Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697755406687.pdf (Fiji)
2017Annual Report Table of CONTENTS ti v e tt e r t o t h L e M i n i s t e r e r s a r d M e m b o B 01 02 03 04 o rt p e n ’ s R a ir m a h C e r a l M a n G e e r’ s R g a n o rt p e c i a l R n a F i n o rt s p e 05 06 16 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 OUR VISION To be the leading provider of affordable, quality and appropriate rental housing for our customers.
OUR MISSION The Public Rental Board will achieve its vision through: Facilitating the development of affordable and quality rental housing to meet the socio economic needs of customers.

Maintaining efficient and effective customer service to meet customer expectation.

Maintaining and enhancing flats to Public Rental Board standards.

Empowering customers through innovative public relations and community building.
Providing cohesive communities while enhancing openings that can be used to facilitate win – win opportunity for everyone.

Undertaking profiling and analysis of existing and potential customers.

Promoting innovative development and funding.

Promoting migration to homeownership.

1 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 CORPORATE OBJECTIVES Re-profiling Re-profiling of customers in order to obtain a better understanding of PRB customers.
Provide Government with a more precise determination of rental subsidy and Non Commercial Obligation (NCO).

Definition and assertion of the socio-economic standing of income range of PRB customers.

Encourage homeownership for customers earning above $317 weekly household combined income.

Rent Review Equitable distribution of subsidy and social cost (non-commercial obligation) compensated by Government.

Maintain rentals at viable level.

Increase income.
Increase income.

Government Grant Continue assisting financially disadvantaged tenants.

Building more flats that are affordable to customers.

Subsidy on construction costs.

Rental subsidy requested to Government to make rental affordable to customers.

Rental Property Stock versus Demand Better information and viable partnerships with other developers of low cost rental accommo- dation to meet demand.

Plan and construct at least 100 flats per annum.


Determine economic rental at different income levels and establish demand.

PRB’s Revenue and Cost Structure PRB recognises that its current cost structure needs to be reduced.

Socio Economic Obligation Reduce squatter settlements.

Promote healthy living.

House urban workforce.

Housing tenants in export finance and import substitute industries.
2 LETTER TO THE MINISTER PUBLIC RENTAL BOARD ANNUAL REPORT 2017 3 BOARD MEMBERS PUBLIC RENTAL BOARD ANNUAL REPORT 2017 Umarji Musa- Acting Board Chair Mr. Musa holds a Bachelor of Arts degree in Economics and a number of professional credentials.

He joined Fiji Development Bank in 1974 and retired in 2010 after serving 36 years.

He has had a distinguished career, having held the position of General Manager in the Bank’s Lending Operations for 21 consecutive years prior to his retirement.
Mr. Musa was appointed as PRB Director in September 2010 and brings across extensive experience in Banking, Financial Analysis, Project Finance, Agricultural Credit and managing large scale, complex and diverse projects.

Currently, he practices as an independent Business and Finance Consultant and also serves on a number of Boards.

Craig Strong – Board Member Appointed to the Board in May 2016.
Mr Strong holds a Bachelor’s Degree in Business Studies from Massey University in New Zealand with other professional credentials and is the General Manager for Pacific Agencies Fiji Limited.

With an extensive commercial and shipping background, Mr Strong is also a member of various business councils between Fiji and a few regional countries and is a board member in various organizations in Fiji.

Roveen Permal – Board Director Appointed to the Board in May 2016.
Mr Permal holds a Bachelor’s Degree in Civil Engineering from the University of New South Wales in Australia.

Currently Mr Permal is a Senior Civil Engineer at HLK Jacob Limited with extensive background in structural engineering, construction engineering and project management.

He is a member of the Institute of Engineers of both Fiji and Australia.
Nesbitt Hazelman – Board Director Appointed to the Board in May 2016, Mr Hazelman holds a Post- Graduate Certificate in Human Resource Management from Australian Training and Quality College, a Bachelor of Arts with double majors in Management and Sociology and a Diploma in Industrial Relations and Personnel Management from the University of the South Pacific.

He has over 31 years of experience in Human Resources, Industrials Relations and Executive Management.
He is the current Chief Executive Officer of the Fiji Commerce Employers Federation.

4 CHAIRMAN’S REPORT PUBLIC RENTAL BOARD ANNUAL REPORT 2017 It gives me great pleasure to deliever the Chairman’s report for the year 2017.

The provision of quality and affordable rental flats to low income earners will continue to be a major focus for the Public Rental Board.

Through the support of Government, PRB will continue to fulfill its mission and objectives to accomodate the housing needs of those in waitlist.
2017, was yet another year of accomplishment with the completion of the ongoing projects at Naqere consisting of 32 one-bedroom and 16 two-bedroom flats, thus increasing PRB’s total number of flats to 1602.

Furthermore, PRB will be undertaking another development projects in 2018 in Simla, Lautoka, consisting of 36 one-bedroom flats and this project costing $3.6 million is fully funded by government.
Through the concept of Public Private Partnership (PPP) program PRB intends to accelerate development of affordable rental flats for low income earners around Fiji in meeting the increasing demand and promoting governments objectives in providing affordable rental housing.
Having almost 900 waitlist applicants, PRB intends to increase its rental portfolio by building appropriate rental flats in the near future with upcoming projects in collaboration with the relevant funding authorities under the PPP scheme.

The projects identified are in Davuilevu, Tavakubu, Newtown and Votua.

This is also in line with governments vision to ensure that every Fijian has access to a decent and affordable housing.
The Board also has collaborated with Housing Authority in migrating transitional tenants to home ownership scheme to free up more flats for new entrants.

In relation to the overall performance of Public Rental Board in 2017, it was both challenging and a productive year.

While providing accommodation to low income earners, the Board has also been able to achieve a reasonable profit.
In 2017 Board recorded an adjusted profit of $851,204 compared to $1,749,504 in 2016, the decline is attributed to the adjustment of $220,697 loss in fluctuation of foreign exchange rate in 2017 against a gain of $714,524 in 2016 for Exim bank loan of $9 million taken for Raiwai housing project.

On behalf of the Board members, I thank the management and staff for preserving the mission and vision and achieving the deliverables of the Board.
I also take this opportunity to thank Government for its continued support in the provision of annual subsidy grant with assistance rendered from the Line Ministry, Local Authorities and Business communities.

Finally, I wish to convey my sincere thanks to all the Board members, for the support and valuable contributions during the year.
……………………………….. Mr Umarji Musa Acting Board Chairman 5 GENERAL MANAGER’S REPORT PUBLIC RENTAL BOARD ANNUAL REPORT 2017 As the Acting General Manager of Public Rental Board, it is my pleasure to present the Annual Report for the financial year ending 2017.

Year 2017 was a positive and eventful year for Public Rental Board (PRB) achieving several milestones.
Significant efforts were placed to promote accountability within the business which strengthened our performance, ensured continuous improvements promoting -agility in responding to customer needs.
We strengthened our core businesses during the year through innovative service delivery, community engagements, partnerships and integration of Human Services which allowed PRB to continue enhancing the tenant experience in supporting the Board’s ongoing role of providing affordable, quality and appropriate rental housing for all Fijians.

The Board is committed to promote and sustain Community Developments in its estates.
Estate meetings, promoting community awareness and Estate beautification took place in all of our Estates bringing the youth groups, women groups and estate committees together.

PRB building projects at Savusavu 48 units and Kalabu 36 units commenced construction in 2014 are substantially completed these units will give shelter to 84 new families.
Incorporated in the Report is a brief highlight of the activities undertaken by the Board in 2017; • • • • • • • Reduce waitlisted applications Corporate Governance Rent Revenue/Rent Subsidy and Rental Flats General Maintenance & New Development Financial Highlights Financial Ratios and Analysis Human Resource and Admistration Report I take this opportunity to express my heartfelt appreciation to the Board of Directors, Management and Staff of Public Rental Board for all their efforts in bringing PRB this far re-assuring Tenants and Stakeholders that we shall always endure to meet their expectations.
We will continue to focus on improving and fine-tuning our services towards our customers to ensure we respond to their needs effectively and efficiently.

6 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 1.

Reduce waitlisted applications PRB has had its own challenges in meeting the demand for rental flats.

We have never been able to catch up with waitlisted applications registered with the Board.

Exorbitant construction cost has not assisted PRB in fulfilling the ever-increasing demand.
PRB currently has 1602 flats rented out against a waitlist demand of 904 applications.

PRB’s rental flats are located in 30 estates around the country.

Given the current trend of flat turnover, the board is continuously networking with housing stakeholders in an effort to increase the flat turnover and reduce the waitlist at the same time increase the number of flats.

Simla housing project comprising of 36 units is expected to commence by early next year.
A six - year comparison on the number of flats available for renting against the waitlist and the turnover of flats is presented in the graph below.

The waitlist in the graph below, decreased in 2017 due to tenants who had graduated to home ownership or applicants who had withdrawn their interest.

2.

Corporate Governance The Board of Directors and Management are responsible for corporate governance and remain committed to upholding high standards of integrity and transparency.
The Board continues to further strengthen its Corporate Governance.

Role of the Board The role of the Board is to assume accountability for the success of Public Rental Board by taking responsibility for the organization’s directions in order to meet the objective of increasing stakeholder value.

PRB in collaboration with Housing Authority is moving towards innovative solutions in meeting the demand for low cost rental housing, facilitate and promote transitional housing to its tenants.
7 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 Meetings of the Board The regular business of the Board during its meetings cover business and strategic matters, governance and compliance, Management reports, financial report and the overall performance of PRB.
The current Board members were appointed in May 2016 and their attendance at Board meetings during the financial year under review is tabled below: Director Mr. Umarji Musa Mr. Roveen Permal Mr. Nesbitt Hazelman Mr. Craig Strong Number of Meetings Conducted Number of Meetings Attended Apologies Received 14 14 14 14 14 14 12 11 0 0 2 3 The Board met on 14 occasions for its regular meetings and Special Board Meeting during the year under review.

Mr. Craig Strong resigned in September 2017.

3.


Rental Revenue on Rental Flats PRB charged rent of $ 3,933,428 in the reporting year.

The total rent collected includes rent for the period, arrears payments, and advance rental payments by tenants.

The total collection against rent charged as of 2017 was $ 3,056,665 or approximately 78%.

Table 1 shows the actual collection amount for 8 years.
Rental Collections Comparison: 2010 to 2017 Table 1 RENTAL COLLECTION 2010 2011 2012 2013 2014 2015 2016 2017 $ 1,606,895 $ 1,823,235 $ 1,921,375 $ 1,912,632 $ 1,998,859 $ 2,683,635 $ 3,018,657 $ 3,056,665 4.

General Maintenance PRB continued the third round of general maintenance program in the year 2017.

The third round of general maintenance program commenced in year 2016.
PRB undertakes general improvements and upgrading of its facilities such as tiling wet and living areas, grills, placement of ceiling, overall painting, changing of waste lines from galvanized to PVC, improvements on the external interior works and repairs.

8 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 Financially disadvantaged tenants are assisted with subsidy according to the 2016 allocation criteria.
General maintenance is essentially important for PRB because revenue from rental is the major contributing source of income for the Board apart from rental subsidy from government.

General maintenance undertaken in 2017 were in the following estates as presented in Table 2.

Table 2- Major General Maintenance Estates Contractor No.
of Units Budget ($) Expenditure ($) (2017) Charles Street Estate In-house Maintenance Team 94 $200,000.00 $117,507 Total Repair & Maintenance cost for 2017 was $284,147 which is approximately 7.25% of Rental Income.

5.

Distribution of Rental Subsidy Subsidy is allocated to tenants based on their household Weekly Gross Income (WGI) in accordance with the 2016 subsidy allocation criteria.

Some 797 financially disadvantaged tenants received a total of $883,967 subsidy assistance in 2017.
Rental subsidy assistance is calculated taking the difference between the actual rent charge and the tenant contribution.

The 2010 subsidy allocation criteria was reviewed in 2016.

Subsidy is allocated according to the subsidy agreement between the Ministry of Housing and the Board.
The 2016 subsidy criteria is as follows: 2016 Subsidy Criteria Income Range Criteria Comments HH Weekly Gross Income $0 – $100 less 8% FNPF 5% of Income Tenant Contribution = 5% of WGI or $5 as minimum HH Weekly Gross Income $101 – $125 less 8% FNPF 8% of Income Tenant Contribution = 8% of WGI HH Weekly Gross Income $126 – $150 less 8% FNPF 11% of Income Tenant Contribution = 11% of WGI HH Weekly Gross Income $151 – $175 less 8% FNPF 14% of Income Tenant Contribution = 14% of WGI HH Weekly Gross Income $176 – $200 less 8% FNPF 17% of Income Tenant Contribution = 17% of WGI HH Weekly Gross Income $201 – $250 less 8% FNPF 20 % of Income Tenant Contribution = 20% of WGI Social Cost The 2017 social cost (difference between market rent and actual rent) was directly funded by Government through the government grant.
Government’s contribution towards payment of social cost was approximately $98,990 for the reporting year.

9 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 6.

New Developments and Construction 6.1.

Kalabu Housing Project Government provided a grant of $1.5 million in the 2014 National Budget and a further grant of $741,344 in the 2015 National Budget.

Construction started in June 2014 for 36 one-bedroom units at Kalabu.
This project has been delayed due to extra works in taking the foundation down about 4 meters to the solid and construction of a retaining wall approximately 8 meters in height to stabilize the rear embankment apart from other contributing factors.

This project is anticipated to complete in 2018.

6.2.

Savusavu Housing Project Government provided a grant of $500,000 in the 2014 National Budget and a further $3.34 million in the 2015 National Budget for Savusavu project.
Construction commenced in March 2015 comprising of 32 one bedroom and 16 two-bedroom flats; total of 48 flats.

This project was completed in December 2017.

6.3.

Simla Housing Project Government provided a partial grant of $1,299,109 in the 2016/2017 National Budget for Simla project.

The project compromises of 36 one-bedroom flats.

The project is anticipated to commence in 2018.

A further grant of $2,347,761 will be provided in 2018/2019 budget.

7.
7.

Tenancy Management The Board has a three-year tenancy agreement with the tenants.

PRB undertakes Household Income survey (HHI) after which tenancy agreements are renewed.

Table 3 No.

of Tenancies No.

of flats Valid Tenancies Tenancies In-Valid for renewal No.

of Agreements issued in 2017 No.

of Agreements issued in 2016 1602 1395 207 321 370 8.
Financial Highlights TOTAL ASSETS & SHAREHOLDER’S FUNDS Years Total Assets Total SH Funds 2012 2013 2014 2015 2016 2017 8,746,018 9,076,368 30,618,946 35,434,598 37,857,045 38,874,656 3,889,559 4,330,386 16,790,770 21,078,972 23,497,661 24,348,865 10 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 OPERATING REVENUE & NET PROFIT Years Operating 2012 2013 2014 2015 2016 2017 2,752,632 2,872,738 2,942,694 3,665,560 4,760,863 4,160,886 Net Profit 8,565 440,827 277,949 359,943 1,749,504 851,204 Net profit reduced by 51% due to loss in flucatuation of foreign exchange rate in 2017 compared to a gain in 2016.
RETURN ON INVESTMENT & ASSETS Years 2012 2013 2014 2015 2016 2017 ROE 0.2% 11% 3% 2% 8% 4% ROA 0.1% 5% 1% 1% 5% 2% 9.
Financial Report Statement of Comprehensive Income (Extract) Total Income Total Expenses Operating profit before interest expenses Operating profit % to Total Income Finance Cost Net profit for the years Net Profit % to Total Income 12 Months period ending 31.12.17 12 Months period ending 31.12.16 4,160,886 (2,983,768) 1,177,118 28.29% 4,760,863 (2,866,504) 1,894,358 39.79% 325,914 144,854 851,204 20.46% 1,749,504 36.75% Other comprehensive income - - Total comprehensive income for the year % to Total Income 851,204 20.46% 1,749,504 36.75% 11 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 Total Income reported as at 31st December 2017 decreased by approximately 12.60% compared against the same period last year.
There was a foreign exchange gain of $714,524 in 2016 thus the Total Income is lower in 2017.

Total comprehensive surplus (net profits) for year 2017 decreased by $898,300 and approximately 51%% compared against the same period last year.

Total expenses increased by approximately 9.91%.

The increase in expenses were noted for staff cost, finance cost due to fluctuation of foreign exchange rate and utilities/Council/ Insurance and Professional fees.
Statement of Financial Position (Extract) 12 Months period ending 31.12.17 12 Months period ending 31.12.16 Non Current Asset 36,293,948 35,282,550 Current Asset Total Asset Total Equity 2,580,708 2,574,495 38,874,656 37,857,045 24,348,865 23,497,661 Non Current Liabilities 11,715,761 10,975,913 Current Liabilities Total Liabilities 2,810,030 3,383,471 14,525,791 14,359,384 Total Equity and Liabilities 38,874,656 37,857,045 Non-Current assets increased by approximately 2.87% taking into consideration the two capital projects under construction at Kalabu (Nasinu) & Naqere (Savusavu).
Current Assets increased by approximately 0.24%.

Total equity increased by approximately 3.62%.

Cash Flow Net cash flow for the financial year ending 31st December 2017 was managed efficiently.

10.

Financial Ratio Analysis Liquidity & Activity Analysis Liquidity analysis measures the adequacy of the Board’s cash resources to meet its near-term cash obligations.

Activity analysis evaluates revenue and output generated by the Board’s assets.

I.
I.

Current Ratio Current Asset / Current Liabilities 2017 0.92 2016 0.76 12 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 II.

Average No.

of Days Receivables Outstanding – Measures the effectiveness of the Board’s credit policies and indicates the level of investment in receivables needed to maintain a desired rental income level.

Average No.

of Days Receivables Outstanding 2017 2016 5 9 Average collection days decreased in the reporting year compared against the same period last year.
The percentage of rental arrears against rental revenue for the year 2017 is 3.49% and 2016 was 4.03%.

Long-Term Debt and Solvency Analysis This examines the Board’s capital structure, including the mix of financing sources and the ability of PRB to satisfy its longer-term debt and investment obligations.

III.

safely be able to borrow over a long period of time.
Debt to Equity Ratio (financial leverage) – Measures how much money the Board should Total Debt / Total Equity 0.61 0.64 2017 2016 The debt to equity ratio for financial year ending 2017 decreased compared against same period last year.

This is mainly due to Government Grant reported in Equity.

Profitability Analysis Measures the income of the Board relative to revenue and invested capital.

IV.

Return on Assets (ROA) – Measures how much profit is generated on every dollar of assets.
This is a strong basis to gauge the asset intensity of the Board.

It is probably one of the most useful measures of management’s ability and efficiency in using the Board’s assets to generate (operating) profits.

ROA is calculated using the formula: Net Profit / Average Total Assets Return on Assets 2017 2016 2.22% 4.77% As a general rule, anything below 5% is more assets intensive whilst anything above 20% is less asset intensive.

The Board’s ROA is more asset intensive.


Return on Equity (ROE) – Measures how much profit is earned in comparison with the V. total shareholder equity in the balance sheet.

ROE is calculated using the formula: Net Profit / Average Total Equity Return on Equity 2017 2016 3.56% 7.85% ROE decreased by approximately 4.29% compared against the same period for the previous year.

It is generally accepted that a high return on equity is capable of generating cash internally.
The required rate of return on equity ratio under the Public Enterprise Act is 10%.

13 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 VI.

Profitability Ratio – Measures the percentage of profit made on income by the Board.

Profitability Ratio 20.45% 36.75% 2017 2016 The profitability ratio decreased for reporting financial year by approximately 16.30% compared to the same period in the previous year.

The decreased is associated to decrease in other income and increase in finance cost compared to last year.

11.
11.

Human Resources, Payroll & Administration Report Staff Personnel Public Rental Board’s personnel are divided into two categories of Established and Permanent Un-Established Staff.

Salaries and wages continue to be a major expense for the Board.

This comprises approximately 21.38% of the total revenue in the current year.

This percentage is high but is expected to reduce through economy of scale and close monitoring by the Board.
Public Rental Board staff and cost in the financial year is provided as follows: DIVISION Executive Finance & Administration Property Un-Established Total No.

of Staff Nil (Vacant) 10 15 16 41 DIVISION Administration Staff Maintenance Staff Salaries & wages as a % of rental income 15.38% 6.0% Training Training and development has been an ongoing challenge for the Board as it pursues the alignment of knowledge, skills and attitude of its workforce to new methods.
The Board ensures that relevant training and development of its workers are conducted at all levels of the organization.

Performance gaps were identified during the Performance Management System’s evaluation process in the reporting year and necessary actions are taken in terms of training (mostly internal) in order to address these gaps.

In addition to in- house training and workshops, employees also attended work related short courses conducted by various training institutions.
Market Salary Adjustment and Performance Management System (PMS) Currently all staff are paid in accordance to the market salary rates implemented in 2012.

Job Evaluation was carried out in 2017.

14 PUBLIC RENTAL BOARD ANNUAL REPORT 2017 12.

Information & Communication Technology The board had approved an upgrade of PRB’s Internet link (IPVPN).

It has been increased from 2MB to 7 MB.

Internet performance has improved drastically.


The board had also approved the purchase of a server UPS which is used to power all our servers and network equipment’s during power outages.

Due to the increased number of users and historical transactions in our Navision system, the server hardware needs to be upgraded to make provision for future storage and memory, thus optimizing performance issues.

This has been identified and is planned to be carried out in 2018.

13.
13.

Acknowledgement The Fijian Government has invested heavily in the development of quality and affordable rental flats for low to middle income earners.

PRB is aware of the level of accountability expected as we deliver the Government objective for all Fijians to have decent housing by year 2020.

I would like to assure all readers that PRB will continue to deliver more rental flats around the country that are affordable with the financial assistance from Government.
On behalf of the Management Team, I wish to take this opportunity to thank all Managers, Team Leaders and staff members for the hard work, perseverance, commitment and support in achieving the current results.

I also acknowledge our valued tenants, private sector and key stakeholders for their invaluable support throughout the year.
Finally, I would like to acknowledge and express my sincere appreciation to the Board of Directors and members of the Ministry of Housing, Ministry of Finance, and the Ministry of Public Enterprises for their valuable contributions, leadership, and dedication in steering the organization through the challenges and ensuring that satisfactory growth is achieved.

And we look forward to their continued support in the years to come.
____________________ Pat Veu Acting General Manager 15 16 CONTENTS Directors’ Report ............................................................................ 18-19 Staement by Directors ...................................................................

Independent Auditor’s Report .....................................................

Statement of Comprehensive Income ........................................

Statement of Changes in Equity ..................................................
Statement of Financial Position ..................................................

Statement of Cash Flows .............................................................. 20 21-22 23 24 25 26 Notes to the Financial Statement ................................................ 27-42 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 PUBLIC RENTAL BOARD 132 Grantham Rd, Raiwaqa, Suva.

P.O.Box 5275, Raiwaqa.

Ph: 338 7787 Fax: 337 0105 email: info@prb.com.fj