Draft Submitted Cabinet

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. 10 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 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

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