,531 28,718

Net Worth (33,256) 59,457

Cash flows from operating activities 0 19,706

Cash flows from investing activities 0 0

Cash flows from financing activities 0 0

Change in cash balances 0 19,706

2008/9 2007/8 Financial Performance Ratio Target Forecast $ $ Current Assets: Current Liabilities 2:1 3:1

Total Assets: Total Liabilities 2.4:1 3.1:1

2008/9 Ownership Agreements 293

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 5 4

Staff turnover (%) 0% 0% Average length of service (Number) Senior management 1 11 Professional staff 8 Administrative staff 4 3

Significant changes to personnel management system

2008/9 2007/8 Physical Capital Measures Target Forecast $ $ Value of total assets 182,275 88,175

Asset replacements: total assets -

Book value of depreciated assets: initial cost of those assets 2% 2%

Depreciation: Cash flow on asset purchases - -

Changes to asset management policies -

2008/9 Major Capital Expenditure Projects Target $ None Planned -

Risk Management

Key risks Change in status from Financial value Actions to manage risk previous year of risk

294 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for the National Drug Council is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8

Budget Forecast Operating Statement $ $ Revenue 525,000 525,000

Operating Expenses 525,000 521,195

Net Surplus/Deficit 0 3,805

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 182,275 88,175

Liabilities 215,531 28,718

Net Worth (33,256) 59,457

2008/9 2007/8

Budget Forecast Statement of Cash Flows $ $ Net cash flows from operating activities 0 19,706

Net cash flows from investing activities 0 0 Net cash flows from financing activities 0 0

2008/9 Ownership Agreements 295

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into the National Drug Council N/A

Capital Withdrawls from National Drug Council N/A

Dividend or Profit Distributions to be made by the National Drug Council N/A

Government Loans to be made to the National Drug Council N/A

Government Guarantees to be issued in relation to National Drug Council N/A Related Party Payments (Non Remuneration) made to Key Management 0 Personnel32 Remuneration33 Payments made to Key Management Personnel 78,660

Remuneration Payments made to Senior Management 0

Number for

2008/9 No of Key Management Personnel 1

No of Senior Management

32 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 33 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

296 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement In signing this document: • The National Drug Council undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that National Drug Council will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------

Hon. Anthony Eden, OBE, JP Minister of Health and Human Services on behalf of Cabinet

------Julene Banks Chairman of the Board National Drug Council

June 25, 2008

2008/9 Ownership Agreements 297

Appendix: Forecast Financial Statements

NATIONAL DRUG COUNCIL STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for the National Drug Council for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Julene Banks Chairman of the Board National Drug Council

June 25, 2008

298 2004/5 Ownership Agreements NATIONAL DRUG COUNCIL STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

The National Drug Council’s (‘the NDC’) financial statements have been prepared in accordance with International Accounting Standards and are stated in Cayman Islands dollars. The following is a summary of the most significant accounting and reporting policies used in preparing the financial statements:

Use of Estimates: The preparation of the financial statements requires the Council to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the year. Actual results could differ from these estimates.

Fixed Assets: Depreciation is being calculated on a straight-line basis on the opening cost over the estimated useful lives of the assets as follows: Contributed Assets Purchased assets Years remaining at acquisition Useful lives Office equipment 2 3 Office furniture 5 6 Computer equipment 1 2 Leasehold improvements 2 3

Capital expenditures greater than $1,000.00 are capitalized as fixed assets.

Deferred grant funds and income: Donation and grant income received for specific projects are credited to income in periods in which expenses on such projects are incurred.

Disclosure about Fair Value of Financial Instruments: The NDC recognises financial assets and financial liabilities on the date it becomes party to the contractual provisions of the instrument. From this date, any gains or losses arising from changes in the fair value of the assets or liabilities are recognised in the statement of operations. Financial instruments are initially measured at cost, which is the fair value of the consideration given or received. Subsequent to initial recognition all financial assets are measured at their estimated fair market value.

The carrying amounts of all financial instruments on the balance sheet are reasonable estimates of the fair values and no gains or losses have been recognised in the statement of operations for the changes in the fair value of the assets or liabilities.

Foreign Exchange: Revenue and expense transactions involving currencies other than Cayman Islands dollars are translated to Cayman Islands dollars at the exchange rates ruling at the time of those transactions. Assets and liabilities included in these financial statements are translated to Cayman Islands dollars at the rates of exchange prevailing at the balance sheet dates. Gains and losses on exchange are taken to the statement of operations.

2008/9 Ownership Agreements 299

NATIONAL DRUG COUNCIL FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Note Budget Forecast Revenue Outputs funded by Cabinet 525,000 525,000 Other 1 0 0 Interest 0 0

Total Operating Revenue 525,000 525,000

Operating Expenses Personnel 291,429 232,184 Depreciation 2 42,186 15,900 Legal and professional fees 14,000 19,000 Other operating expenses 177,385 254,110

Total Operating Expenses 525,000 521,195

(Deficit)/ Surplus from Operating Activities 0 3,805

Gains/losses on asset sales 0 0

Total Other Revenue 0 3,805

Surplus/Deficit from Ordinary Activities 0 3,805

Extraordinary items 0 0

Net Surplus/Deficit after Extraordinary Items 0 3,805

The notes to the forecast financial statements are an integral part of these financial statements and should be read in conjunction with them.

300 2004/5 Ownership Agreements NATIONAL DRUG COUNCIL FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast

Opening balance net worth (33,256) 55,651

(Deficit)/Surplus 0 3,805

Net revaluations during the period

Total recognised revenues and expenses (33,256) 59,456 Distribution of surplus Closing balance net worth (33,256) 59,456

The notes to the forecast financial statements are an integral part of these financial statements and should be read in conjunction with them.

2008/9 Ownership Agreements 301 NATIONAL DRUG COUNCIL FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Note Forecast Budget

Current Assets Cash and cash equivalents 2 0 83,905 Accounts receivable 131,250 0 Prepayments and other receivables 0 2,667

Total Current Assets 131,250 86,572

Long-term Assets Fixed Assets 3 51,025 1,603

TOTAL ASSETS 182,275 88,174

Current Liabilities Accounts payable and accruals 75,333 28,718 Employee Entitlement 72,855 Other Current Liabilities 67,343 Deferred Income – Assets Transferred 0 0

Total Current Liabilities 215,531 28,718

Long-term Liabilities Obligations under finance lease 0 0

Total Long-term Liabilities 0 0

Shareholder’s Equity Share capital 4 0 0 Retained earnings (33,256) 59,456

Total Shareholder’s Equity (33,256) 59,456

TOTAL LIABILITIES AND EQUITY 182,275 88,174

The notes to the forecast financial statements are an integral part of these financial statements and should be read in conjunction with them.

302 2004/5 Ownership Agreements NATIONAL DRUG COUNCIL FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Note Budget Forecast

Cash Flows from Operating 0 19,706

Cash Flows from Investing Purchase of fixed assets 0 0 Proceeds from sale of fixed asset 0 0

Net Cash Flows from Investing 0 0

Cash Flows from Financing Distribution of surplus 0 0 Capital injections 0 0 Capital withdrawls 0 0

Net Cash Flows from Financing 0 0

Opening Balance Cash and Cash Equivalents 0 64,199 Net change in cash and cash equivalents 0 19,706

Closing Balance Cash and Cash Equivalents 0 83,905

The notes to the forecast financial statements are an integral part of these financial statements and should be read in conjunction with them.

2008/9 Ownership Agreements 303 NATIONAL DRUG COUNCIL NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

NOTE 1 - OPERATING REVENUES Operating revenue from Government grant income is determined on a calendar year basis by the Government of the Cayman Islands from its annual budgets. As the NDC has no other significant source of funding for its operational expense, its ability to continue as a going concern is contingent on this continued support from Government. Grant income is booked as income when due. Special grant income relating to other projects is allocated to income during the period over which the project is expected to be commenced and completed.

NOTE 2 - CASH AND CASH EQUIVALENTS Cash and Cash equivalents include amounts due from bank on demand. All cash and cash equivalents are held with a bank in the Cayman Islands.

2008/9 2007/8 Budget Forecast

Current and call accounts 0 83,905

Short-term fixed deposits maturing within one month 0 0 TOTAL 0 83,905

NOTE 3 - DEPRECIATION AND FIXED ASSETS

2008/9 2007/8 Forecast Budget Leasehold Improvements Opening Book Value/Cost 0 0 Additions 0 0 Depreciation 0 0 Closing Book Value 0 0

Office Furniture and Equipment Opening Book Value/Cost 43,935 30,671 Additions 0 0 Depreciation (19,826) (29,870) Closing Book Value 24,109 801

Computer Hardware and Software Opening Book Value/Cost 28,972 34,253 Additions 0 0 Depreciation (19,954) (33,451) Closing Book Value 9,018 802

NOTE 4 - SHARE CAPITAL Not applicable

304 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

National Gallery of the Cayman Islands

For the year ending 30 June 2009

2008/9 Ownership Agreements 305

Contents Page

1. Purpose 3

2. Nature and Scope of Activities 4

3. Strategic Goals and Objectives 5

4. Ownership Performance Targets 6

5. Summarised Forecast Financial Statements 9

6. Other Financial Information 10

7. Agreement 12

8. Appendix: Forecast Financial Statements 13

306 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of National Gallery of the Cayman Islands have agreed that the National Gallery of the Cayman Islands will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the National Gallery of the Cayman Islands is to operate during the year.

General Nature of Activities

The National Gallery of the Cayman Islands activities involve: outreach programmes, educational course programmes, exhibitions, youth programmes, events, workshops, and educational lectures. The National Gallery has an art collection (mostly of donated works) and an extensive art-based lending library at the Gallery’s Education Centre in the Merren’s Centre. The Gallery’s small art and gift sales shop is on the National Gallery’s premises in Harbour Place. The Gallery’s mandate is to preserve and develop the visual arts in the Cayman Islands and to that end to travel Caymanian artists abroad as well as to develop our artists locally. Further to this, our mandate is to use the visual arts as a proven tool for social regeneration, for outreach into the society at all levels to have a better quality of life socially and economically, through the visual arts.

Scope of Activities

This budget for 2008/9 is limited to the revenue and expenses related to operations. The Management Board of the National Gallery has undertaken to raise CI$ 3,200,000 for the purpose of the construction of the purpose built National Gallery of the Cayman Islands. The funds involved are segregated from the operational funds of the National Gallery, see 3 (5).

The scope of the National Gallery of the Cayman Islands activities is as follows:

• 50% of what we do is outreach and educational programming in particular for youth, at-risk populations of our society, and up and coming developing artists, followed by programming for young children and adult art aficionados and finally, for our visitors. Programmes are specific to various groups of people: Inside Art for prisoners, Art Magnet and Art Zone for underserved youth, and Art Trek for primary-aged kids, Artists Away for professional Caymanian artists and Art Sisters for women coping with unusual stressful situations, to name a just few.

• 20% of what we do are exhibitions, plan on approximately 4,000 gallery users per exhibition depending upon subject matter and educational focus, duration is a month to three months per exhibition, free entrance. Workshops and lectures are well received by many cross-sections of the community with attendance from 5 – 30 people, as they are either one-on-one or small group interactive activities.

• 10% of what we do is events: all are public art centred and usually free of charge, are attended by ranges between 300-5000 depending upon the event.

• 20% is maintaining and developing our collections: national collection and library materials.

Exhibitions: 6 for 2008/9, Friends of the Gallery Volunteer Group; full service art and design library (multi-media available); open art studio with locker availability; National Gallery workshop series, National Gallery lecture series

At magnet, Inside Art Northward, Inside Art Fairbanks, Inside Art Eagle House, Art Zone, Art Sisters, Art Outreach Bonaventure, Art Outreach Frances Bodden, Art Outreach Lighthouse School, Art Outreach Caribbean Haven,

2008/9 Ownership Agreements 307 Continuing Education Courses, Little Artists, Guided Art Studio with Still Life; Walkers Art Club; District Art Clubs for Youth; Art Talks at district centres

Cineclub art films

Artist of the month, Art Trek Tuesdays, Art Flix, lunchtime lectures; observer culture column, journal art serial

Artists away, art@governors, eco art party, Chalkfest, clothesline project, celebration of art* pending 2006-7 pilot year; Cayfest art show and sale; National Children’s Art Festival, 3 annual summer student internships,

Traditional Caymanian Sandyard competition, Carifesta art exhibit, international biennials, international art competition participation, international: child art forum participations and sculpting competition Cayman Brac, sand sculpting competition Grand Cayman

Art in the workplace, art consultations, art appraisals, art parties

Customers and Location of Activities

The services provided by the National Gallery of the Cayman Islands are provided to the customer (users) as follows: all ages of students, amateur and professional artists, the incarcerated, the recovering institutionalised substance abuser, children in group home care, and both residents and visitors to the islands in general.

The services provided by the National Gallery are located usually at Harbour Place, (exhibitions), continuing education (workshops) at National Gallery’s Education Centre, Bay Town Plaza, and in all the districts in all three islands at the various community halls and civic centres including WB Town Hall, Town Hall, GT, South Sound Community Centre, Savannah School hall, Bodden Town *new location TBD, North Side Community Centre, East End *new location TBD, Cayman Brac Eldemire House, and Heritage House, Little Cayman Beach resort; with some (programmes) being conducted on-site at prisons, youth centres, or overseas and (Events) are at Governors House, Seven Mile Public Beach, or at other locations.

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3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The National Gallery of the Cayman Islands for the 2008/9 financial year are as follows:

PRIORITY: 1) To continue major capital fundraising drive; to commence and nearly complete construction of the new National Gallery buildings on the Esterly Tibbetts Bypass (Date to move in now set at July 2009)

Estimated cost of building CI$ 3,200,000 Building Fund CI$ 2,200,000 Balance to be raised by donation CI$ 1,000,000

2) Continue the production of quality, timely exhibitions, programmes, and events. Develop especially the core of cultural studies relating to the visual arts, including the visual arts history, development, and promotion of our culture through the visual arts.

3) Comprehensive membership drives (Aim for renewal of the majority of 2009 memberships in January 2009, and a 15% increase in membership).

4) Continue staff training guided by Investors in People of which the National Gallery successfully became members, and guided by NG’s ethic to work hard and develop its entire Caymanian staff to fullest extent possible.

5) Attend Ministry meetings to create the National Cultural Policy.

6) Complete review and overhaul of collection policy and budget to enable NGCI to collect as outlined by NGCI law.

2008/9 Ownership Agreements 309 4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision) for The National Gallery of the Cayman Islands for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 416,000 403,000 Revenue from ministries, portfolios, statutory authorities and 0 500,000 government companies Revenue from other persons or organisations 1,210,000 274,000 (Note (1) Accounting Policies) Surplus/deficit from outputs 0 0

Other expenses 626,000 1,177,000

Net Surplus/Deficit 1,000,000 500,000

Total Assets 3,539,000 2,536,000

Total Liabilities 3,250 0

Net Worth 3,536,000 2,536,000

Cash flows from operating activities 1,000,000 475,000

Cash flows from investing activities (3,200,000) NIL

Cash flows from financing activities 0 165,000

Change in cash balances (2,200,000) 640,000

2008/9 2007/8 Financial Performance Ratio Target Forecast % % Current Assets: Current Liabilities 104:1

Total Assets: Total Liabilities 1089:1

310 2004/5 Ownership Agreements Maintenance of Capability

Human Capital Measures 2008/9 2007/8 Target Forecast Total full time equivalent staff 7 7

Staff turnover (%) 0% 0% Average length of service (Number) in years Senior management 7 7 Professional staff 3 3 Administrative staff 9 9

Professional HR Audit done for strategic staff planning by As I See It Adhering to Adhering to Solutions (Juliet Johnson - De Feu) IIP personnel IIP personnel IIP Standard holder

2007/8 2006/7 Physical Capital Measures Target Est. Actual Value of total assets $3,539,250 $2,536,750

Asset replacements: total assets - -

Book value of depreciated assets: initial cost of those assets Not available Not available Depreciation: Cash flow on asset purchases NIL:NIL NIL:NIL Changes to asset management policies NIL NIL Future planning for Capital Project

Major Capital Expenditure Projects 2008/9 Target Completion of Purpose Built National Gallery And Education Centre $3,200,000

Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk Director’s responsibility for Ability to raise donations yes donations for annual NG $210,000 operations Management Board’s fund raising committee $1,000,000 Ability to raise funds yes responsibility for capital

project

2008/9 Ownership Agreements 311

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for National Gallery of the Cayman Islands is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 1,626,000 677,000 Operating Expenses 626,000 677,000 Net Surplus/Deficit 1,000,000 NIL

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 3,539,250 2,536,750

Liabilities 3,250 0

Net Worth 3,536,750 2,536,750

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 1,000,000 475,000

Net cash flows from investing activities (3,200,000) -

Net cash flows from financing activities - 165,000

312 2004/5 Ownership Agreements

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into National Gallery of the Cayman Islands N/A

Capital Withdrawls from National Gallery of the Cayman Islands N/A Dividend or Profit Distributions to be made by National Gallery of the Cayman N/A Islands Government Loans to be made to National Gallery of the Cayman Islands N/A Government Guarantees to be issued in relation to National Gallery of the N/A Cayman Islands Related Party Payments (Non Remuneration) made to Key Management N/A Personnel34 Remuneration35 Payments made to Key Management Personnel N/A

Remuneration Payments made to Senior Management $72,000

Number for 2008/9 No of Key Management Personnel (Board) 19

No of Senior Management (Director) 1

34 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 35 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

2008/9 Ownership Agreements 313

7. Agreement

Scope of this Agreement In signing this document: • National Gallery of the Cayman Islands undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that National Gallery of the Cayman Island will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Alden M. McLaughlin Jr., JP Minister of Education, Training, Employment, Youth, Sports and Culture /International Financial Services Policy on behalf of Cabinet

------Henry Harford, Chairman of the Board National Gallery of the Cayman Islands

June 25, 2008

314 2004/5 Ownership Agreements

Appendix: Forecast Financial Statements

NATIONAL GALLERY OF THE CAYMAN ISLANDS STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law 2003 (Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for National Gallery of the Cayman Islands for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Henry Harford, Chairman of the Board National Gallery of the Cayman Islands

June 25, 2008

2008/9 Ownership Agreements 315 NATIONAL GALLERY OF THE CAYMAN ISLANDS STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

Use of estimates: The preparation of financial statements in accordance with International Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditure during the year. Actual results could differ from these estimates.

Recognition of revenue: Revenue is generally recognized when earned by the Gallery, which usually coincides with date received.

Government grants: Government grants are received for operating financial support on a quarterly basis, and then are recorded when received. Grants may also be received for special projects and these are matched with project expenditure over the term of the project and recorded in the statement of operations when the expenditure is incurred.

Donations: Donations are recorded when the donation is received.

Interest income: Interest income is recorded on an accrual basis.

Fixed assets: Fixed assets are recorded at cost and depreciated on a straight-line basis. The term being dependent on the category of the fixed asset.

Stock in Gallery gift shop: Stock in Gallery gift shop recorded at cost.

Cash and cash equivalents: For the purposes of the statement of cash flows, cash and cash equivalents include cash at bank and short term deposits with original maturities at three months or less.

Foreign exchange: Revenue and expense transactions involving currencies other than Cayman Islands are translated at the exchange rates ruling at the time of those transactions. Assets and liabilities included in the financial statements are translated at the rates of exchange prevailing on the balance sheet dates. Gains and losses on exchange are taken to the statements of operations.

Collections and exhibits: The cost of all objects purchased is recorded as an expense in the statements of operations. Objects acquired by gift or donations are not recorded in these financial statements, as it is difficult to obtain an objective measurement of valuation.

Donation services: A substantial number of unpaid volunteers make significant contributions of their time to develop the Gallery’s programmes. The value of this donated time is not reflected in these financial statements as the cost cannot be objectively measured or valued.

316 2004/5 Ownership Agreements

NATIONAL GALLERY OF THE CAYMAN ISLANDS FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Revenue and support from operations Donations 130,000 60,000 Capital Donations 1,000,000 500,000 Membership 80,000 70,000

1,210,000 630,000

Expenditure Administrative expenses 346,000 317,000 Exhibition and collections expense 60,000 40,000 Facility expenses 99,000 99,000 Information and training 105,000 105,000 Programmes and events expense 75,000 75,000 Exhibition reception expenses 17,000 17,000 Marketing and advertising 12,000 12,000 Depreciation 8,000 8,000 Other operating expenses 4,000 4,000

626,000 677,000

Net expenditure from operations - (47,000)

Other income and expenditure - 144,000

OUtputs-Cayman Islands Government 416,000 403,000

Increase in unrestricted general fund balances 1,000,000 500,000

2008/9 Ownership Agreements 317

NATIONAL GALLERY OF THE CAYMAN ISLANDS FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Operating Net worth 2,536,000 1,871,000

Equity Investment - 165,000

Forecast surplus 1,000,000 500,000

Closing Net worth 3,536,000 2,536,000

318 2004/5 Ownership Agreements NATIONAL GALLERY OF THE CAYMAN ISLANDS FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $

Assets Current Assets Cash and Cash equivalents 235,250 2,435,250 Fixed deposit - - Other assets 104,000 100,750 Total current assets 339,250 2,536,000 Fixed assets 3,200,000 - Total assets 3,539,250 2,536,750

Liabilities and fund balances Current Liabilities Accounts payable and accrued expenses 3,250 -

Total Assets Less Total Liabilities 3,536,000 2,536,750

Fund balances Unrestricted general fund 3,536,000 371,000 Restricted building fund - 2,165,750 Total Liabilities and fund balances 3,536,000 2,536,750

2008/9 Ownership Agreements 319 NATIONAL GALLERY OF THE CAYMAN ISLANDS FORECAST STATEMENT OF CASH FLOWS COMBINED FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $

Cash flow from operations: Cash from government funding 416,000 378,000 Capital Donations 1,000,000 500,000 Cash from other sources 210,000 274,000 Payment to suppliers (386,000) 9360,000) Payments to employees (240,000) (317,000) Cash flow from operation 1,000,000 475,000

Cash flow from financing - 165,000

Cash flow from investing (3,200,000) - Net change in cash balances (2,200,000) 640,000

Cash at beginning of year 2,435,250 1,795,250

Cash at the end of the year 235,250 2,435,250

320 2004/5 Ownership Agreements NATIONAL GALLERY OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

1. National Gallery’s permanent collection not part of balance sheet. This policy is to be reassessed in the future under the advice of our auditors, KPMG.

2008/9 Ownership Agreements 321

322 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

National Housing Development Trust

For the year ending 30 June 2009

2008/9 Ownership Agreements 323 Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

324 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of the National Housing Development Trust have agreed that the National Housing Development Trust will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the National Housing Development Trust is to operate during the year.

General Nature of Activities

The National Housing Development Trust activities involve in being an important factor in the economic development of the Cayman Islands by providing homes and financing to low-income Caymanians at an affordable price.

Scope of Activities

The scope of the National Housing Development Trust activities is as follows:

1. Construction of low-income affordable homes to be sold to the Caymanian public at an affordable price

2. Provide financing to low-income Caymanian who qualifies under the criteria set by the Board of Directors for the purchase of an affordable home constructed under the supervision of the Trust.

3. Perform the duties as an administrator and loan processing agent on behalf of the Cayman Islands Government for the Government Guaranteed Assisted Home Mortgage Programme.

Customers and Location of Activities

The services provided by the National Housing Development Trust are provided only within the Cayman Islands.

2008/9 Ownership Agreements 325

3. Strategic Goals and Objectives

The key strategic goals (from an ownership perspective) for the National Housing Development Trust for the 2008/9 financial year are as follows:

• To become a well structured, efficiently managed organization that is fair and prudent in its selection processing of eligible applicants for affordable homes offered by the Trust.

• To identify the housing needs of low-income Caymanians and to proceed with the processing of future development of affordable homes that will contribute to the economic development of the Cayman Islands.

• To administer the Government Guaranteed Home Assisted Mortgage Program in collaboration with the commercial banks to provide financing to Caymanian whose income level is classified as low-to-middle income.

The key objectives (from an ownership perspective) for National Housing Development Trust for the 2008/9 financial year are as follows:

• Continue to manage the lease portfolio of the Trust and to offer counselling to clients as it becomes necessary.

• To seek out addition funding for future development of low-income housing that have been identified as an imperative need in the economic development of these islands.

• To continue a close working relationship with local contractors in the development of new homes for low- income person in our community.

• To ensure that the Government Guaranteed Home Assisted Mortgage Programme is managed in an efficient and prudent manner.

326 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for National Housing Development Trust for the 2008/9 financial year are as follows.

Financial Performance

2008/9 Financial Performance Measure Target $ Revenue from Cabinet 650,249

Revenue from ministries, portfolios, statutory authorities and government companies 0

Revenue from other persons or organisations 795,400

Surplus/deficit from outputs 0

Other expenses (2,197,137)

Net Surplus/Deficit (751,488)

Total Assets 12,841,163

Total Liabilities 10,486,334

Net Worth 2,354,829

Cash flows from operating activities (751,487)

Cash flows from investing activities 0

Cash flows from financing activities 300,000

Change in cash balances (451,487)

2008/9 Financial Performance Ratio Target $ Current Assets: Current Liabilities .182:1

Total Assets: Total Liabilities 1.22:1

2008/9 Ownership Agreements 327

Maintenance of Capability

2008/9 Human Capital Measures Target Total full time equivalent staff 9

Staff turnover (%) 0%

Average length of service (Number)

Senior management 2 years Professional staff - Administrative staff 4 years

Significant changes to personnel management system

2008/9 Physical Capital Measures Target Value of total assets $12,841,163

Asset replacements: total assets 0%

Book value of depreciated assets: initial cost of those assets 85.05%

Depreciation: Cash flow on asset purchases 0%

Changes to asset management policies

Major Capital Expenditure Projects 2008/9 Target $ Land purchase 300,000

Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk Follow up on delinquent account and Default on lease Accrued income Unchanged make arrangement for payments in payment reduced arrears

328 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for the National Housing Development Trust is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8

Budget Forecast Operating Statement $ $ Revenue 1,445,649 1,264,822

Operating Expenses (2,197,136) 2,142,207

Net Surplus/Deficit (751,487) (877,385)

As at 30 June As at 30 June

2009 2008 Balance Sheet $ $ Assets 12,841,163 11,819,199

Liabilities 10,486,334 10,898,104

Net Worth 2,354,829 321,095

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities (751,487) (189,950)

Net cash flows from investing activities 0 1,300,000

Net cash flows from financing activities 300,000 500,000

2008/9 Ownership Agreements 329

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into the National Housing Development Trust 300,000

Capital Withdrawals from the National Housing Development Trust 0

Dividend or Profit Distributions to be made by the National Housing Development Trust 0

Government Loans to be made to the National Housing Development Trust 0 Government Guarantees to be issued in relation to the National Housing Development 0 Trust Related Party Payments (Non Remuneration) made to Key Management Personnel36 0

Remuneration37 Payments made to Key Management Personnel 102,534

Remuneration Payments made to Senior Management 78,931

Number for

2008/9 No of Key Management Personnel 1

No of Senior Management 1

36 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 37 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

330 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement

In signing this document:

• The National Housing Development Trust undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and

• The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that the National Housing Development Trust will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Kirk Tibbetts, JP Minister of District Administration, Planning, Agriculture and Housing on behalf of Cabinet

------Mr. Leonard N. Ebanks Chairman of the Board National Housing Development Trust

June 25, 2008

2008/9 Ownership Agreements 331

Appendix: Forecast Financial Statements

NATIONAL HOUSING DEVELOPMENT TRUST STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for the National Housing Development Trust for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Mr. Leonard N. Ebanks Chairman of the Board National Housing Development Trust

June 25, 2008

332 2004/5 Ownership Agreements THE NATIONAL HOUSING DEVELOPMENT TRUST STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

Organization and Objectives

The National Housing and Community Development Trust (the “Trust”) was incorporated on 29th September, 2003 as a not-for-profit company limited by guarantee and not having a share capital. In 2006 the name of the Trust was amended to National Housing Development Trust. The Trust’s Mission Statement is to construct and provide affordable homes in planned communities, offer easier financing opportunities and provide a management system that adds security, value and ownership that imparts a sense of pride in hard working Caymanians that are placed in the category of being low income.

Significant Accounting Policies

Basis of preparation: These financial statements are prepared in accordance with International Public Sector Accounting Standards (“IPSAS”) under the historical cost convention, and are expressed in Cayman Islands Dollars.

Foreign Instruments: Foreign currency transactions are recorder at the exchange rates prevailing on the date of the transactions. Assets and Liabilities are translated at the exchange rate in effect at the Balance Sheet date.

Financial instruments: Financial instruments are measured initially at cost, including transaction costs. The fair value of financial instruments is based on their quoted market price at the balance sheet date without any deduction for transaction costs. If a quoted market price is not available, the fair value of the instrument is estimated using management’s best estimates, taking into account current market conditions and the credit quality of the counterparties.

The fair value of derivatives that are not exchange traded is estimated at the amount that the Bank would receive or pay to terminate the contract at the balance sheet date taking into account current market conditions and the current creditworthiness of the counterparties.

Cash and cash equivalents: For the purpose of the Statement of Cash Flows, cash equivalents consist of deposits held at call with banks, net of overdraft maturing within 90 days.

Use of estimates: The preparation of financial statements in accordance with IPSAS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the year. Actual results could differ from those estimates.

Income recognition: Income and expenses are recorded on the accrual basis of accounting.

Deposit Accounts: Deposit accounts reflect term deposits, which are placed with approved financial institutions. Such deposits have maturity between three (3) months and twelve (12) months from the date of acquisition.

Government grants: The trust is dependant upon annual operating grants from the Cayman Islands Government to meet its obligations.

2008/9 Ownership Agreements 333 THE NATIONAL HOUSING DEVELOPMENT TRUST STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Fixed Assets: Fixed assets are recorded at cost. Depreciation, which is based on the cost Fixed assets and low- income housing properties are stated at cost less accumulated depreciation and any recognized impairment loss. Depreciation is charged as to write off the cost or valuation of asset over their estimated useful lives, using the straight- line method, on the following bases:

Years Computer equipment 3 Furniture and fixtures 12 Office and telephone equipment 5 Vehicle 4 Affordable housing properties 10

The gain or loss arising on the disposal or retirement of an asset is determined as difference between the sales proceeds and the carrying amount of the asset and is recognized as income.

Employee benefits: Obligations for contributions to defined contribution pension plans are recognized as an expense in the income statement as incurred. Pension contributions for eligible employees of the Trust are paid to the Public Service Pensions Fund (the “Fund”). The fund is administered by the Public Service Pensions Board (the “Pensions Board”).

334 2004/5 Ownership Agreements THE NATIONAL HOUSING DEVELOPMENT TRUST FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Budget Note $

Revenue Outputs to Cabinet 650,249 Operating Income 1 795,400

Total Operating Revenue 1,445,649

Operating Expenses Personnel Costs 4 596,324 Accommodation 61,677 Supplies and Consumables 8,992 Insurance Expenses 180,649 Depreciation 595,400 Project Maintenance 26,067 Professional Fees 65,000 Other Operating Expenses 55,000

Total Operating Expenses 1,589,109

Loss from operating activities and before extraordinary items (143,460) Extraordinary items (608,027)

Net Deficit (751,487)

2008/9 Ownership Agreements 335 THE NATIONAL HOUSING DEVELOPMENT TRUST FORECAST STATEMENT OF CHANGES IN NET WORTH AS AT 30 JUNE 2009

2008/9 Budget $ Note Opening balance net worth 634,145 Net deficit (751,487) Property revaluations -

Total recognised revenues and expenses (117,342)

Equity investment 300,000

Closing balance net worth 182,658

336 2004/5 Ownership Agreements THE NATIONAL HOUSIGN DEVELOPMENT TRUST FORECAST BALANCE SHEET FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Note Budget $

Current Assets Cash and Cash equivalents 2 83,586 Accounts receivable 189,000 Marketable Securities and Deposits 1,640,000

Total Current Assets 1,912,586

Non-Current Assets Property 10,908,577 Other non-current asset 20,000

Total Non-Current Assets 10,928,577

Total Assets 12,841,163

Current Liabilities Accounts payable 0 Employees’ entitlement 8,000

Total Current Liabilities 8,000

Long-Term Liabilities Bonds 10,478,334

Total Long-Term Liabilities 10,478,334

Total Current Liabilities 10,486,334

TOTAL ASSETS LESS TOTAL LIABILITIES 2,354,829

2008/9 Ownership Agreements 337 THE NATIONAL HOUSING DEVELOPMENT TRUST FORECAST CASH FLOW STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/09 Budget Note $

CASH FLOWS FROM OPERATING ACTIVITIES Cash flow from operating activities 3 695,400 Outputs to cabinet 650,249 Interest 100,000 Personnel costs 4 (596,324) Suppliers (342,385) Other payments (1,258,42)7

Net cash flows from operating activities (751,487)

CASH FLOWS FROM INVESTING ACTIVITES Purchase of investments 0 Proceeds from sale of non-current assets 0

Net cash flows from investing activities 0

CASH FLOWS FROM FINANCING ACTIVITIES Equity investment 300,000 Repayment of surplus Proceeds from borrowings Capital withdrawal 0

Net cash flows from financing actives 300,000

Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period 535,073

Cash and cash equivalents at end of period 83,586

338 2004/5 Ownership Agreements THE NATIONAL HOUSING DEVELOPMENT TRUST NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Budget $ Note 1: OPERATING REVENUES Lease Income 695,400 Interest income 100,000

795,400

Note 2: CASH and CASH EQUIVALENTS Current and Call Accounts 83,586 Accounts Receivable 189,000 Short-term Fixed Deposits within 6 months 1,640,000

1,912,586

Note 3: LEASE RECEIVABLES Lease Receivables is comprised of the annual payments on the customers account Mortgage 475,400 Rental 220,000

695,400

Note 4: PERSONNEL COSTS Salaries and wages 466,236 Pension (Employee/Government) 51,680 Medical 70,308 Other (Duty/overtime) 8,100

596,324

2008/9 Ownership Agreements 339 340 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

National Roads Authority

For the year ending 30 June 2009

2008/9 Ownership Agreements 341

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

342 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of the National Roads Authority have agreed that the National Roads Authority will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the National Roads Authority is to operate during the year.

General Nature of Activities

The general nature of activities of the National Roads Authority involves the management and development of public roads and related infrastructure in accordance with the National Roads Authority Law.

Scope of Activities

The scope of activities of the National Roads Authority include providing policy advice, publication of a National Roads Plan, provision of project and construction management services for the delivery of new road-works and the maintenance management of the existing road infrastructure for fund-holding Client Agencies.

Additionally, the National Roads Authority provides support services to:

• Public Works Department to enable that Department to provide an appropriate response to Hurricanes and other national emergencies, and • Planning Department for the review of planning applications involving road related matters and the site inspection of road related constructed applications.

Customers and Location of Activities

The customers of the National Roads Authority are fund-holding Government Agencies, approved private sector clients and any other entity. These services are provided only in the Cayman Islands.

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The National Roads Authority for the 2008/9 financial year are as follows:

• Continue establishment of the Authority, develop and implement effective administrative, financial and information management systems

• Identify and seek approval for strategies for financing future road development

• To continue the Traffic Improvement and Development Roads Programmes

2008/9 Ownership Agreements 343

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for the National Roads Authority for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 5,730,375 22,745,151 Revenue from ministries, portfolios, statutory authorities and 7,666,842 0 government companies Revenue from other persons or organisations 0 0

Surplus/deficit from outputs 0 0

Other expenses 0 0

Net Surplus/Deficit 0 0

Total Assets 9,885,538 7,565,099

Total Liabilities 2,380,639 1,740,899

Net Worth 7,504,899 5,824,200

Cash flows from operating activities 0 0

Cash flows from investing activities (896,400) (474,500)

Cash flows from financing activities 896,400 474,500

Change in cash balances 0 0

2008/9 2007/8 Financial Performance Ratio Target Forecast % % Current Assets: Current Liabilities 2.71:1 2.8:1

Total Assets: Total Liabilities 4.15:1 1.3:1

344 2004/5 Ownership Agreements

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast $ $ Total full time equivalent staff 138 117

Staff turnover (%) Nil Nil

Average length of service (Number) Senior management 5 4 Professional staff 5 4 Administrative staff 5 4

Significant changes to personnel management system None None

2008/9 2007/8 Physical Capital Measures Target Forecast $ $ Value of total assets 3,436,980 7,565,099

Asset replacements: total assets Nil Nil

Book value of depreciated assets: initial cost of those assets .79:1

Depreciation: Cash flow on asset purchases

Changes to asset management policies None None

2008/9 Major Capital Expenditure Projects Target $ Purchase of vehicles and other equipment 896,400

2008/9 Ownership Agreements 345 Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk Work related injuries to No change Introduction, training and Undefined: persons implementation of safety depends on standards for heavy extent of injury equipment machinery and workforce personnel. Accidents related to the No change Implement driver-training Undefined: operation of vehicles and courses. HOD to exercise depends on heavy equipment appropriate disciplinary extent of action for each offence or damage repeating offender, such as loss of authority to drive or financial contribution by driver. Appropriate training in operation of vehicle to reduce operational misuse of the vehicle.

346 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for the National Roads Authority is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8

Budget Forecast Operating Statement $ $ Revenue 13,397,217 22,745,151

Operating Expenses 13,397,217 22,745,151

Net Surplus/Deficit 0 0

As at 30 As at 30 Balance Sheet June 2009 June 2008 $ $ Assets 9,885,538 7,565,099

Liabilities 2,380,639 1,740,899

Net Worth 7,504,899 5,824,200

2008/9 2007/8

Budget Forecast Statement of Cash Flows $ $ Net cash flows from operating activities 0 0

Net cash flows from investing activities (896,400) (474,500)

Net cash flows from financing activities 896,400 474,500

2008/9 Ownership Agreements 347

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $

Equity Investments into the National Roads Authority. 896,400 Capital Withdrawals from the National Roads Authority. 0

Dividend or Profit Distributions to be made by the National Roads Authority. 0

Government Loans to be made to the National Roads Authority. 0 Government Guarantees to be issued in relation to the National Roads 0 Authority. Related Party Payments (Non Remuneration) made to Key Management 0 Personnel38 Remuneration39 Payments made to Key Management Personnel

Remuneration Payments made to Senior Management

Number for

2008/9 No of Key Management Personnel 15

No of Senior Management 6

38 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 39 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

348 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement In signing this document: • The National Roads Authority undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that the National Roads Authority will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. V. Arden McLean, JP Minister of Communications, Works and Infrastructure on behalf of Cabinet

------

Chairman of the Board The National Roads Authority

June 25, 2008

2008/9 Ownership Agreements 349

Appendix: Forecast Financial Statements

THE NATIONAL ROADS AUTHORITY STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for the National Roads Authority for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------

Chairman of the Board The National Roads Authority

June 25, 2008

350 2004/5 Ownership Agreements THE NATIONAL ROADS AUTHORITY STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

Significant Accounting Policies

Basis of preparation: These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Committee (IASC), and interpretations issued by the Standing Interpretations Committee of the IASC. The significant accounting policies adopted by the NRA in these financial statements are as follows:

The financial statements of the NRA are presented in Cayman Island dollars and are prepared on the accrual basis under the historical cost convention.

Cash and cash equivalents: This comprises cash at bank and short term investments with maturity at inception of three months or less.

Foreign currency translation: All assets and liabilities denominated in foreign currency are translated to Cayman Islands Dollars at exchange rates in effect at the balance sheet date. Revenue and expense transactions denominated in foreign currency are translated to Cayman Islands Dollars at exchange rates ruling at the date of those transactions. Gains and losses arising on translation are included in the Operating Statement.

Fixed Assets/depreciation: Fixed assets include motor vehicles, heavy equipment, dump trucks, furniture and fixtures and computer hardware and software are stated at cost less accumulated depreciation and impairment losses.

Depreciation is calculated on a straight-line basis at annual rates estimated to write off the carrying value of each asset over the period of its expected useful life.

Annual rates are as follows:

Vehicles and Heavy Equipments 4 - 12 Years Furniture and Fixtures 3 - 15 Years Computer Hardware and Software 3 - 6 Years Other Plant and Equipment 4 Years

Receivables: Receivables are advances that are recorded at the amounts expected to be ultimately collected in cash.

Allowance for bad debts: The allowance for bad debts is established through a provision for bad debts charged to expenses. Accounts receivable are written off against the allowance when management believes that the collect ability of the amount is unlikely. The allowance is an amount that management believes will be adequate to cover any bad debts, based on an evaluation of collect ability and prior bad debts experience.

Inventory: Inventory is valued at the lower of net realizable value or cost, on a last-in first-out basis.

Accounts Payable: Accounts payable are recorded at the amount owing after allowing for credit notes and other adjustments.

2008/9 Ownership Agreements 351 THE NATIONAL ROADS AUTHORITY STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Employee entitlements:

Pension Plans: The Authority makes pension contributions for its eligible employees to the Public Service Pensions Fund, which is administered by the Public Service Pensions Board. The Fund has both a defined benefit and a defined contribution element.

Under defined contribution plans, the Authority pays fixed contributions and has no obligation to pay further contributions if the fund does not have sufficient assets to pay employee benefits relating to employee service in the current and prior periods. The Authority recognises contributions to a defined contribution plan when an employee has rendered services in exchange for those contributions.

A defined benefit plan is one that defines an amount of benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation. The asset or liability in respect of defined benefit plans is the difference between the present value of the defined benefit obligation at the balance sheet date and the fair value of plan assets, adjusted for unrecognised actuarial gains/losses and past service cost. Where a pension asset arises, the amount recognised is limited to the net total of any cumulative unrecognised net actuarial losses and past service cost and the present value of any economic benefits available in the form of refunds from the plan or reduction in future contributions to the plan. The pension costs are assessed using the Projected Unit Credit Method. Under this method the cost of providing pensions is charged in the Income Statement so as to spread the regular cost over the service lives of employees in accordance with advise of the actuary, (who is due to carry out a full valuation of the plans every year). The pension obligation is measured at the present value of the estimated future cash outflows using discount estimated rates based on market yields on high quality corporate bonds at the time of the accounting date which have terms to maturity approximating the terms of the related liability.

Obligations for contributions to defined contribution and defined benefits pension plans are recognized as an expense in the income statement as incurred.

Revenue recognition: Revenue from sale of services to Cabinet and other government agencies is recognised when it is earned. Investment revenue is recognised in the period in which it is earned. Donations are recognised at fair value at the time of receipt.

Expense recognition: Expenses are recognised when incurred.

352 2004/5 Ownership Agreements Financial Instruments:

Classification: A financial asset is classified as any asset that is cash, a contractual right to receive cash or another financial asset, exchange financial instruments under conditions that are potentially favourable or an equity instrument of another enterprise. Financial assets comprise of cash and cash equivalents and accounts receivable.

A financial liability is any liability that is a contractual obligation to deliver cash or another financial instrument or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. Financial liabilities comprise of accounts payables and employee entitlements.

Recognition: The Authority recognises financial assets and financial liabilities on the date it becomes party to the contractual provisions of the instrument. From this date, any gains and losses arising from changes in fair value of the assets or liabilities are recognised in the Operating Statement.

Measurement: Financial instruments are measured initially at cost which is the fair value of the consideration given or received. Subsequent to initial recognition all financial assets are recorded at historical cost, which is considered to approximate fair value due to the short-term or immediate nature of these instruments.

Derecognition: A financial asset is derecognised when the Authority realises the rights to the benefits specified in the contract or loses control over any right that comprise that asset. A financial liability is derecognised when it is extinguished, that is when the obligation is discharged, cancelled, or expires.

Credit Risk: Cash and short term investments are held with substantial financial institutions. Receivables are short term and settled after the year-end.

Interest Rate Risk: The Authority’s income and operating cash flows are substantially independent of changes in market interest rates.

2008/9 Ownership Agreements 353

THE NATIONAL ROADS AUTHORITY FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/09 2007/08 Budget Forecast $ $ Revenue Outputs funded by Cabinet 5,730,375 22,745,151 Revenue from Third Parties (sales) 7,666,842 0 Interest 0 Total Operating revenue 13,397,217 22,745,151

Operating Expenses Personnel 8,405,372 5,714,998 Depreciation 406,305 379,724 Interest 0 Other operating expenses 4,585,540 16,650,429 Total Operating Expenses 13,397,217 22,745,151

Surplus/deficit from Operating Activities Gains/losses on asset sales 0 0 Total Other Revenue 0 0 Surplus/Deficit from Ordinary Activities Extraordinary items 0 0 Net Surplus/Deficit after Extraordinary Items 0 0

354 2004/5 Ownership Agreements THE NATIONAL ROADS AUTHORITY FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $

Opening Balance Net Worth 6,608,499 5,349,700 Deficit 0 784,299 Net Revaluations during the period Total Recognised Revenues and Expenses 6,608,499 6,133,999

Contribution of Initial Capital Equity Investment 896,400 474,500 Capital Withdrawals Distributions of Surplus Closing Balance Net Worth 7,504,899 6,608,499

2008/9 Ownership Agreements 355 THE NATIONAL ROADS AUTHORITY FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Assets Current Assets Cash 1,346,692 1,320,176 Debtors 5,101,866 3,694,341 Fixed Assets Office Furniture and Fittings: comprising 98,602 108,603 Office Furniture, Equipment and Fittings Computers, Printers, and Projectors Total: Office Furniture and Fittings Less Accumulated Depreciation Residual value Less Depreciation

Plant and Equipment: 1,902,514 389,115 Less Accumulated Depreciation Residual value Less Depreciation

Vehicles 1,435,864 2,052,864 Less Accumulated Depreciation Residual value Add purchases Less Depreciation Leasehold Improvement Land

Total Assets 9,885,538 7,565,099

Liabilities Current Liabilities Creditors 2,380,639 1,740,899 Term Liabilities Roading Finance Total Liabilities 2,380,639 1,740,899

Net Assets 8,446,899 5,824,200

Equity Contributed Capital 5,024,503 4,402,603 Retained Earnings 2,480,396 1,421,597 Total Equity 7,504,899 5,824,200

356 2004/5 Ownership Agreements THE NATIONAL ROADS AUTHORITY FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast $ $ Cash Flows from Operating Activities Operating Receipts 13,397,217 22,745,151 Operating Payments 13,397,217 22,745,151 Net Cash Flows from Operating Activities 0 0

Cash Flows from Investing Activities Purchase of Fixed Assets (896,400) (474,500) Proceeds from the sale of Fixed Assets 0 0 Net Cash Flows from Investing Activities (896,400) (474,500)

Cash Flows from Financing Activities Equity Investment 896,400 474,500 Roading Finance 0 0 Net Cash Flows from Financing Activities 896,400 474,500

Net Movement in Cash Balances 0 0 Cash and Cash Equivalent at the start 1,346,692 0 Cash and Cash Equivalent at the end 1,346,692 0

2008/9 Ownership Agreements 357 358 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Port Authority of the Cayman Islands

For the year ending 30 June 2009

2008/9 Ownership Agreements 359

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreements

8. Appendix: Forecast Financial Statements

360 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of Port Authority of the Cayman Islands have agreed that Port Authority of the Cayman Islands will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Port Authority of the Cayman Islands is to operate during the year.

General Nature of Activities

The Port Authority of the Cayman Islands activities involves the management of the maritime affairs of the Cayman Islands.

Scope of Activities

The scope of the Port Authority of the Cayman Islands activities is as follows:

Providing and maintaining facilities for the offloading of cargo imports into all three Islands.

To contribute to the growth of cruise tourism (and thereby the economy), by providing and maintaining facilities to accommodate the cruise ship passengers.

Providing and maintaining navigational markers in Cayman Islands waters.

Providing a patrolling presence, using two fully equipped motor vessels, in the immediate harbour area of the Cayman Islands during cruise ship visits.

Providing a safe and enjoyable environment for the Port Authority’s staff and customers. Carrying out the Port Authority Laws

Customers and Location of Activities

The services provided by the Port Authority of the Cayman Islands are provided only in the Cayman Islands.

2008/9 Ownership Agreements 361

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The Port Authority of the Cayman Islands for the 2008/9 financial year are as follows:

• Improve the image of the Cayman Islands and the experience of the cruise tourist, by upgrading the cruise ship arrival facilities in George town and at Spotts

• Improve efficiency of the cargo operations by repairing and enhancing the cargo facility in Industrial Park by purchasing additional property adjacent to CDC as well as expanding and relocating the present dock facility.

• To fine tune the existing computer system, to meet management’s need for more useful management reports and to serve the customer needs more efficiently.

• To improve the human resource and risk management aspects, through developing an operations safety/risk management manual.

• To improve operations through the purchase of new equipment and the repairs to existing equipment.

• Improve the efficiency of the administration by constructing additional offices unto the current billing office that will house all administrative and accounting staff in one central location.

362 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for Port Authority of the Cayman Islands for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 0 0 Revenue from ministries, portfolios, statutory authorities and 0 0 government companies Revenue from other persons or organisations 21,386,458 20,538,097

Surplus/deficit from outputs

Other expenses 21,645,552 20,031,278

Net Surplus/Deficit (259,084) 506,819

Total Assets 59,563,875 59,403,374

Total Liabilities 18,729,772 17,604,404

Net Worth 40,834,103 41,798,970

Cash flows from operating activities 1,737,681 3,928,117

Cash flows from investing activities (2,160,000) (1,772,415)

Cash flows from financing activities (3,008,354) (2,986,162)

Change in cash balances (3,430,673) 3,682,487

2008/9 2007/8 Financial Performance Ratio Target Forecast $ $ Current Assets: Current Liabilities 1.2:1 1.4:1

Total Assets: Total Liabilities 3.2:1 3.4:1

2008/9 Ownership Agreements 363

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 168 166

Staff turnover (%) 5 max 5 max

Average length of service (Number)

Senior management 10 10 Professional staff 10 10 Administrative staff 25 25

Significant changes to personnel management system None None

2008/9 2007/8 Physical Capital Measures Target Forecast Value of total assets $59,563,874 Unknown

Asset replacements: total assets 3% Less than 1%

Book value of depreciated assets: initial cost of those assets 96% 80% Not separately Depreciation: Cash flow on asset purchases 3.2% Identified Changes to asset management policies None Planned None Planned

2008/9 Major Capital Expenditure Projects Target $ Asset additions and Replacements 2.2 million

Risk Management

Key risks Change in status from Financial value Actions to manage risk previous year of risk Hurricane Plan practiced on Hurricanes and Storms None $2 million a continuous basis Personal injury or fatality None Employee safety procedures unknown during operation

364 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Port Authority of the Cayman Islands is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8

Budget Forecast Operating Statement $ $ Revenue 21,386,458 20,538,097

Operating Expenses 21,645,552 20,031,278

Net Surplus/Deficit (259,084) 506,819

As at 30 June As at 30 June 2008 2009 Balance Sheet $ $ Assets 59,563,875 59,403,374

Liabilities 18,729,772 17,604,404

Net Worth 40,834,103 41,798,970

2008/9 2007/8

Budget Forecast Statement of Cash Flows $ $ Net cash flows from operating activities 1,737,681 3,928,177

Net cash flows from investing activities (2,160,000) (1,772,415)

Net cash flows from financing activities (3,008,354) (2,986,162)

2008/9 Ownership Agreements 365

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into Port Authority of the Cayman Islands. -

Capital Withdrawls from Port Authority of the Cayman Islands. - Dividend or Profit Distributions to be made by Port Authority of the Cayman 350,000 Islands. Government Loans to be made to Port Authority of the Cayman Islands. - Government Guarantees to be issued in relation to Port Authority of the - Cayman Islands. Related Party Payments (Non Remuneration) made to Key Management - Personnel40 Remuneration41 Payments made to Key Management Personnel -

Remuneration Payments made to Senior Management -

Number for 2008/9

No of Key Management Personnel 3

No of Senior Management 7

40 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 41 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

366 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement In signing this document: • Port Authority of the Cayman Islands undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Port Authority of the Cayman Islands will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Charles E. Clifford, JP Minister of Tourism, Environment, Investment and Commerce on behalf of Cabinet

------Wayne Panton Chairman of the Board Port Authority of the Cayman Islands

June 25, 2008

2008/9 Ownership Agreements 367

Appendix: Forecast Financial Statements

PORT AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Port Authority of the Cayman Islands for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Wayne Panton Chairman of the Board Port Authority of the Cayman Islands

June 25, 2008

368 2004/5 Ownership Agreements PORT AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

Background information

The Port Authority of the Cayman Islands (“the Port Authority”) is a statutory body established on September 15, 1976 under the Port Authority Law.

The Port Authority is principally engaged in the management of the maritime affairs of the Cayman Islands.

Significant accounting policies

These financial statements are prepared in accordance with International Public Accounting Standards. The principal accounting policies adopted by the Port Authority are as follows:

Basis of accounting: The financial statements of the Port Authority are prepared on an accruals basis under the historical cost convention.

Use of estimates: The preparation of the financial statements in accordance with International Public Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the year. Actual results could differ from these estimates.

Financial instruments:

Classification: A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset, exchange financial instruments under conditions that are potentially favourable or an equity instrument of another enterprise. Financial assets comprise unrestricted and restricted bank balances and accounts receivable.

A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. Financial liabilities comprise long term and short term debt.

Recognition: The Port Authority recognises financial assets and financial liabilities on the date it becomes a party to the contractual provisions of the instrument. From this date, any gains and losses arising from changes in fair value of the assets or liabilities are recognised in the statements of income.

Measurement: Financial instruments are measured initially at cost which is the fair value of the consideration given or received. Subsequent to initial recognition all financial assets are measured at their estimated fair market value.

Financial liabilities are subsequently measured at amortised cost, being the amount at which the liability was initially recognised less any principal repayments plus any amortisation (accrued interest) of the difference between that initial amount and the maturity amount.

2008/9 Ownership Agreements 369 PORT AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Financial instruments: continued

Cash and cash equivalents: For the purposes of the statements of cash flows, cash and cash equivalents includes current and money market accounts and term deposits with an original maturity of three months or less, and include unrestricted and restricted bank balances.

Interest income and expense: Interest income and expense are recognised in the statements of income on an accruals basis. Interest income represents the interest earned on term deposits. Interest expense includes interest paid on long term debt.

Derecognition: A financial asset is derecognised when the Port Authority realises the rights to the benefits specified in the contract or the Port Authority loses control over any right that comprise that asset. A financial liability is derecognised when it is extinguished, that is when the obligation is discharged, cancelled or expired.

Depreciation:

Depreciation is charged to the statements of income on a straight-line basis at the following rates estimated to write off the cost of the assets over their expected useful lives:

Land Nil

Buildings 4% per annum

Marine Dock 2% per annum

Other fixed assets 4% - 20% per annum

Foreign currency translation:

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheets dates are translated to Cayman Islands dollars at the foreign exchange rate ruling at those dates. Foreign exchange differences arising on translation are recognised in the statements of income. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated at the foreign exchange rate ruling at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to the reporting currency at the foreign exchange rates ruling at the dates that the values were determined.

Allowance for bad debts:

The allowance for bad debts is established through a provision for bad debts charged to expenses. Accounts receivable are written off against the allowance when management believes that the collectability of the account is unlikely. The allowance is an amount that management believes will be adequate to cover any bad debts, based on an evaluation of collectability and prior bad debts experience.

370 2004/5 Ownership Agreements PORT AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Inventory:

Inventory is valued at the lower of net realisable value or cost, on a first in, first out basis.

Revenue recognition:

Fee income on services provided is recognised in the statements of income when the rendering of a service is completed or substantially completed, and the customer is invoiced.

Borrowing costs:

Borrowing costs are recognised as an expense in the period in which they are incurred.

Pensions and other post-retirement benefits:

The Port Authority participates in the Silver Thatch Pension Plan, a defined contribution pension fund, in accordance with the Cayman Islands National Pension Law. The Port Authority makes monthly contributions at a rate of 10% of an employee’s salary depending on the employee’s position. Contributions are charged to expenses as they are incurred based on set contribution rates.

Restricted bank balances

Management has placed restrictions on the use of certain bank balances in order to fund the future emergency expenditures. The Emergency Reserve is established to cover the costs of repairs to the premises or equipment from storm damage and to cover the insurance deductible on the dock.

Related party transactions

The Port Authority also engages the services of other government departments of the Cayman Islands Government. Such services are provided on an arms length basis.

2008/9 Ownership Agreements 371

PORT AUTHORITY OF THE CAYMAN ISLANDS FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast NOTE $ $ Revenue Outputs to Others 21,167,501 20,185,568 Investment Revenue 218,957 352,529

Total Operating Revenue 21,386,458 20,538,097

Operating Expenses Personnel 11,323,990 10,449,280 Supplies and consumables 8,371,977 7,507,672 Depreciation 1,949,585 2,074,318

Total Operating Expenses 21,645,552 20,031,270

Surplus/Deficit from Operating Activities (259,094) 506,827

Extraordinary Items Loss on disposal of Fixed Asset 0

Net Surplus/Deficit after Extraordinary Items (259,094) 506,827

372 2004/5 Ownership Agreements PORT AUTHORITY OF THE CAYMAN ISLANDS FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast NOTE $ $

Opening Balance Net Worth 41,443,189 41,642,144 Net Surplus (259,085) 506,827 Transfer to Reserve Fund Total Recognized Revenues and Expenses 41,184,104 42,148,971 Dividend (350,000) (350,000) Closing Balance Net Worth 40,834,104 41,798,971

2008/9 Ownership Agreements 373 PORT AUTHORITY OF THE CAYMAN ISLANDS FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Budget Forecast NOTE $ $ Current Assets Cash and Cash Equivalents 2 2,522,324 3,682,487 Accounts Receivable and Prepaids and Other 2,145,883 1,446,696 Assets Inventories 109,840 141,176

Total Current Assets 4,778,047 5,270,359

Non-Current Assets Property, plant and equipment 54,785,827 54,133,015

TOTAL ASSETS 59,563,874 59,403,374

Current Liabilities Accounts Payable 1,380,066 1,048,834 Other current liabilities - 0

Total Current Liabilities 1,380,066 1,048,834 Non-Current Liabilities Non-current liabilities 17,349,706 16,555,570

Total Liabilities 18,729,772 17,604,404

TOTAL ASSETS LESS TOTAL LIABILITIES 40,834,102 41,798,970

Net Worth Dividend (350,000) (350,000) Accumulated surpluses 41,184,102 42,148,970

Total Net Worth 40,834,102 41,798,970

374 2004/5 Ownership Agreements PORT AUTHORITY OF THE CAYMAN ISLANDS FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast NOTE $ $

Cash Flows from Operating Activities

Receipts

Outputs to Ministries, Portfolios, SAs and GCs - 0

Outputs to Others 21,167,502 20,185,568

Interest Received 218,957 352,529

Payments

Personnel Costs (11,323,990) (10,449,280)

Suppliers (8,324,782) (6,160,640)

Net Cash Flows from Operating Activities 1,737,687 3,928,177

Cash Flows from Investing Activities

Purchase of non-current assets (2,160,000) (1,772,415)

Net Cash Flows from Investing Activities (2,160,000) (1,772,415)

Cash Flows from Financing Activities

Capital Withdrawl (350,000) (350,000)

Repayment of Borrowings (2,658,354) (2,636,157)

Net Cash Provided by Financing Activities (3,008,354) (2,986,157)

Opening Balance Cash and Cash Equivalents 5,952,997 843,363 Net Change in Cash and Cash Equivalents (3,430,673) 830,395

Closing Balance Cash and Cash Equivalents 2 2,522,324 12,968

2008/9 Ownership Agreements 375 PORT AUTHORITY OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

NOTE 1 - OPERATING REVENUES 2008/9 2007/8 Budget Forecast $ $ Consignee Income 13,201,887 12,804,661 Owner/Agent Income 6,285,709 4,957,043 Other Income 1,898,862 2,776,394

Total Operating Revenue 21,386,458 21,538,098

NOTE 2 - CASH AND CASH EQUIVALENTS 2008/9 2007/8 Budget Forecast $ $ Current accounts 37,660 12,968 Short-Term fixed deposits 2,484,664 3,669,519

Total Cash and Cash Equivalents 2,522,324 3,682,487

NOTE 3 - INVENTORIES 2008/9 2007/8 Budget Forecast $ $ Mechanical Parts and Diesel 109,840 141,176

Total Inventories 109,840 141,176

376 2004/5 Ownership Agreements PORT AUTHORITY OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

NOTE 4 - DEPRECIATION AND FIXED ASSETS 2008/9 2007/8 Budget Forecast $ $ Land Opening Book Value/Cost 14,164,489 14,164,489 Additions - Accumulated Depreciation - Closing Book Value 14,164,489 14,164,489

Buildings Opening Book Value/Cost 34,611,389 40,942,271 Additions 1,600,000 750,000 Depreciation (1,119,735) (8,713,455) Closing Book Value 35,091,654 32,978,816

Plant, Equipment and Vehicles Opening Book Value/Cost 5,150,844 9,701,845 Additions 200,000 Accumulated Depreciation (551,647) (5,050,314) Closing Book Value 4,799,197 4,651,531

Other Fixed Assets Opening Book Value/Cost 380,002 1,171,513 Additions 360,000 Accumulated Depreciation (184,258) (853,636) Closing Book Value 555,744 317,877

Furniture and Office Equipment Opening Book Value/Cost 268,688 696,905 Additions - 0 Accumulated Depreciation (93,945) (480,193) Closing Book Value 174,743 216,712

Total Fixed Assets 54,785,827 52,329,425

2008/9 Ownership Agreements 377 378 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Public Service Pensions Board

For the year ending 30 June 2009

2008/9 Ownership Agreements 379

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

380 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of Public Service Pensions Board have agreed that Public Service Pensions Board will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which Public Service Pensions Board is to operate during the year 2008/9.

General Nature of Activities

The function of Public Service Pensions Board activities is equitable and fair provision, as well as promotion and administration of public service pension plans.

Scope of Activities

The scope of Public Service Pensions Board activities are as follows: • Administration of: i. The Public Service Pensions Plan ii. The Parliamentary Pensions Plan iii. The Judicial Pension Plan iv. The Ex-Gratia Pensions • Policy advice on pension requirements for public service pension plans and related legislation. • Administration and management of the Public Service Pensions fund

Customers and Location of Activities

The services provided by Public Service Pensions Board are provided to the eligible employees of the Cayman Islands Government and the participating statutory authorities (Cayman Islands Development Board, National Housing Trust, Cayman Islands Monetary Authority, Water Authority, Turtle Farm, National Roads Authority, Civil Aviation Authority, Airports Authority, Maritime Authority of the Cayman Islands, Health Service Authority, Cays Foundation, Information Communication Technology Authority and Public Service Pensions Board). The customers of the Public Service Pensions Board include pensioners, current participants and deferred vested participants of the above-mentioned pension plans. The Public Service Pensions Board offices are located in Grand Cayman.

2008/9 Ownership Agreements 381 3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for the Public Service Pensions Board for the 2008/9 financial year are as follows:

• Continue with the Public Service Pensions Law Review process.

• To fully operationalize the new Pension Administration System and to improve financial and benefits reporting.

• Preparation and submission of financial statements as at 30 June 2009.

• Population of the reconciled data from 1990 - 1999 into the new pension administration system coming online over the next twelve to eighteen months.

• Ongoing enhancements to PSPB web-site to allow participants to review their Participant Contribution Accounts.

• To reduce the unfunded portion of the fund.

• To obtain additional office accommodation to facilitate the growing needs of the PSPB office.

382 2004/5 Ownership Agreements 4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision) for Public Service Pensions Board for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 600,000 600,000 Revenue from ministries, portfolios, statutory authorities and

government companies Revenue from other persons or organisations

Surplus/deficit from outputs 0 0

Other expenses

Net Surplus/Deficit 0 0

Net Assets of PSPB (30 June 2007 – not audited) 230,586,422 144,147,681 Total Liabilities of PSPB 300,581,656 259,902,090 (1 January 2005 – as per latest actuarial valuation report) Net Worth of PSPB (69,995,234) (115,754,409) (fund deficit subject to next actuarial valuation) Cash flows from operating activities 0

Cash flows from investing activities 0

Cash flows from financing activities 0

Change in cash balances 0

2008/9 2007/8 Financial Performance Ratio Target Forecast $ $ Information not Information not Current Assets: Current Liabilities available available Information not Information not Total Assets: Total Liabilities available available

2008/9 Ownership Agreements 383 Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 35 28 11% 11% Staff turnover (%) (Equal to four (Equal to three persons) persons) Average length of service (Number)

Senior management 12 yrs 9 yrs Professional staff 5 yrs 5 yrs Administrative staff 3 yrs 4 yrs

Significant changes to personnel management system N/A N/A

2008/9 2007/8 Physical Capital Measures Target Forecast $ $ Information not Information not Value of total assets available available Information not Information not Asset replacements: total assets available available Information not Information not Book value of depreciated assets: initial cost of those assets available available Information not Information not Depreciation: Cash flow on asset purchases available available Information not Information not Changes to asset management policies available available

2008/9 2007/8 Major Capital Expenditure Projects Target Target $ $ N/A

Risk Management

Change in status from Financial value of Key risks Actions to manage risk previous year risk Hurricane/loss of data/file Risk reduced for the Ensure that staff is familiar with Unquantifiable PSPB Filing System, is the Hurricane Preparedness Plan. now located in safe room. Risk reduced due to individual server installed in PSPB offices. Public Liability Risk unchanged Seeking pubic liability coverage Unquantifiable (tendered process) Loss of key personnel Risk unchanged Training and development in Unquantifiable place as retention incentive.

384 2004/5 Ownership Agreements 5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Public Service Pensions Board is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2007/8 2008/9 Budget Operating Statement Forecast $ $ Information not Information not Revenue available available Information not Information not Operating Expenses available available Information not Information not Net Surplus/Deficit available available

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Information not Information not Assets available available Information not Information not Liabilities available available Information not Information not Net Worth available available

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Information not Information not Net cash flows from operating activities available available Information not Information not Net cash flows from investing activities available available Information not Information not Net cash flows from financing activities available available

2008/9 Ownership Agreements 385

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into Public Service Pension Board 0

Capital Withdrawls from Public Service Pension Board 0

Dividend or Profit Distributions to be made by Public Service Pension Board 0

Government Loans to be made to Public Service Pension Board 0

Government Guarantees to be issued in relation to Public Service Pension Board 0

Related Party Payments (Non Remuneration) made to Key Management Personnel42 0

Remuneration43 Payments made to Key Management Personnel 0

Remuneration Payments made to Senior Management 0

Number for

2008/9 No of Key Management Personnel 12

No of Senior Management 5

42 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 43 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

386 2004/5 Ownership Agreements 7. Agreement

Scope of this Agreement

In signing this document: • Public Service Pensions Board undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Public Service Pensions Board will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

______Hon. Kenneth Jefferson, JP Financial Secretary on behalf of Cabinet

______Sonia McLaughlin Deputy Chairman of the Board Public Service Pensions Board

June 25, 2008

2008/9 Ownership Agreements 387

Appendix: Forecast Financial Statements

PUBLIC SERVICE PENSIONS BOARD STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Public Service Pensions Board for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

______Sonia McLaughlin Deputy Chairman of the Board Public Service Pensions Board

June 25, 2008

388 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Sister Islands Affordable Housing Corporation

For the year ending 30 June 2009

2008/9 Ownership Agreements 389

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

390 2004/5 Ownership Agreements 1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of Sister Islands Affordable Housing Corporation have agreed that Sister Islands Affordable Housing Corporation will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Sister Islands Affordable Housing Corporation is to operate during the year.

General Nature of Activities

The Sister Islands Affordable Housing Corporation activities involve being an important factor in the economic development of the Cayman Islands by providing homes to Caymanians in the Sister Islands at an affordable price.

Scope of Activities

The scope of the Sister Islands Affordable Housing Corporation activities is as follows:

• Construction of affordable homes to be sold to the Caymanian public in the Sister Islands at an affordable price

• Assisting with financing Caymanian households in the Sister Islands that qualify under the criteria set by the corporation for the purchase of an affordable home that have been constructed under the supervision of the corporation.

Customers and Location of Activities

The services provided by the Sister Islands Affordable Housing Corporation are provided only within the Sister Islands.

2008/9 Ownership Agreements 391

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The Sister Islands Affordable Housing Corporation for the 2008/9 financial year are as follows:

Strategic goals:

• To be become a well structured, efficiently managed organization that is fair and prudent in its selection processing of eligible applicants for the affordable homes offered by the Corporation.

• To identify the housing needs of Caymanians in the Sister Islands and to proceed with the processing of future development of affordable homes that will contribute to the economic development of the Sister Islands.

The key objectives (from an ownership perspective) for The Sister Islands Affordable Housing Corporation for the 2008/9 financial year are as follows:

Objectives:

• To seek out additional funding for future development of affordable housing that have been identified as an imperative need in the economic development of the Sister Islands.

• To continue a close working relationship with the local construction industry in the development of new homes for the households in the Sister Islands community.

• Ensure that Sister Islands Affordable Housing Corporation is managed in an efficient and prudent manner.

392 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision) for Sister Islands Affordable Housing Corporation for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2008/9 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 75,000 75,000 Revenue from ministries, portfolios, statutory authorities and 0 0 government companies Revenue from other persons or organisations 20,000 20,000

Surplus/deficit from outputs 0 0

Other expenses 94,658 10,000

Net Surplus/Deficit 342 10,000

Total Assets 1,470,342 1,145,000

Total Liabilities 0 0

Net Worth 1,470,342 1,145,000

Cash flows from operating activities 17,080 10,000

Cash flows from investing activities (522,000) 0

Cash flows from financing activities 290,000 300,000

Change in cash balances (214,290) 310,000

2008/9 2008/9 Financial Performance Ratio Target Forecast $ $ Current Assets: Current Liabilities No Liabilities No Liabilities

Total Assets: Total Liabilities No Liabilities No Liabilities

2008/9 Ownership Agreements 393

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff 1 0

Staff turnover (%) 0 0

Average length of service (Number)

Senior management 1 0 Professional staff 0 0 Administrative staff 0 0

Significant changes to personnel management system

2008/9 2007/8 Physical Capital Measures Target Forecast $ $ Value of total assets 1,470,342 1,145,000

Asset replacements: total assets -

Book value of depreciated assets: initial cost of those assets -

Depreciation: Cash flow on asset purchases -

Changes to asset management policies

2008/9 Major Capital Expenditure Projects Target $ Construction and sale of 4 homes 400,000

Completion of 4 started in 0708 122,000

Risk Management

Change in status from Financial value Key risks Actions to manage risk previous year of risk NIL

394 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Sister Islands Affordable Housing Corporation is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 95,000 20,000

Operating Expenses (94,658) (10,000)

Net Surplus/Deficit 342 10,000

As at 30 June As at 30 June Balance Sheet 2007 2006 $ $ Assets 1,470,342 1,145,000

Liabilities 0 0

Net Worth 1,470,342 1,145,000

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 17,080 10,000

Net cash flows from investing activities (522,000) 0

Net cash flows from financing activities 290,000 300,000

2008/9 Ownership Agreements 395

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $

Equity Investments into Sister Island Affordable Housing Corporation 290,000

Capital Withdrawals from Sister Island Affordable Housing Corporation. 0 Dividend or Profit Distributions to be made by Sister Island Affordable Housing Corporation. 0 Government Loans to be made to Sister Island Affordable Housing Corporation. 0 Government Guarantees to be issued in relation to Sister Island Affordable Housing Corporation. 0 Related Party Payments (Non Remuneration) made to Key Management Personnel44 0

Remuneration45 Payments made to Key Management Personnel 0

Remuneration Payments made to Senior Management 0

Number for 2008/9 No of Key Management Personnel 12

No of Senior Management 1

44 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 45 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

396 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement

In signing this document:

• Sister Islands Affordable Housing Corporation undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability.

• The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Sister Islands Affordable Housing Corporation will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Kirk Tibbetts, JP Minister of District Administration, Planning, Agriculture and Housing on behalf of Cabinet

------Chairman of the Board Sister Island Affordable Housing Corporation

June 25, 2008

2008/9 Ownership Agreements 397

Appendix: Forecast Financial Statements

SISTER ISLAND AFFORDABLE HOUSING CORPORATION STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Sister Islands Affordable Housing Corporation for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Chairman of the Board Sister Island Affordable Housing Corporation

June 25, 2008

398 2004/5 Ownership Agreements SISTER ISLANDS AFFORDABLE HOUSING CORPORATION FORECAST OPERATING STATEMENT FOR THE YEAR ENDED 30 JUNE 2009

2008/9 2007/8 2006/7 Forecast Est. Actual Actual Note $000 $000 $000

Revenue Outputs to Cabinet 75 75 0 Outputs to other government agencies Outputs to others Interest revenue 20 20 20

Total Operating Revenue 95 95 20

Operating Expenses Personnel costs 1 59 56 0 Supplies and consumables 2 19 19 10 Depreciation 3 16 Capital charge Other operating expenses

Total Operating Expenses 95 75 10

Surplus from operating activities and 0 20 10 before extraordinary items

Extraordinary items

Net Surplus 0 20 10

2008/9 Ownership Agreements 399 SISTER ISLAND AFFORDABLE HOUSING CORPORATION FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDED 30 JUNE 2009

2008/9 2007/8 2006/7

Budget Forecast Actual Note $000 $000 $000 Opening balance net worth 1,180 845 0 Net surplus 010 Property revaluations Investment revaluations Net revaluations during the period Total recognised revenues and expenses 1,180 855 845

Equity investment 290 300 845 Repayment of surplus Capital withdrawal

Closing balance net worth 1,470 1,170 845

400 2004/5 Ownership Agreements SISTER ISLAND AFFORDABLE HOUSING CORPORATION FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 2006/7 Budget Forecast Actual $000 $000 $000 Current Assets Cash and cash equivalents 4 357 920 1,155 Accounts receivable 5 Inventories 6

Total Current Assets 357 920 1,155

Non-Current Assets Property, plant and equipment 7 1,113 560 0 Other non-current assets

Total Non-Current Assets 1,113 560 0

Total Assets 1,470 1,480 1,155

Current Liabilities Accounts payable 8 Unearned revenue 9 Employee entitlements 10 Other current liabilities

Total Current Liabilities 0 0 0

Non-Current Liabilities Employee entitlements 11 Other non-current liabilities 12

Total Non-Current Liabilities 0 0 0

Total Liabilities 0 0 0

TOTAL ASSETS LESS TOTAL 1,470 1,480 1,155 LIABILITIES

NET WORTH 1,470 1,460 1,145

Contributed capital

Asset revaluation reserve Accumulated surpluses 0 20 10

Total Net Worth 1,470 1,480 1,155

2008/9 Ownership Agreements 401 SISTER ISLAND AFFORDABLE HOUSING CORPORATION FORECAST CASH FLOW STATEMENT FOR YEAR ENDED 30 JUNE 2009

2008/9 2007/8 2006/7

Budget Forecast Actual Note $000 $000 $000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts Outputs to Cabinet 75 75 0 Outputs to other government agencies Outputs to others Interest received 20 20 20 Payments Personnel costs (59) (56) 0 Suppliers (19) (19) (10) Other payments

Net cash flows from operating activities 13 17 20 10

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of non-current assets (522) (560) 0 Proceeds from sale of non-current assets

Net cash flows from investing activities (522) (560) 0

CASH FLOWS FROM FINANCING ACTIVITIES Equity investment 290 290 300 Repayment of surplus Capital withdrawal

Net cash flows from financing activities 290 290 300

Net increase/(decrease) in cash and cash equivalents (215) (250) 310

Cash and cash equivalents at beginning of period 572 1,170 845

Cash and cash equivalents at end of period 4 357 920 1,155

402 2004/5 Ownership Agreements SISTER ISLAND AFFORDABLE HOUSING CORPORATION NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR YEAR ENDED 30 JUNE 2009

NOTE 1 - PERSONNEL COSTS

2008/9 2007/8 2006/7 Budget Forecast Actual

$000 $000 $000

Salaries and wages (including employee pension 57 54 0 contributions)

Employer/Government pension expense 2 2 0

Total Personnel Costs 59 56 0

NOTE 2 - SUPPLIES AND CONSUMABLES 2008/9 2007/8 2006/7 Budget Forecast Actual $000 $000 $000 Supply of goods and services 17 17 10 Operating lease rentals 0 0 0 Other 2 2 0

Total Supplies and Consumables 19 19 10

NOTE 3 - DEPRECIATION 2008/9 2007/8 2006/7 Budget Forecast Actual $000 $000 $000 Buildings 17 Vehicles Aeroplanes Boats Furniture and fittings

Computer hardware and software Office equipment Other plant and equipment Other assets

Total Depreciation 177 0

2008/9 Ownership Agreements 403 SISTER ISLAND AFFORDABLE HOUSING CORPORATION NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR YEAR ENDED 30 JUNE 2009

NOTE 3 - DEPRECIATION continued

Assets are depreciated on a straight-line basis as follows: Years Buildings Vehicles Aeroplanes Boats Furniture and fittings

Computer hardware and software Office equipment Other plant and equipment Other assets

NOTE 4 - CASH AND CASH EQUIVALENTS 2008/9 2007/8 2006/7 Budget Forecast Actual $000 $000 $000 Cash on hand Bank accounts 357 920 1,155 Deposits with Portfolio Finance and Economic (Treasury)

Total Cash and Cash Equivalents 357 920 1,155

404 2004/5 Ownership Agreements SISTER ISLAND AFFORDABLE HOUSING CORPORATION NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR YEAR ENDED 30 JUNE 2009

NOTE 5 - ACCOUNTS RECEIVABLE 2008/9 2007/8 2006/7

Budget Forecast Actual $000 $000 $000 Outputs to Cabinet Outputs to other government agencies Outputs to others Interest receivable Prepayments Interest Receivable Other Receivables

Total Gross Less provision for doubtful debts

Total Net 0 0 0

NOTE 6 - INVENTORIES

2008/9 2007/8 2006/7 Budget Forecast Actual $000 $000 $000 Raw Materials (including Consumable Stores) Work in Progress Finished Goods Total Inventories 0 0 0

2008/9 Ownership Agreements 405

SISTER ISLAND AFFORDABLE HOUSING CORPORATION NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR YEAR ENDED 30 JUNE 2009

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT

Closing Opening Balance Addition Disposals Revaluation Depreciation Balance 2008/9 Budget $000 $000 $000 $000 $000 $000

Buildings 365 365 730

Vehicles

Aeroplanes

Boats

Furniture and fittings Computer hardware and software Office equipment Other plant and equipment Construction in progress 243 157 400

Other assets

Total 608 522 1,130

HC or Revalued Accum. 2008/9 2006/7

Amount Depr. Budget Est. Actual $000 $000 $000 $000 Buildings 730 (17) 713 Vehicles Aeroplanes Boats Furniture and fittings Computer hardware and software Office equipment Other plant and equipment Construction in progress 400 0 400 Other assets (list if material)

Total 1,130 0 560 0 SISTER ISLAND AFFORDABLE HOUSING CORPORATION NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR YEAR ENDED 30 JUNE 2009

406 2004/5 Ownership Agreements

NOTE 8 - ACCOUNTS PAYABLE

2008/9 2007/8 2006/7 Budget Forecast Actual

$000 $000 $000 Trade Creditors Operating lease rental Accruals

Total 0 320 320

NOTE 9 - UNEARNED REVENUE

2008/9 2007/8 2006/7

Budget Forecast Actual $000 $000 $000 Revenue received in advance

Total 0 0 0

NOTE 10 - EMPLOYEE ENTITLEMENTS (CURRENT)

2008/9 2007/8 2006/7

Budget Forecast Actual $000 $000 $000 Long service leave and other leave entitlements Other salary related entitlements

Total Employee Entitlements 0 0 0

NOTE 11 - EMPLOYEE ENTITLEMENTS (NON-CURRENT)

2008/9 2007/8 2006/7 Budget Forecast Actual $000 $000 $000 Long service leave and other leave entitlements Other salary related entitlements

Total 0 0 0

2008/9 Ownership Agreements 407

SISTER ISLAND AFFORDABLE HOUSING CORPORATION NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR YEAR ENDED 30 JUNE 2009

NOTE 12 - OTHER NON-CURRENT LIABILITIES 2008/9 2007/8 2006/7

Budget Forecast Actual

$000 $000 $000 Provision for agency revenue repayable Provision for restructuring Accounts payable Unearned revenue Other

Total 0 0 0

408 2004/5 Ownership Agreements SISTER ISLAND AFFORDABLE HOUSING CORPORATION NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR YEAR ENDED 30 JUNE 2009

NOTE 13 - RECONCILIATION OF OPERATING SURPLUS TO CASH FLOWS FROM OPERATING ACTIVITIES

2008/9 2007/8 2006/7

Budget Forecast Actual $000 $000 $000

Operating surplus/(deficit) 0 20 0 Non-cash movements Depreciation 17 Increase in provision for doubtful debts Increase in payables/accruals Net gain/loss from sale of fixed assets Net gain/loss from sale of investments Increase in other current assets Increase in receivables

Net cash flows from operating activities 17 10 0

2008/9 Ownership Agreements 409 SISTER ISLAND AFFORDABLE HOUSING CORPORATION STATEMENT OF ACCOUNTING POLICIES FOR YEAR ENDED 30 JUNE 2009

General Accounting Policies

Reporting entity: These forecast financial statements are for the Sister Island Affordable Housing Corporation

Basis of preparation: The forecast financial statements have been prepared in accordance with International Public Sector Accounting Standards (IPSASs) using the accrual basis of accounting. Where there is currently no IPSAS, other authoritative pronouncements such as International Accounting Standards and United Kingdom reporting standards applicable to the public sector have been used. The measurement base applied is historical cost adjusted for revaluations of certain assets.

The forecast financial statements have been prepared on a going concern basis and the accounting policies have been applied consistently.

Reporting Period: The reporting period is the period ended 30 June.

Specific Accounting Policies

Revenue:

Output revenue: Output revenue, including revenue resulting from user charges or fees, is recognised when it is earned.

Interest revenue: Interest revenue is recognised in the period in which it is earned.

Expenses:

General: Expenses are recognised when incurred.

Depreciation: Depreciation of non-financial physical assets is generally provided on a straight-line basis at rates based on the expected useful lives of those assets.

Assets:

Cash and cash equivalents: Cash and cash equivalents include cash held in the Ministry or Portfolio’s bank account and on deposit with the Portfolio of Finance and Economics (Treasury).

Receivables and advances: Receivables and advances are recorded at the amounts expected to be ultimately collected in cash.

Inventory: Inventories are recorded at the lower of cost and net current value. Where inventories are valued at cost, specific identification or the FIFO method has been used. Appropriate allowance has been made for obsolescence.

Property, Plant and Equipment (including Infrastructure Assets): Buildings are recorded at historical cost (or fair value as at time of first recognition) or valuation.

Other plant and equipment, which includes motor vehicles and office equipment, is recorded at cost (or fair value if acquired prior to 2005) less accumulated depreciation.

410 2004/5 Ownership Agreements SISTER ISLAND AFFORDABLE HOUSING CORPORATION STATEMENT OF ACCOUNTING POLICIES continued FOR YEAR ENDED 30 JUNE 2009

Assets: continued

Computer Hardware and Software: Computer hardware and software are recorded at cost, and depreciated in accordance with the policy on depreciation.

Liabilities:

Accounts Payable: Accounts payable are recorded at the amount owing after allowing for credit notes and other adjustments.

Provisions: Provisions are recognised in accordance with IPSAS 19 Provisions, Contingent Liabilities and Contingent Assets.

Employee entitlements: Amounts incurred but not paid at the end of the reporting period are accrued. Annual leave due, but not taken, is recognised as a liability.

Long service leave liabilities are measured as the present value of estimated leave service entitlements.

2008/9 Ownership Agreements 411 412 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

Tourism Attractions Board

For the year ending 30 June 2009

2008/9 Ownership Agreements 413

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

414 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of the Tourism Attraction have agreed that the Tourism Attraction Board will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the Tourism Attraction Board is to operate during the year.

General Nature of Activities

The Tourism Attraction Board activities involve the oversight management and maintenance of tourism attraction sites which fall under its control, as well as provide policy directive to the national festival office. The Tourism Attraction Board discharges its statutory obligations through its Administrative office, which oversees the implementation of policies, and provides management assistance, including strategic marketing guidance and accounting expertise, to the staff of the attraction sites and the national festival office.

Scope of Activities

The scope of the Tourism Attraction Board activities is as follows:

• Administrative Office – Development and implementation of marketing strategies, personnel management, general accounting and insurance management; preparation of budgets and financial statements; and the provision of secretarial services for the Board.

• Botanic Park – Operational management for the display and maintenance of Colour Gardens and Heritage Garden; maintenance of nature trail; plant sales and maintenance; educational seminars; operation of gift shop; promote rental of the site for special events.

• Pedro St. James –Operational management and custody of a historic site; operation of gift shop and the theatre audio-visual show; café and bar operation; promote rental of the site for special events; generate revenue from on site activities.

• Pirate’s Week Office – Organise and schedule units of the festival; generate revenue from events, sponsorship, and donations; assist District Heritage Days presentations.

• Cayman Craft Market – Organize and manage the activities of artists and vendors; maintenance of building and site; promote Caymanian arts and craft.

• Hell Attraction – Preservation of natural resources; maintenance of buildings and site; collection of monthly rental fees.

2008/9 Ownership Agreements 415 2. Nature and Scope of Activities continued

Customers and Location of Activities

The customers come from three markets – residents, stay-over tourists, and cruise ship passengers. The services provided by the Tourism Attraction Board are supplied through its attractions sites located at; Pedro St. James, Savannah; the Queen Elizabeth II Botanic Park, Frank Sound Rd, North Side; Cayman Craft Market, George Town; Hell Attraction, West Bay; Pirates’ Week Office in George Town. The Tourism Attraction Board Administrative office is located at Suite # 203, Crighton Building, Crewe Road, Grand Cayman.

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The Tourism Attraction Board for the 2008/9 financial year are as follows:

• Increase the attendance at and profitability of the attractions and national festival, ensuring their sustainability as tourism products in the Cayman Islands.

• Preserve and enhance the environment and history of the attractions through physical renovations and social awareness.

• Provide research to assess visitor expectations, human capital requirements, and commercial opportunities.

• Improve the visitor experience through education, improved signage, and technological enhancements.

416 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision) for Tourism Attraction Board for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $

Revenue from Cabinet 2,125,850 1,753,000 Revenue from ministries, portfolios, statutory authorities and 0 0 government companies Revenue from other persons or organisations 673,000 656,500

Surplus/deficit from outputs 0 0

Other expenses 0 0

Net Surplus/Deficit 0 (414,584)

Total Assets 9,038,618 9,575,778

Total Liabilities 2,481,008 4,918,168

Net Worth 6,557,610 4,657,610

Cash flows from operating activities (76,953) 189,180

Cash flows from investing activities 0 0

Cash flows from financing activities 250,000 0

Change in cash balances 173,047 189,180

2008/9 2007/8 Financial Performance Ratio Target Forecast

Current Assets: Current Liabilities 75% 69%

Total Assets: Total Liabilities 364% 312%

2008/9 Ownership Agreements 417

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast

Total full time equivalent staff 38 38

Staff turnover (%) 0% 5%

Average length of service (Number) 8 8 Senior management 6 6 Professional staff 2 1 Administrative staff 8 8

Significant changes to personnel management system None planned None planned

2008/9 2007/8 Physical Capital Measures Target Forecast $ $ Value of total assets 9,038,618 9,575,778

Asset replacements: total assets 1% 2%

Book value of depreciated assets: initial cost of those assets 80% 82%

Depreciation: Cash flow on asset purchases 25% 40%

Changes to asset management policies None Planned None Planned

2008/9 Major Capital Expenditure Projects Target $ None Planned None Planned

418 2004/5 Ownership Agreements Risk Management

Change in status from Financial value of Key risks Actions to manage risk previous year risk Tourism Attraction Board

Public Liability None Insurance Unknown Natural Disasters None Take necessary precautions Cost of debris on-site to minimize damage removal plus in the event of a hurricane or insurance deductible. other forecasted natural disaster and review insurance policy to ensure adequate coverage is in place. Property Loss Due to None Take necessary precautions Cost of debris Hurricanes or other Natural on-site to minimize damage removal plus Disasters in the event of a hurricane or insurance deductible. other forecasted natural disaster and review insurance policy to ensure adequate coverage is in place. Rain None None* <= $50,000

Accidents None Insurance Unknown

*Note: Historically, $50,000.00 has been retained in the Events Account to cover shortfalls due to inclement weather and for setup costs for the subsequent year.

2008/9 Ownership Agreements 419 5. Summarised Forecast Financial Statements

A full set of forecast financial statements for Tourism Attraction Board is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 2,779,150 2,409,500

Operating Expenses 2,779,150 2,824,084

Net Surplus/Deficit - (414,584)

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 9,038,618 9,575,778

Liabilities 2,481,008 4,918,168

Net Worth 6,557,610 4,657,610

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities (76,953) 68,344

Net cash flows from investing activities 0 0

Net cash flows from financing activities 250,000 0

420 2004/5 Ownership Agreements

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into Tourism Attraction Board 1,900,000

Capital Withdrawls from Tourism Attraction Board -

Dividend or Profit Distributions to be made by Tourism Attraction Board. -

Government Loans to be made to Tourism Attraction Board. -

Government Guarantees to be issued in relation to Tourism Attraction Board. - Related Party Payments (Non Remuneration) made to Key Management - Personnel46 Remuneration47 Payments made to Key Management Personnel -

Remuneration Payments made to Senior Management -

Number for

2008/9 No of Key Management Personnel 7

No of Senior Management 6

46 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 47 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

2008/9 Ownership Agreements 421

7. Agreement

Scope of this Agreement

In signing this document: • The Tourism Attraction Board undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that the Tourism Attraction Board will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Charles E. Clifford, JP Minister of Tourism, Environment, Investment and Commerce on behalf of Cabinet

------Chairman of the Board Tourism Attraction Board June 25, 2008

422 2004/5 Ownership Agreements

Appendix: Forecast Financial Statements

TOURISM ATTRACTION BOARD STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for the Tourism Attraction Board for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------Chairman of the Board Tourism Attraction Board

June 25, 2008

2008/9 Ownership Agreements 423 TOURISM ATTRACTION BOARD STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

The financial statements of the Tourism Attraction Board are stated in Cayman Islands Dollars. These financial statements have been prepared In accordance with International Accounting Standards (IAS) issued by the International Accounting Standards Committee (IASC). A summary of the significant accounting and reporting policies used in preparing these statements are as follows:

Basis of Accounting: The financial statements are prepared In accordance with International Accounting Standards, under the historical cost convention. No account is taken of the effects of inflation.

Use of estimates: The preparation of the financial statements In accordance with International Accounting Standards requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of Income and expenses during the year. Actual results could differ from these estimates.

Depreciation: Fixed assets are recorded at cost, and depreciated by the straight-line method at the following rates for each entity estimated to write off the cost of the assets over their expected useful lives;

Queen Elizabeth II Botanic Park Visitor’s Centre 2.0% Paving and Pathways 10.0% Equipment, Furniture and Fixtures 12.5% Start-up Costs and Computer Equipment 33.3% Motor Vehicles and Shade Houses 20.0%

Pedro St. James Castle Visitor’s Centre 2.0% Multimedia, Furniture, Fixtures, Bar and Café Equipment 12.5% Start-up Costs and Computer Equipment 33.3% Motor Vehicles 20.0%

Pirates’ Week Computer Equipment and Office Equipment 33.3% Furniture, Fixtures, Fittings and Signage 20.0%

Tourism Attraction Board Administration Furniture and Fixtures 12.5% Start-up Costs and Computer Equipment 33.3%

The capital costs of the Great House, Period Furnishings and the Botanical Gardens have not been depreciated since these will be maintained in perpetuity. All future expenditures on these assets will be expensed in the year that these costs are incurred.

Foreign Currency Translation: Assets and liabilities denominated in currencies other than the Cayman Islands Dollar are translated at exchange rates in effect at the balance sheet date. Revenue and expense transactions denominated in currencies other than Cayman Islands Dollars are translated at exchange rates in effect at the time of those transactions. Gains and losses on exchange are taken to the Statement of Income and Expenditure.

Inventory: Inventory is valued at the lower of cost and net realizable value on a first in, first out basis.

424 2004/5 Ownership Agreements TOURISM ATTRACTION BOARD STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Pensions and Other Post-retirement Benefits: During 1998 the Tourism Attraction Board joined a defined contribution Pension Plan, in accordance with the Cayman Islands National Pensions Law the employer and employees began monthly contributions at a rate of 5%. Defined pension scheme contributions are charged to the Statement of Income and Expenditure based on a set contribution rate.

Borrowing Cost: A portion of the interest charges on the loan received for the restoration of the Pedro Castle heritage site has been capitalised. The amount used for capitalisation was determined based on the terms of the loan agreement which requires that the actual interest be calculated and a portion as determined by the Caribbean Development Bank is capitalised and added to the total loan outstanding.

Revenue Recognition: Income is recognised upon delivery of goods. Income from contracts and for services rendered is included to the extent of the completion of the contract or service concerned. All income from short-term deposits is credited to the Statement of Income and Expenditure in the period in which it is earned.

Cash and Cash Equivalents: For purposes of reporting cash flows, cash and cash equivalents represents cash deposits with original maturities of three months or less. All cash and cash equivalents are held at banks In the Cayman Islands.

2008/9 Ownership Agreements 425 TOURISM ATTRACTION BOARD FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast Revenue Government Output Funding 2,125,850 1,753,000 Extraordinary Revenue - - Insurance Proceeds - - Sales 673,300 656,500 Total Revenue 2,799,150 2,409,500

Cost of Goods Sold - -

Gross Profit 2,799,150 2,409,500

Expenses Personnel 1,491,393 1,558,645 Depreciation 246,897 244,614 Supplies and Consumables 538,000 510,800 Other operating expenses 158,612 155,025 Extraordinary Expenses - - Insurance 174,248 165,000 Loss on Disposal of Fixed Asset - - Interest 190,000 190,000 Total Expenses 2,799,150 2,824,084

Surplus / (Deficit) - (414,584)

426 2004/5 Ownership Agreements TOURISM ATTRACTION BOARD FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 Budget Forecast

Opening balance net worth 4,657,610 4,697,434 (Deficit) / Surplus - (414,584)

Total recognized revenue and expenses 4,657,610 4,282,850

Donated Capital 1,900,000 374,760 Distribution of surplus - - Capital withdrawl - -

Closing balance net worth 6,557,610 4,657,610

2008/9 Ownership Agreements 427 TOURISM ATTRACTION BOARD FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 Budget Forecast Assets

Current Assets Cash and cash equivalents 212,699 371,625 Marketable Securities and Deposits 14,000 0 Accounts receivable 73,850 209,133 Inventories 93,565 105,902 Other current assets 0 0 Total Current Assets 394,114 686,660

Total Fixed Assets 8,644,504 8,889,118

Total Assets 9,038,618 9,575,778

Liabilities and Equity Liabilities Current Liabilities Accounts payable and accruals 96,094 1,114,121 Other current liabilities 428,539 153,815 Total Current Liabilities 524,633 1,267,936

Long-term Liabilities Long-term debt 1,956,375 3,650,232 Total Long-term Liabilities 1,956,375 3,650,232

Total Liabilities 2,481,008 4,918,168

Capital and Reserves Donated capital 11,896,028 10,370,788 Accumulated deficit (5,338,418) (5,713,178) Total Capital and Reserves 6,557,610 4,657,610

Total Liabilities and Equity 9,038,618 9,575,778

428 2004/5 Ownership Agreements TOURISM ATTRACTION BOARD FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009

2008/9 Budget

Cash Provided by Operating Activities Surplus/(Deficit) 0 Add back non-cash items: Depreciation (246,897)

Add/(Less) net changes in non-cash working capital

balances relating to operating activities: Increase (Decrease) in Accounts Payable and 96,094 Accruals Decrease (Increase) in Accounts Receivable 73,580 Decrease (Increase) in Provisions for doubtful debts 0

Net cash flow from Operating Activities (76,953)

Cash flows from Investing Activities Decrease (Increase) in Fixed Assets 0

Net cash flow from Investing Activities 0

Cash flow from Financing Activities Donated Capital 1,900,000 Repayment of borrowings (1,650,000)

Net cash flow from Financing Activities 250,000

Net increase/(decrease) in cash and cash equivalents 173,047 Cash and cash equivalents at beginning of period 39,652

Cash and cash equivalents at end of period 212,699

2008/9 Ownership Agreements 429

TOURISM ATTRACTION BOARD NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

Background Information

The Tourism Attraction Board (TAB) Law was established under the Tourism Attraction Board Law, 1996 (Law 17 of 1996) on 25 November 1996. The primary function of the TAB is the general and financial management of Pedro St. James as a building of historic interest and a heritage site for visitors, and of such other land and buildings as may be vested in it or placed under its management, in accordance with the general policies of the Government. The Queen Elizabeth II Botanic Park is a conservation effort of both the Cayman Islands Government and the National Trust for the Cayman Islands and was the second site placed under the management of the TAB in 1997.

The TAB was given the responsibility for the Pirates’ Week office and Hell in 2000. The TAB has been directly involved in the day-to-day management of Hell beginning July 2004. The Pirates’ Week Festival is an annual event organized by the Pirates’ Week Committee. Since 1995, part of the activities of the Committee in connection with the Festival had been conducted through the Pirates’ Week Festival Limited (the “Company”), a Cayman Islands limited liability company. However, during 1998 a decision was taken not to use the Company for this purpose in future. The Company was struck off the Register of Companies in 2001. The assets and liabilities of the Company were transferred to the Festival and the Company was duly terminated. During the year, “Pirates’ Week” was registered as a trademark with the Trade Mark Association. The TAB has also been delegated with the responsibility to manage the Cayman Craft Market, which opened for business in September 2005.

The Tourism Attraction Board Administrative Office is located at Suite 203, Crighton Building, Crewe Rd., Grand Cayman. Its mailing address is P. O. Box 31783 SMB, Grand Cayman.

Property, Furniture and Equipment: Details of fixed asset depreciation for each entity are as follows:

The cost of land purchased for Pedro St. James is included in fixed assets.

The Park and National Trust for the Cayman Islands own the land at the Queen Elizabeth II Botanic Park 50% each. The value of this land is not known and therefore not included in these financial statements. Prior to the official opening of the Park, the National Trust for the Cayman Islands contributed volunteer labour and funding to assist in the development of the Park. These cash and non-cash expenditures have not been included in the financial statements since the donations were made prior to the establishment of the Tourism Attraction Board.

Donated Capital: The Cayman Islands Government pays interest charges on the Pedro St. James loan. These amounts increase the capital donated by Government.

Long Term Loan: A loan of US$5,790,000 from the Caribbean Development Bank (CDB) to finance the Pedro St. James restoration project is in the name of the Cayman Islands Government. As at 05 March 2001 US$5,369,720 had been withdrawn from the loan leaving an un-withdrawn balance of US$420,280, which was duly cancelled by the CDB.

430 2004/5 Ownership Agreements TOURISM ATTRACTION BOARD NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Related Party Transactions: As disclosed in Note 6, Pedro St. James, the Queen Elizabeth II Botanic Park, the Pirates’ Week Festival, Hell, and the Cayman Craft Market are dependent on an annual grant from the Cayman Islands Government.

The Auditor General has statutory responsibility for the audit of the TAB and the entities that it manages.

The TAB also relies on the Cayman Islands Government to provide or arrange long-term finance for capital development projects.

Insurance coverage for assets of the historic sites and the Pirates’ Week Festival managed under the TAB is provided through the Cayman Islands Government.

The TAB also depends on legal advice of the Cayman Islands Legal Department.

Government Output Funding: To continue as going concerns Pedro St. James, Queen Elizabeth II Botanic Park, the Pirates Week Festival, Hell and Cayman Craft Market will require annual assistance from the Government for the foreseeable future.

Financial Instruments:

Fair Values: The methods and assumptions used to estimate the fair value of each class of financial instruments for which it is practical to estimate a value are as follows:

Short-term financial assets and liabilities: The carrying value of these assets and liabilities is a reasonable estimate of their fair value because of the short maturity of these instruments. Short-term financial assets comprise cash, accounts receivable, and prepayments. Short-term financial liabilities comprise accounts payable, accrued expenses and deferred revenue.

Long-term financial assets and liabilities: The carrying value of the long -term liabilities approximates their fair value.

Credit Risk: The entity offers its services to customers primarily in the Cayman Islands. Credit risk arises from the possibility that customers and counterparties may default on their obligations to the entity. The amount of the entity's maximum exposure to credit risk is indicated by the carrying amount of its financial assets. The entity performs ongoing credit reviews on its customers and counterparties and provisions are set aside against amounts deemed irrecoverable.

2008/9 Ownership Agreements 431

432 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and

University College of the Cayman Islands

For the year ending 30 June 2009

2008/9 Ownership Agreements 433

Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

434 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Board of the University College of the Cayman Islands have agreed that the University College of the Cayman Islands will seek to achieve during the 2008/9 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which the University College of the Cayman Islands is to operate during the year.

General Nature of Activities

The University College of the Cayman Islands activities involve developing and teaching Tertiary Level Educational Programmes and Continuing Education courses and complimentary Educational services that satisfy the Islands’ need for qualified, trained citizens.

Scope of Activities

The scope of the University College of the Cayman Islands activities is as follows:

• To provide high quality education in career, liberal arts and transfer programmes.

• To prepare students in career programmes to meet the standards and competencies required for employment.

• To respond to varied educational needs of the local University through a range of continuing education, career training and University service programmes.

• To develop new educational programmes in response to the economic development needs of the University in collaboration with the Cayman Islands Government, the Chamber of Commerce, and other local associations.

To pursue plans for the implementation of Baccalaureate Degree Programmes.

Customers and Location of Activities

The services provided by the University College of the Cayman Islands are provided only in the Cayman Islands.

2008/9 Ownership Agreements 435

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The University College of the Cayman Islands for the 2008/9 financial year are as follows:

• Teaching/development of Baccalaureate Degree/Postgraduate Programmes

• Increase enrolment in all Programmes

• Increase retention in Vocational Programme

• Respond in a timely manner to changing training needs.

436 2004/5 Ownership Agreements

4. Ownership Performance Targets

The ownership performance targets (as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for The University College of the Cayman Islands for the 2008/9 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Target Forecast $ $ Revenue from Cabinet 3,925,000 3,774,111 Revenue from ministries, portfolios, statutory

authorities, government companies Revenue from others 2,803,240 2,379,360

Surplus/deficit from outputs

Ownership expenses 6,728,240 6,117,614

Operating Surplus/Deficit 0 35,857

Net Worth 6,379,564 6,379,564

Cash flows from operating activities 458,260 414,369

Cash flows from investing activities (551,658) (751,388)

Cash flows from financing activities (99,260) 294,317 Change in cash (192,658) (42,702) balances

2008/9 2007/8 Financial Performance Ratio Target Forecast % % Current Assets: Current Liabilities (Working Capital) 2.48 : 1 2.58 : 1

Total Assets: Total Liabilities 3.11 : 1 3.02 : 1

2008/9 Ownership Agreements 437

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Target Forecast Total full time equivalent staff employed 48 42 Staff turnover (%)

Managers Professional and technical staff Clerical and labourer staff

Average length of service (number of years in current position) 5yrs 5yrs Managers Professional and technical staff 10yrs 10yrs Clerical and labourer staff

New/Replacement of Changes to personnel management system: Repatriating lecturers

2008/9 2007/8 Physical Capital Measures Target Forecast Value of total assets $9,429,253 $9,520,113

Asset replacements: total assets % 0%

Book value of assets: initial cost of those assets 66% 67%

Depreciation: cash flow on asset purchases % %

Changes to asset management policies None Planned None Planned

2008/9 Major New Entity Capital Expenditures for the Year Budget $ UCCI Expansion Project One (1) New Building /Gymnasium and ICT 500,000 Equipment

Major Entity Capital Expenditure Commenced but not completed Anticipated Project Status at st in previous years 1 July 2008

438 2004/5 Ownership Agreements

5. Summarised Forecast Financial Statements

A full set of forecast financial statements for The University College of the Cayman Islands is provided in the Appendix to this Ownership Agreement.

A summary of those forecasts is as follows.

2008/9 2007/8 Operating Statement Budget Forecast $ $ Revenue 6,728,240 6,153,471

Operating Expenses (6,728,240) (6,117,614)

Net Surplus/Deficit 0 35,857

As at 30 June As at 30 June Balance Sheet 2009 2008 $ $ Assets 9,429,253 9,548107

Liabilities 3,049,689 3,168,543

Net Worth 6,379,564 6,379,564

2008/9 2007/8 Statement of Cash Flows Budget Forecast $ $ Net cash flows from operating activities 458,260 508,724

Net cash flows from investing activities (551,658) (751,388)

Net cash flows from financing activities (99,260) 294,317

2008/9 Ownership Agreements 439

6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Remuneration Payments made to Key Management Personnel 142,944

Remuneration Payments made to Senior Management 241,620

Number for

2008/9 No of Key Management Personnel 1

No of Senior Management 3

440 2004/5 Ownership Agreements

7. Agreement

Scope of this Agreement In signing this document: • The University College of the Cayman Islands undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that The University College of the Cayman Islands will seek to achieve for the 2008/9 financial year and that the Cabinet will monitor performance against.

------Hon. Alden M. McLaughlin Jr., JP Minister of Education, Training, Employment, Youth, Sports and Culture /International Financial Services Policy on behalf of Cabinet

------

Chairman of the Board University College of the Cayman Islands

June 25, 2008

2008/9 Ownership Agreements 441 Appendix: Forecast Financial Statements

THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for The University College of the Cayman Islands for the year ended 30 June 2009 (c) comply with generally accepted accounting practice.

------

Chairman of the Board University College of the Cayman Islands

June 25, 2008

442 2004/5 Ownership Agreements THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDING 30 JUNE 2009

General Accounting Policies

Reporting entity These forecast financial statements are for the University College of the Cayman Islands

Basis of preparation: The forecast financial statements have been prepared in accordance with International Public Sector Accounting Standards (IPSASs) using the accrual basis of accounting. Where there is currently no IPSAS, other authoritative pronouncements such as International Accounting Standards and United Kingdom reporting standards applicable to the public sector have been used. The measurement base applied is historical cost adjusted for revaluations of certain assets.

The forecast financial statements have been prepared on a going concern basis and the accounting policies have been applied consistently.

Reporting Period: The reporting period is the period ended 30 June 2009. The Budget forecast is base on the original forecast for the financial year, as presented in the 2008/9 Budget.

Specific Accounting Policies

Revenue:

Output revenue: Output revenue, including revenue resulting from user charges or fees, is recognised when it is earned.

Interest revenue: Interest revenue is recognised in the period in which it is earned.

Expenses:

General: Expenses are recognised when incurred.

Depreciation: Depreciation of non-financial physical assets is generally provided on a straight-line basis at rates based on the expected useful lives of those assets.

Assets:

Cash and cash equivalents: Cash and cash equivalents include cash held in the Ministry or Portfolio’s bank account and on deposit with the Portfolio of Finance and Economics (Treasury).

Receivables and advances: Receivables and advances are recorded at the amounts expected to be ultimately collected in cash.

Inventory: Inventories are recorded at the lower of cost and net current value. Where inventories are valued at cost, specific identification or the FIFO method has been used. Appropriate allowance has been made for obsolescence.

Property, Plant and Equipment (including Infrastructure Assets): Buildings are recorded at historical cost (or fair value as at time of first recognition) or valuation.

Other plant and equipment, which includes motor vehicles and office equipment, is recorded at cost (or fair value if acquired prior to 2005) less accumulated depreciation.

2008/9 Ownership Agreements 443

THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS STATEMENT OF ACCOUNTING POLICIES continued FOR THE YEAR ENDING 30 JUNE 2009

Assets: continued

Computer Hardware and Software: Computer hardware and software are recorded at cost, and depreciated in accordance with the policy on depreciation.

Liabilities

Accounts Payable: Accounts payable are recorded at the amount owing after allowing for credit notes and other adjustments.

Provisions: Provisions are recognised in accordance with IPSAS 19 Provisions, Contingent Liabilities and Contingent Assets.

Employee entitlements: Amounts incurred but not paid at the end of the reporting period are accrued. Annual leave due, but not taken, is recognised as a liability.

Long service leave liabilities are measured as the present value of estimated leave service entitlements.

444 2004/5 Ownership Agreements

THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS FORECAST OPERATING STATEMENT FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 2006/07

Budget Forecast Actual Note $0 $0 $0 Revenue Outputs to Cabinet 3,925,000 3,774,111 2,236,002 Outputs to other government agencies Outputs to others 2,786,820 2,364,500 1,838,131 Interest revenue 16,420 14,860 37,528 Insurance proceeds - - -

Total Operating Revenue 6,728,240 6,153,471 4,109,661

Operating Expenses Personnel costs 1 4,387,858 4,094,519 3,069,662 Supplies and consumables 2 795,108 764,527 616,217 Depreciation 3 458,260 472,867 480,867 Capital charge Other operating expenses 1,087,014 785,701 1,276,737

Total Operating Expenses 6,728,240 6,117,614 5,443,483

Surplus from operating activities and

before extraordinary items - 35,857 (1,333,822) - - Extraordinary items - - -

Net Surplus - 35,857 (1,333,822)

2008/9 Ownership Agreements 445 THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS FORECAST STATEMENT OF CHANGES IN NET WORTH FOR THE YEAR ENDING 30 JUNE 2009

2008/9 2007/8 2006/07 Budget Forecast Actual Note $0 $0 $0 Opening balance net worth 6,379,564 5,870,087 6,506,881

Net surplus - 35,857 (1,333,822) Property revaluations - - - Investment revaluations - - - Net revaluations during the period - - - Total recognised revenues and expenses 6,379,564 5,905,944 5,173,059 Interest Earned on Capital Fund - 48,620 64,420

Equity investment - 425,000 632,609 Repayment of surplus - - - Capital withdrawl - - -

Closing balance net worth 6,379,564 6,379,564 5,870,087

446 2004/5 Ownership Agreements THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS FORECAST BALANCE SHEET AS AT 30 JUNE 2009

2008/9 2007/8 2006/07

Budget Forecast Actual Note $0 $0 $0 Current Assets Cash and cash equivalents 4 1,472,723 1,717,781 1,666,128 Accounts receivable and prepayments 5 246,580 208,462 148,647 Inventories 6 271,840 246,380 231,477

Total Current Assets 1,991,143 2,172,623 2,046,252

Non-Current Assets Property, plant and equipment 7 7,438,110 7,375,484 7,113,466 Other non-current assets

Total Non-Current Assets 7,438,110 7,375,484 7,113,466

Total Assets 9,429,253 9,548,107 9,159,718

Current Liabilities Accounts payable 8 682,314 696,340 693,520 Unearned revenue 9 42,458 48,160 40,940 Other current liabilities 99,260 99,126 99,571

Total Current Liabilities 824,032 843,626 834,031

Non-Current Liabilities Employee entitlements 11 Other non-current liabilities 12 2,225,657 2,324,917 2,455,600

Total Non-Current Liabilities 2,225,657 2,324,917 2,455,600

Total Liabilities 3,049,689 3,168,543 3,289,631

TOTAL ASSETS LESS TOTAL LIABILITIES 6,379,564 6,379,564 5,870,087

NET WORTH Contributed capital 5,298,368 4,174,942 3,749,942 Capital Fund - 1,123,426 1,074,806 Accumulated surpluses 1,081,196 1,081,196 1,045,339

Total Net Worth 6,379,564 6,379,564 5,870,087

2008/9 Ownership Agreements 447 THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS FORECAST STATEMENT OF CASH FLOWS FOR THE YEAR ENDING 30 JUNE 2009 2008/9 2007/8 2006/07

Budget Forecast Actual Note $0 $0 $0 Cash Flows From Operating Activities

Receipts Outputs to Cabinet 3,925,000 3,774,111 2,236,002 Outputs to other government agencies - - - Outputs to others 2,723,242 2,364,500 1,836,1312 Interest received 79,998 14,860 37,528 Insurance proceeds - - -

Payments Personnel costs (4,387,858) (4,094,519) (3,069,662) Suppliers (795,108) (764,527) (616,217) Other payments (1,087,014) (785,701) (1,122,917)

Net cash flows from operating activities 13 458,260 508,724) (699,135)

Cash Flows From Investing Activities Purchase of non-current assets (551,658) (751,388) (1,134,068) Gain on sale of non-current asset - - 5,500

Net cash flows from investing activities (551,658) (751,388) (1,128,568)

Cash Flows From Financing Activities Equity investment - 425,000 697,029 Repayment of long term debt (99,260) (130,683) (117,187)

Capital withdrawl

Net cash flows from financing activities (99,260) 294,317 525,842

Net increase/(decrease) in cash and cash

equivalents (192,658) 51,653 (1,301,861) Cash and cash equivalents at beginning of 1,665,381 1,666,128 2,967,989 period Cash and cash equivalents at end of 4 1,472,723 1,717,781 1,666,128 period

448 2004/5 Ownership Agreements THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

Note 1 - Personnel costs

2008/9 2007/8 2006/07

Budget Forecast Actual $0 $0 $0 Salaries and wages (including employee pension 4,013,040 3,858,692 2,863,079 contributions) Employer/Government pension expense 374,818 235,827 206,583

Total Personnel Costs 4,387,858 4,094,519 3,069,662

Note 2 - Supplies and consumables

2008/9 2007/8 2006/07

Budget Forecast Actual $0 $0 $0 Supply of goods and services 795,108 764,527 613,217 Operating lease rentals - - - Other 0 0 0

Total Supplies and Consumables 795,108 764,527 613,217

Note 3 - Depreciation

2008/9 2007/8 2006/07

Budget Forecast Actual $0 $0 $0 Buildings 248,320 221,924 223,303 Vehicles 1,305 1,740 2,321 Aeroplanes - - - Boats - - Furniture and fittings 67,642 75,545 81,147 Computer hardware and software 124,153 156,302 148,090 Office equipment - - - Other plant and equipment - - - Other assets 16,840 18,356 20,006

Total Depreciation 458,260 472,867 480,867

THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS

2008/9 Ownership Agreements 449 NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Assets are depreciated on a straight-line basis as follows: Years Buildings 40 Vehicles 4 Aeroplanes N/A Boats N/A Furniture and fittings 5-10 Computer hardware and software 3 Office equipment N/A Other plant and equipment N/A Other assets (Library Books) 2-8

Note 4 - Cash and cash equivalents 2008/9 2007/8 2006/07 Budget Forecast Actual $0 $0 $0 Cash on hand 500 500 500 Bank accounts 1,472,223 1,717,281 1,265,628

Deposits with Portfolio Finance and Economic - - - (Treasury) - - -

Total Cash and Cash Equivalents 1,472,723 1,717,781 1,266,128

Note 5 - Accounts Receivable

2008/9 2007/8 2006/07

Budget Forecast Actual $0 $0 $0 Outputs to Cabinet - - - Outputs to other government agencies - - - Outputs to others 198,250 190,296 83,525 Interest receivable - - 1,452 Prepayments 64,472 64,254 66,443 Interest Receivable - - - Other Receivables - - 2,000

Total Gross 262,722 254,550 153,410 Less provision for doubtful debts (16,142) (16,230) (4,763)

Total Net 246,580 238,320 148,647

450 2004/5 Ownership Agreements THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 6 - Inventories 2008/9 2007/8 2006/07 Budget Forecast Actual $0 $0 $0 Raw Materials (including Consumable Stores) - - - Work in Progress - - - Finished Goods 271,840 246,380 231,477 Total Inventories 271,840 246,380 231,477

Note 7 - Property, Plant and Equipment Opening Addition Disposals Revalue Depr. Closing Balance Balance 2008/9 Forecast Land 273,090 - - - - 273,090 Buildings 6,769,758 266,600 - - 248,320 6,521,438 Vehicles 4,643 - - - 1,305 3,338 Aeroplanes - - - - - 0 Boats - - - - - 0 Furniture and fittings 407,959 130,350 (15,016) - 67,642 340,217

- 0 Computer hardware and software 376,311 140,564 124,153 (15,756) - 252,158

Office equipment - - - Other plant and equipment - - - Construction in progress - - - Other assets 64,609 14,244 - - 16,840 47,869

Total 7,896,370 551,658 (30,772) - 458,260 7,438,110

2008/9 Ownership Agreements 451 THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

HC or Accum. 2008/9 2007/8 Revalued Depr. Budget Forecast Amount 2007/8 2007/8

Land 273,090 - 273,090 273,090 Buildings 6,521438 2,693,005 6,521,438 6,503,158 Vehicles 3,338 4,642 3,338 4,643 Aeroplanes - - - - Boats - - - - Furniture and fittings 340,317 410,709 340,217 292,625 Computer hardware and software 252,158 430,078 252,158 251,503 Office equipment - - - - Other plant and equipment - - - - Construction in progress - - - - Other assets (list if material) 47,769 350,095 47,869 50,465

Total 7,438,110 3,888,529 7,438,110 7,375,484

Note 8 - Accounts Payable

2008/9 2007/8 2006/07

Budget Forecast Actual $0 $0 $0 Trade Creditors 682,314 696,340 693,520 Operating lease rental - - - Accruals 0 89,126 99,571

Total 682,314 785,466 793,091

Note 9 - Unearned Revenue

2008/9 2007/8 2006/07

Budget Forecast Actual $0 $0 $0 Revenue received in advance 42,458 48,160 40,940

Total 42,458 48,160 40,940

452 2004/5 Ownership Agreements THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 10 - Employee entitlements (Current) 2008/9 2007/8 2006/07 Budget Forecast Actual $0 $0 $0 Long service leave and other leave entitlements - - - Other salary related entitlements - - -

Total Employee Entitlements - - -

Note 11.Employee entitlements (Non-current)

2008/9 2007/8 2006/07

Budget Forecast Actual $0 $0 $0 Long service leave and other leave entitlements - - - Other salary related entitlements - - -

Total - - -

Note 12. Other Non-Current Liabilities

2008/9 2007/8 2006/07

Budget Forecast Actual $0 $0 $0 Provision for agency revenue repayable - - - Provision for restructuring - - - Accounts payable - - - Unearned revenue - - - Other (Long Term Loans) 2,225,657 2,324,917 2,455,600

Total 2,225,657 2,324,917 2,455,600

2008/9 Ownership Agreements 453 THE UNIVERSITY COLLEGE OF THE CAYMAN ISLANDS NOTES TO THE FORECAST FINANCIAL STATEMENTS continued FOR THE YEAR ENDING 30 JUNE 2009

Note 13. Reconciliation of Operating Surplus to Cash Flows from Operating Activities

2008/9 2007/8 2006/07

Budget Forecast Actual $0 $0 $0

Operating surplus/(deficit) - 35,857 (1,333,882) Non-cash movements Depreciation 458,260 472,867 480,867 Interest and foreign exchanges - 64,981 70,924 Increase in payables/accruals (19,728) 9,595 205,188 Net gain/loss from sale of fixed assets - - (5,364) Net gain/loss from sale of investments - - Increase in other current assets 57,846 (14,903) (147,899) Increase in receivables (38,118) (59,673) 31,031

Net cash flows from operating activities 458,260 508,724 (699,135)

454 2004/5 Ownership Agreements

BUDGET 2008/9

Ownership Agreement

Between

The Cabinet of the Cayman Islands Government

and Water Authority - Cayman

For the year ending 30 June 2009

2008/9 Ownership Agreements 455 Contents

1. Purpose

2. Nature and Scope of Activities

3. Strategic Goals and Objectives

4. Ownership Performance Targets

5. Summarised Forecast Financial Statements

6. Other Financial Information

7. Agreement

8. Appendix: Forecast Financial Statements

456 2004/5 Ownership Agreements

1. Purpose

This Ownership Agreement documents the ownership performance that the Cabinet and the Water Authority - Cayman Board of Directors have agreed that Water Authority - Cayman will seek to achieve during the 2008/09 financial year.

The purpose of the document is to ensure that the ownership performance expectations for the year are clearly specified and agreed by both parties.

2. Nature and Scope of Activities

This section outlines the nature and scope of activities within which Water Authority – Cayman is to operate during the year.

General Nature and Scope of Activities

The Water Authority – Cayman’s activities are;

• To ensure that the entire population of the Cayman Islands have access to a pure, wholesome and affordable supply of potable water; and to regulate other entities who are licensed by the Government to provide public water supplies.

• To protect and develop groundwater resources for the benefit of present and future populations of these islands.

• To provide for the collection, treatment and disposal of sewage within these islands in a manner that is safe, efficient and affordable.

• To operate in such a manner as to be financially self-sufficient, while contributing to the economy of these islands and achieving a reasonable and acceptable return on capital investments.

Customers and Location of Activities

Water Authority – Cayman provides sewer services on Grand Cayman and potable water to both Grand Cayman and Cayman Brac. The administrative offices are located at 13G Red Gate Road (949-6352) with a satellite office on the island of Cayman Brac (947-1403).

3. Strategic Goals and Objectives

The key strategic goals and objectives (from an ownership perspective) for The Water Authority - Cayman for the 2008/09 financial year are as follows: • Develop water Production plan to service the North Side • Extend and repair existing Collection System • Cayman Brac Water Distribution System • Red Gate Site Work – New Storage Tank, File Storage Building, Landscaping • North Side Water Works - Pumping Facility • Cayman Brac – Septage Treatment and Disposal

2008/9 Ownership Agreements 457 4. Ownership Performance Targets

The ownership performance targets as specified in schedule 5 to the Public Management and Finance Law (2005 Revision)) for Water Authority – Cayman for the 2008/09 financial year are as follows.

Financial Performance

2008/9 2007/8 Financial Performance Measure Budget Forecast Revenue from Cabinet 0 Revenue from ministries, portfolios, statutory authorities and 1,000,000 government companies Revenue from other persons or organisations (including 27,789,215 23,757,255 Sundry Income) Surplus/deficit from outputs 8,795,408 7,684,536 (Gross Operating Surplus) Other expenses 6,794,106 6,526,422

Net Surplus/Deficit 2,001,302 1,158,114

Total Assets 76,400,000 71,400,000

Total Liabilities 29,979,216 26,900,000

Net Worth 46,420,784 44,500,000

Cash flows from operating activities 4,712,673 3,436,302

Cash flows from investing activities (15,007,100) (10,901,434)

Cash flows from financing activities 10,172,771 4,944,941

Change in cash balances (121,655) (2,520,191)

2008/09 Financial Performance Ratio 2007/08 Forecast Budget Current Assets: Current Liabilities .73 .73

Total Assets: Total Liabilities 2.60 2.65

Maintenance of Capability

2008/9 2007/8 Human Capital Measures Budget Forecast Total full time equivalent staff 120 115

Staff turnover (%) 14% 14%

Average length of service (Number) Senior management 10 10

Professional staff 5 5 Administrative staff 5 5

Significant changes to personnel management system None None

458 2004/5 Ownership Agreements

2008/9 2007/8 Physical Capital Measures Budget Forecast Value of total capital assets (NBV of Fixed Assets) 58,800,000 56,700,000 Asset replacements: total assets 17,600,000 14,700,000 (Total Accumulated Depreciation) Book value of depreciated assets: initial cost of those assets 76,400,000 71,400,000

Depreciation: Cash flow on asset purchases 2,900,000 2,700,000

Changes to asset management policies None None

2008/9 Major Capital Expenditure Projects Budget $ Develop water production plant to service the North Side 4,000,000

Extend and repair existing Collection System 3,000,000 Cayman Brac Water Distribution System 2,500,000 Red Gate Site work – New Storage Tank, File Storage Building, Landscaping 1,500,000 North Side Water Works – Pumping Facility 500,000 Cayman Brac – Septage Treatment and Disposal 500,000

Risk Management

Change in status from Financial value of Key risks Actions to manage risk previous year risk

Employee / Public Liability / No identified change in Adequate insurance Undeterminable Motor Vehicle / risk status maintained to mitigate the risk

2008/9 Ownership Agreements 459 5. Summarised Forecast Financial Statements

2008/9 2007/8 Operating Statement Budget Forecast Revenue 27,789,215 24,757,255

Operating / Administrative Expenses 25,787,913 23,599,141

Net Surplus/Deficit 2,001,302 1,158,114

2008/9 2007/8 Balance Sheet Budget Forecast Assets 76,400,000 71,400,000

Liabilities 29,979,216 26,900,000

Net Worth 46,420,784 44,500,000

2008/9 2007/8 Statement of Cash Flows Budget Forecast Net cash flows from operating activities 4,712,673 3,436,302

Net cash flows from investing activities (15,007,100) (10,901,434)

Net cash flows from financing activities 10,172,771 4,944,941

460 2004/5 Ownership Agreements 6. Other Financial Information

Detailed below is information about specific financial transaction required to be included in the Ownership Agreement by the Public Management and Finance Law (2005 Revision).

Amount for Transaction 2008/9 $ Equity Investments into Water Authority – Cayman Nil

Capital Withdrawals from Water Authority - Cayman Nil

Dividend or Profit Distributions to be made by Water Authority – Cayman 100,000

Government Loans to be made to Water Authority – Cayman Nil

Government Guarantees to be issued in relation to Water Authority – Cayman Nil Related Party Payments (Non Remuneration) made to Key Management Nil Personnel48 Remuneration49 Payments made to Key Management Personnel (Director, Deputy Director, Operations Manager, Human Resources, Customer Approx. 900,000 Service, Finance, IT, Water Resources and Cayman Brac) Remuneration Payments made to Senior Management Same as above

Number for

2008/9 No of Key Management Personnel 9 (Director, Deputy Director, Operations Manager, Human Resources, Customer

Service, Finance, IT, Water Resources and Cayman Brac) No of Senior Management 9

48 Key Management Personnel as defined by International Public Accounting Standards No 20, e.g. Minister, Board Member and Senior Management Team 49 Remuneration as defined by International Public Accounting Standards No 20 Par 34(a)

2008/9 Ownership Agreements 461

7. Agreement

Scope of this Agreement

In signing this document: • Water Authority – Cayman undertakes to seek to achieve the performance specified in sections 2 to 6 to the best of its ability; and • The Cabinet agrees to the performance specified in sections 2 to 5 and the financial transactions specified in section 6.

Procedures for Changing this Ownership Agreement

Changes to this Ownership Agreement may be made during the year only with the express and explicit agreement of both parties to the Agreement.

Changes will be made in the following way:

• If either party wish to change the specification of performance contained in this Ownership Agreement, they must notify the other in writing describing the changes that they wish to make.

• The other party will take no more than 15 working days to consider the proposed amendments, or such other time as the two parties may agree.

• The other party will respond to the other about the proposed amendments and negotiate appropriate changes that are agreeable to both parties.

• The Parties will the sign the amended Ownership Agreement.

• The amended Ownership Agreement will be attached to, and form part of, this Agreement.

Agreement

We jointly agree that this Ownership Agreement accurately documents the ownership performance that Water Authority – Cayman will seek to achieve for the 2008/09 financial year and that the Cabinet will monitor performance against.

------Hon. V. Arden McLean, JP Minister of Communications, Works and Infrastructure on behalf of Cabinet

------Mr. Brainard Walter Chairman of the Board Water Authority - Cayman

June 25, 2008

462 2004/5 Ownership Agreements

Appendix: Forecast Financial Statements

WATER AUTHORITY – CAYMAN STATEMENT OF RESPONSIBILITY FOR FORECAST FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2009

These Forecast Financial Statements have been prepared in accordance with the provisions of the Public Management and Finance Law (2005 Revision).

The Board accepts responsibility for the accuracy and integrity of the financial information in these financial statements.

To the best of our knowledge the forecast financial statements are:

(a) complete and reliable; (b) fairly reflect the forecast financial position as at 30 June 2009 and performance for Water Authority - Cayman for the year ended 30 June 2009; (c) comply with generally accepted accounting practice.

------Mr. Brainard Walter Chairman of the Board Water Authority - Cayman

June 25, 2008

2008/9 Ownership Agreements 463 WATER AUTHORITY OF THE CAYMAN ISLANDS FORECAST BALANCE SHEETS AS AT 30 JUNE 2008 AND 30 JUNE 2009

2008/9 2007/8 Current Assets Budget Forecast Cash On Hand 3,000 2,799 Cash At Bank 216,972 338,830

Total Cash And Cash Equivalents 219,972 341,628

Accounts Receivable 3,180,028 3,043,991 Inventory 1,000,000 724,939 Prepaid Expenses 400,000 393,579

Total Current Assets 4,800,000 4,504,137

Current Liabilities Accounts Payable 1,050,000 961,797 Contract Retention Payable 50,000 25,898 Customer Deposits 1,100,000 1,026,777 Current Maturities On Long Term Liabilities 4,800,000 4,125,692

Total Current Liabilities 7,000,000 6,140,163

Net Current Liabilities (2,200,000) (1,636,026)

Fixed Assets Land – Freehold 3,300,000 3,319,598 Buildings 7,100,000 4,624,886 Water Supply System 28,000,000 26,962,792 Waste Water Treatment And Collection 22,500,000 19,794,195 Other Assets 1,700,000 1,981,531 Construction In Progress 9,000,000 10,183,531

Total Fixed Assets 71,600,000 66,866,803

Total Net Assets 69,400,000 65,230,777 Long Term Liabilities (22,979,216) (20,711,295)

Net Assets 46,420,784 44,519,482

Equity Represented By: Contributed Capital 1,085,223 1,085,223 Accumulated Surpluses 45,335,561 43,434,259

Total Equity 46,420,784 44,519,482

464 2004/5 Ownership Agreements WATER AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF NET INCOME AND RETAINED EARNINGS FOR THE YEAR ENDED 30 JUNE 2009

2008/9 2007/8 INCOME Notes Budget Forecast Gross Operating Revenue 26,504,853 23,545,593 Less: Operating Expenses 18,993,807 17,072,719

Gross Operating Surplus for the Year 7,511,046 6,472,874 Sundry Income 1,284,362 1,211,662

Operating Surplus for Year 8,795,408 7,684,536

OTHER REVENUE / (EXPENSES) Administrative Expenses 6,794,106 6,226,422 Hurricane Revenue / (Expenses) (net of interim 12 - 300,000 settlement) Past Service Pension Liability 9

Net Income for Year 2,001,302 1,158,114

Retained Earnings at the Beginning of the Year 43,434,259 42,326,145

Retained Earnings Before Contribution to Government 44,014,777 43,484,259 Contribution to Government 8 (100,000) (50,000)

Retained Earnings at End of Year 45,335,561 43,434,259

2008/9 Ownership Agreements 465 WATER AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF INCOME FOR THE 12 MONTH PERIOD ENDED 30 JUNE 2008 AND 30 JUNE 2009

2008/9 2007/8 OPERATING REVENUE Budget Forecast Water Sales / Sewerage Fees 25,033,770 22,141,129 Water Sales to Ministries / Portfolios / Statutory Authorities and 1,000,000 1,000,000 GC’s Connection and Miscellaneous Fees 395,813 376,964 Agency Work 75,270 27,500

Total Gross Operating Revenue 26,504,853 23,545,593

SUNDRY INCOME Royalties 1,193,462 1,125,162 Other (15,000) (16,000) Statutory Licencing Fees 15,000 12,500 Interest Earned 90,900 90,000

Total Sundry Income 1,284,362 1,211,662

TOTAL REVENUE 27,789,215 24,757,255

2008/9 2007/8 OPERATING EXPENSES Budget Forecast Water Purchases 6,248,105 6,723,693 Loan Interest 2,522,870 1,074,044 Depreciation Expense 2,699,553 2,435,639 Other Operating Expenses 7,523,279 6,839,343

Total Operating Expenses 18,993,807 17,072,719

ADMINISTRATIVE EXPENSES Interest 210,766 221,374 Depreciation Expense 257,848 254,601 Miscellaneous 6,325,492 5,750,447 Hurricane Expenses - 300,000

Total Administrative Expenses 6,794,106 6,526,422

TOTAL OPERATING AND ADMINISTRATIVE EXPENSES 23,054,777 23,599,141

NET SURPLUS FOR THE PERIOD 4,734,938

466 2004/5 Ownership Agreements WATER AUTHORITY OF THE CAYMAN ISLANDS STATEMENT OF CASH FLOWS FOR THE 12 MONTH PERIOD ENDED 30 JUNE 2008 AND 30 JUNE 2009

2008/9 2007/8 CASH FLOW FROM OPERATING ACTIVITIES Budget Forecast Net Income for Period 2,001,302 1,158,114

Net Change in Working Capital Net Change in Non-Cash Working Capital (2,888,765) (1,613,969) Depreciation 2,957,401 2,690,240 Gain / Loss on Sale of Fixed Assets - (3,500) Interest Earned (90,900) (90000) Interest Expense 2,733,635 1,295,417

Net Cash Provided by Operating Activities 4,712,673 3,436,302

CASH FLOW FROM INVESTING ACTIVITIES Interest Received 90,900 90,000 Cost of Fixed Assets Purchased (600,000) (811,550) Transfer from CIP to Fixed Assets (7,452,000) Proceeds from Sale of Fixed Assets - 3,500 Construction in Progress (70,46,000) (10,183,384)

Net Cash Used by Investing Activities (15,007,100) (10,901,434)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds of Long Term Liabilities 14,250,000 8,032,000 Repayment of Long Term Liabilities (3,977,229) (3,037,059) Loans Payable - - Contribution to Government (100,000) (50,000)

Net Cash Used by Financing Activities 10,172,771 4,944,941

Net Increase in Cash and Cash Equivalents During the Period (121,655) (2,520,191) Cash and Cash Equivalents at the Beginning of the Period 341,627 2,861,818

Cash and Cash Equivalents at End of Period 219,972 341,627

2008/9 Ownership Agreements 467