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ANNUAL REPORT 2014

www.sandyportmanagement.com Serving our community

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FROM THE CHAIRMAN I

t has been my pleasure to serve as the Chairman of your Board since December 2012. This Annual Report is for the period ending December 2014 and completes our fifth year under the Homeowner’s control of the Association. I would like to thank former Directors Costa Berdanis and Kenny Cartwright for their contribution during their tenure which ended in March, 2014. Kenny Cartwright is worth a special mention after serving on the Board since the transition from the development company in 2010. At the last AGM we welcomed two new Board members. Bruce Knowles also sits on our Audit and Finance Committee. Michéle Rassin-Moodie became the de-facto spokesperson for Beach Lane owners. The economy continues to be fragile but decisions taken in recent years to lower fixed expenses have assured the financial security of our Association. This has enabled us to make the highest investment in improvements on record. During the year we invested over $500,000 on improvements without the need for a special assessment. We placed an emphasis on both security and upgrades to our quality of community living. Careful financial planning and control allowed us to end another year without adjusting the maintenance fees. Plus we have been able to maintain a respectable level of cash reserves for future needs.

The Association hosted it’s first social event in November. It was pleasing to see such a high level of participation. Some residents also took the time and effort to contribute food and snacks making the function a more personal affair. This gave us the opportunity to meet new and old friends. Also the Directors could learn, first hand, about what matters most to our community. As Chairman it was reassuring to receive only positive comments about the Association and the improvements that have taken place. An African proverb states “It takes a village to raise a child”. It takes our collective efforts to make our community. Since 2010, 23 Directors have served on the Board on a voluntary basis. Our various committee members also volunteer their time. Each time a resident suggests an improvement, makes a recommendation, posts a comment on our website or reports a concern they are contributing. It isn’t practical to meet every demand but the suggestions offer guidance to the Board and Management. This makes Sandyport a community cultivated by its members. Our team carries out its duties with enthusiasm and with the support of our valued added partners. So on behalf of the Board I would like to express our gratitude to all that have contributed. On behalf of the Board of Directors

There are over $2m of necessary improvements on our program for consideration. To date we have been funding improvements from our maintenance budget. We will continue to do so as the budget permits. Your Board considers the demands of the community and balances them against essential improvements. We review these on a regular basis and determine which to complete in the budgeted period.

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Robert Sands Chairman


WE SHOULD ALL BE DELIGHTED WITH THE NEW BOARD. I’M SURE THEY WILL ALL CONTINUE WITH THE FINE EXAMPLES SET BY THE PREVIOUS BOARD. THANKS TO THEM ALL FOR THE CONTINUING IMPROVEMENTS AND KEEPING US BEAUTIFULLY MAINTAINED AND MANAGED. WE REALLY APPRECIATE ALL THEIR HARD WORK AND DEVOTION TO OUR COMMUNITY. CB


WELCOME 2

FROM THE CHAIRMAN

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MANAGEMENT TEAM

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ACCOMPLISHMENTS

13

LOOKING AHEAD

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TREASURER’S REPORT

17

2015 FINANCIAL BUDGET

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FINANCIAL STATEMENTS

31

PROFESSIONAL ADVISORS


COMMITTEES Audit & Finance Landscaping & Architectural

CONTRACTORS Gardening Creative Designs by Munroe

Security Candid Commando

Painting Louis Joseph

Waste Disposal Ismi Estesant

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MANAGEMENT TEAM OFFICERS

Steve Roberts Treasurer

Robert Sands Chairman

Eddie Gardner Secretary

DIRECTORS

Bruce Knowles Vice Treasurer

Monique Cartwright

Tony Miaoulis

MichĂŠle Rassin-Moodie

MANAGEMENT

Ronella Francis Asst. Manager

Orpheus Ingraham Maintenance

Simon Cooper General Manager

Charles Cooper Water/Sewerage

Perlissa Munroe Accountant

Sarah Barton Security Services

Kayla Lightbourne Accounts Clerk

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ACCOMPLISHMENTS T

he challenge of prioritizing between visual and ‘back of house’ improvements is ongoing. To put it another way it is deciding between aesthetics and necessities. The Board is in a permanent state of review to determine the most important improvements. The common property includes roads, waterways, sea walls, recreation areas, pools, tennis courts, parking, security booths, utility & storage buildings, offices, gates, fences, barriers, walls, security systems, water and sewer lines, wastewater treatment facilities, lighting, docks, carports and landscaped areas. Our budget includes maintenance of this property with improvements carried out if funding permits.

but made subtle aesthetic changes for a more modern interface. In recognition of the increasing trend in the use of mobile Internet, the website also responds according to the device used to access it. Our first official Owner Guide brings together the various policy documents in a friendly format. The guide is particularly helpful for the many new residents moving into Sandyport every month. The Association hosted it’s first social event in November. We believe it had the highest attendance of a single event ever held within the community. The participation was tremendous and the event was well received. As one owner put it “Sandyport is the best gated community on the Island.”

Behind the scenes

Security

We built a dedicated database to document routine maintenance inspections of common property. The database resides on our servers which we update in real time using iPads. Key personnel receive a prompt when an item is due for inspection, they report the condition and decide if it requires any action.

During late 2013 and early 2014 there had been an increase in the number of boat thefts in The Bahamas and Sandyport was a target. To better control access and egress to the Sandyport waterways we installed a new mechanized canal barrier. The operator controlled barrier opens and closes on demand allowing us to keep it closed as necessary. We added sensors to alert security of passing traffic and upgraded the CCTV systems for high-def video footage.

The website received a makeover. We retained the familiar layout

EVERYTHING LOOKS REALLY GREAT. THANKS TO ALL. ANON

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We networked the three security control points at the main, service and canal entrances to our file servers. By accessing the property database, security can review owner, tenant, vehicle and worker information. The information is live so updates are effective in real time. And we revised the procedures for registration of watercraft requiring detailed mandatory registrant information. As a result, the number of registered boats on file increased by a factor of ten. This has made our ability to police canal traffic much more effective. Our aging security vehicles received some upgrades. We replaced the SUV with a newer model and replaced two older golf carts with brand new models. The enhanced lighting on the new golf carts provide safer night time patrols. Since 2013 an external security company vets all our personnel before hiring. During 2014 we introduced a new policy requiring Licenses for all security personnel. The Ministry for National Security issued the Licenses which are subject to renewal every 6 months. With the upward trend in crime, we are taking extra precautions to keep our community safe.

Wastewater system The wastewater system received an overhaul in 2013. Further works are necessary to optimize the capacity of the system and provide more redundancy. We have deferred these pending the outcome of discussions with Water & Sewerage Corporation. Yet we made some minor improvements to the system. We installed a safety platform around the headworks (where the effluent meets the plant). This allows for safe cleaning and servicing of the screen. Also we replaced the corroded steel risers in our lift stations with heavy duty PVC risers. The risers are pipes that are part of the network of sewer lines running throughout Sandyport to the wastewater plant. The corrosion in steel pipes causes the wastewater to feed back into the system causing the pumps to work more than necessary. We operate a total of seven lift stations, each with two pumps. The pumps send wastewater from each lift station via the risers and on to the next lift station via a gravity feed. Maintaining each of the lift stations and components is critical for effective wastewater collection.

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ACCOMPLISHMENTS CONTINUED Wastewater system continued

Beach Lane

We introduced independent monthly analysis of our wastewater and potable water. The report allows us to notify Water & Sewerage Corporation of any deviations to acceptable standards. And it informs our wastewater team if they should take any action to maintain quality treated wastewater.

To determine our obligations of Beach Lane, our legal team researched the governing documents for the property. After over a year of research and liaising with representatives for Beach Lane owners, they clarified:

Recreation areas We renovated three tennis courts during the year, the two located near the main entrance and one at Governor’s Cay. All three courts received new regulation standard lighting. Governor’s Cay also received a new miniature scale basketball court complete with safety fencing. And we renovated the swimming pool by resurfacing the pool and expanding the deck with new travertine tiles. We replaced all fencing with a single picket fence around the pool which we screened with vegetation. We will complete the area with new parking spaces, curbing, playground and landscaping out of the 2014 budget. Infrastructure We commissioned a firm of structural engineers to perform an inspection of our sea wall. There are about 17,800 linear feet of sea wall of varying types in total. The engineers have classified them into 3 categories of urgency - within a year, within 3 years and over 3 years. But the engineers’ recommendation is to perform most of the works within 1-3 years. The areas most subject to flooding during the wet season received new drains. The five most affected locations were near Governor’s Cay 1 and Sandyport Drive numbers 33, 44, 158 & 183.

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• We own the common property outside of the curtilage of the buildings, except for the private parking and docks. As such maintenance of those areas is our responsibility. • The buildings, parking spaces and docks belong to the respective owners within Beach Lane. As such they, through their respective Associations, are responsible for maintenance of them. The exception is painting which falls under the scope of the License Agreement and is our responsibility. As soon as we determined which areas were our responsibility, we began to renovate them. Also the Board recommended that we renovate the docks although the maintenance responsibility is that of the owners. We completed the first phase of Beach Lane improvements which included: New walkways Replacement staircases New fences around the air conditioning units New landscaping Replacement dock lights The result is amazing.


THANK YOU FOR THE BEAUTIFICATION OF BEACH LANE……WE FINALLY LOOK LIKE PART OF SANDYPORT. GREAT JOB EVERYONE. CR

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IT’S GREAT TO LIVE IN A COMMUNITY WHERE OUR VOICES ARE HEARD. THANK YOU SANDYPORT FOR PUTTING THE DOGGIE BAGS AND CONTAINER ACROSS FROM THE MAIN POOL ON SP DRIVE. ALSO, IT’S A PLEASURE TO DRIVE AROUND SP AND VIEW THE WELL-GROOMED COMMON AREAS. JS

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LOOKING AHEAD O

ur proposed improvements are grouped into essential or optional categories. The Board reviews the improvements program and available budget to determine those that best serve the community.

Security is one of the main reasons people live in a gated community. We secure the majority of the perimeter with chain link fence. There are locations that receive special attention from criminals and would be more secure with a wall.

Essential improvements

The processed wastewater can be safe for irrigating common areas if given further treatment. We are exploring the cost to install a filtration and pumping system for this purpose. The original common irrigation lines are beyond repair so we will also need to consider the cost to replace them. We expect the cost of installing the irrigation system will be offset by a reduction in our water expense.

The wastewater treatment plant is capable of processing 80,000 gallons per day in its present configuration. We currently process about 75,000 gallons per day (gpd) which includes sewerage from Sandyport Olde Towne. We can reconfigure the plant to process it’s full capacity of 100,000 gpd by adding an equalization system. The cost is between $230,000 and $400,000 depending on the options. We estimate the need for an equalization system within 3 years and about 5 years for plant expansion. After we treat the wastewater, we return it to the water table via a deep return well. The engineer’s report recommends the addition of an extra well for redundancy. The return well is about 75% congested. A redundant well will allow us to continue disposing of the treated wastewater in the event of a failure of the existing well. The cost for this redundancy is over $100,000. We commissioned Engineering & Technical Services Ltd. to review the condition of our sea wall and canal inlet. The 17,800 linear feet of sea wall vary in condition and they recommended most of the repairs for completion within 3 years. The engineers provided a design that will end the constant infiltration of sand through the groin at the canal inlet. Dredging costs about $50,000 each year and we should make the repairs a priority to reduce the need for periodic dredging. The estimated cost to repair the canal inlet is $250,000 of which the developer should expect to make a contribution. There are shallow spots in the canal basin that are problematic during low tide. The estimated cost to remedy is $90,000 and, for the moment, is not deemed urgent. Optional improvements One tennis court remains outstanding for renovation near Roberts Isle. The neighboring property was encroaching which delayed making further plans. With the encroachment resolved, we plan to renovate the tennis court and pool areas as they are overdue. The pool area at Clipper Island is also due for renovation. The pool needs resurfacing and we plan to replace the deck at the same time. We have limited parking in the area so we will change the layout to include more parking bays.

Our roads, particularly closer to the main entrance, have deteriorated. When we resurface them, we will consider adding pedestrian walkways where possible. Also the area along the bridge from West Bay Street to our main entrance is unsafe. There is no walkway for pedestrians and it is unappealing. We may approach the government for permission to install a path, it will enhance the entrance and make it safer. We have started to renovate the bridges and added decorative details to give them a finished appearance. And we are replacing the original dock lights with solar powered LEDs. There are about 200 street lights and 70 ‘dusk to dawn’ lights around the property. We may review the lighting and consider consolidating to a single more robust and effective design. We completed the first phase of renovations in Beach Lane. Future plans include remodeling the parking area and modifying the main entrance. The main entrance plans include adding a wall to either side that projects an air of exclusivity about our community.

19% Total of direct expenses invested in improving our community (2013: 16%)

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TREASURER’S REPORT W

e completed the year ahead of budget with a modest $22,910 surplus. Our maintenance revenue increased by 1.9%, or $48,286, with total revenue increasing by $210,862 or 6.8% to $3,316,435 (2013: $3,105,573).

We introduced late payment fees in 2013, at that time about 140 accounts each month incurred the penalty. In 2014 late payment fees contributed $32,257 to our income averaging about 100 accounts, or 14%, per month.

Other services revenue rose by $87,515 or 107%. Most of this is due to a rate revision for the treatment of wastewater from Olde Towne billed to the development company (“Devco”). Devco has not yet agreed to the adjusted rate pending review. We implemented the new rate in 2013 and in the meantime Devco continues to pay the invoices at the former rate.

There was no hurricane damage and our dredging expenses for the canal inlet were lower than usual at $38,924 (2013: $62,610). Amenity expenses were higher than the previous year. Holiday decor, the social event and repairs to the amenity areas were the main contributing factors.

The underpayment of wastewater fees by Devco has affected our receivables balance which increased to $459,167 (2013: $366,827). The increase in our bad debt provision is also affected based on the current policy as set out in the note. At the turn of the year, Devco owed a total of $125,398 with a further $110,371 due from accounts which they are the owner of record. We have instructed our legal counsel to pursue them for the balances outstanding. A further $135,644 is the subject of litigation with other debtors. The court has granted an order for vacant possession enabling us to sell one of the properties to clear a $25,036 debt. We are in discussions with Water & Sewerage Corporation to determine if there are plans to connect Sandyport to a public sewer system. The outcome of those discussions may impact on the agreement between Devco and ourselves. As our wastewater plant reaches capacity, we need to plan for the demand as the community grows. If there is no short to medium term plan to connect Sandyport to a public sewer system, the treatment plant will soon need expansion. Under the terms of the agreement, it is our understanding that Devco has the obligation to carry out the expansion. The outcome of discussions with Water & Sewerage Corporation will determine the next steps in this regard.

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The waste disposal contract came to an end during the year, ending a 3 year fixed price term. We explored competitive options and renewed the contract for a further year with an upward rate revision. We also renewed the gardening contract for a further year on the same terms. We managed to continue with a lean team of 26 personnel (2013: 27). In 2010 our payroll had 64 employees but we have made these reductions without compromising service. Some positions were redundant and many contracted out. This has afforded us better cost control and greater flexibility to make improvements. And we offer competitive pay and a quality working environment for our team. We have also established a track record with our vendors for prompt payment to secure priority service and pricing. Our improvements budget was $367,500 which we were able to increase to $534,707, making it the highest spend to date. Although we invested in much needed improvements, we ended the year with $957,340 in cash, a 65% increase (2013: $578,863). Much of the increase is due to early payment of 2015 fees; owners paid 26% of 2015 maintenance fees by the end of January 2015 to take advantage of the 3% early settlement discount.


IMPROVEMENTS

29+27+258541A 1%

SEAWALL & CANAL

4%

WASTEWATER SYSTEM

5%

ROADS & LIGHTING

8%

SECURITY

29%

GOVERNOR’S CAY

$543k

25%

TENNIS COURTS

27%

BEACH LANE

BAD DEBT The policy for bad debt provision remained the same as the previous year; we provide for all balances over 360 days past due. As a result the provision for bad debts increased by $79,809 to $182,319. The Board believes this policy to be adequate as the legal basis of the license agreement supports most of the receivables.

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VAT REGISTRATION The Government advised that Homeowners’ Associations should be VAT registered. As we met the criteria for registration, we implemented VAT without incident. As registrants we are able to recover the VAT paid to our suppliers, so there is no material cost burden to the Association. But Homeowners are liable for the payment of VAT for goods and services provided by the Association.

CONGRATULATIONS TO THE BOARD ON THE ANNUAL REPORT, AND INFORMATION THEREIN WHICH IS VERY COMPREHENSIVE. THERE ARE MANY POSITIVE OPERATIONAL AND PHYSICAL IMPROVEMENTS THAT HAVE BEEN MADE, AND MUCH WORK STILL TO DO! WELL DONE IN PARTICULAR ON THE RECEIVABLES FRONT AND FINANCIAL HEALTH OF SANDYPORT .... AND THE MANAGEMENT TEAM OF COURSE. ST

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2015 FINANCIAL BUDGET

REVENUE Maintenance fees - 905,807 sq ft @ $2.75 per sq ft (389 homes, 2014 : 378) Indenture fees (109 lots, 2014 : 118) Other maintenance fees fees - 23,734 sq ft (6 under construction, 2014 : 7) Water & meters income Other services Total revenue

2014 2015 2,490,969 172,502 34,313 453,266 50,568 3,201,618

DIRECT EXPENSES Security expenses

693,536

Gardening expenses

418,834

Water & meters

397,877

Maintenance of common areas

360,272

Wastewater management Improvements

301,775 300,000

Painting expenses

173,792

Garbage removal

84,000

Total direct expenses Gross Profit

2,730,087 471,530

OPERATING EXPENSES Salaries, benefits & national insurance

246,475

Office & computer supplies

44,526

Provision for doubtful accounts

41,830

Professional fees

41,016

Rent & utilities

36,600

Telephone & communications

15,516

Insurance

10,512

Finance charges

9,081

Other expenses

2,370

Property & other taxes

1,000

Total operating expenses NET MAINTENANCE FUND

448,930 22,599

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FINANCIAL STATEMENTS Financial Statements For The Year Ended December 31, 2014 And Independent Auditors’ Report

W

e have audited the accompanying financial statements of Sandyport Homeowners Association Limited (“the Homeowners Association”), which comprise the statement of financial position as at December 31, 2014 and the related statements of maintenance fund, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards for Small and Medium-sized Entities, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Sandyport Homeowners Association Limited as at December 31, 2014 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards for Small and Medium-sized Entities.

HLB GALANIS & CO. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

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March 6, 2015


SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF FINANCIAL POSITION At December 31, 2014 (Expressed in Bahamian dollars)

ASSETS

2014

2013

Cash and cash equivalents

957,341

580,712

Accounts receivable (Note 4)

276,847

264.316

-

5,538

72,150

73,881

1,306,338

924,447

114,629

137,170

1,420,967

1,061,617

216,516

118,615

647,018

408,479

863,534

527,094

399

395

General reserve fund (Note 8)

534,124

430,593

Maintenance fund

22,910

103,535

557,433

534,523

1,420,967

1,061,617

Current Assets

Loan receivable (Note 5) Prepayments and deposits Total current assets Fixed assets, net (Note 6) TOTAL

LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES Current liabilities Accounts payable and accrued expenses Prepaid maintenance fees and deposits (Note 7) Total current liabilities

SHAREHOLDERS’ EQUITY Share capital 5,000 ordinary shares authorized at $1.00 par value, 399 (2013: 395) shares issued and outstanding

Total shareholders’ equity TOTAL

The accompanying notes form an integral part of these audited financial statements. These financial statements were approved by the board of directors and authorized for issue on March 5, 2015.

Director

Director

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF MAINTENANCE FUND For the year ended December 31, 2014 (Expressed in Bahamian dollars)

REVENUE

2014

2013

2,648,973

2,600,687

Water & meters income

453,887

400,068

Other services

169,233

81,718

Miscellaneous income

44,342

23,100

3,316,435

3,105,573

689,400

609,625

Improvements (Note 10)

543,703

406,834

Gardening expenses (Note 11)

432,158

402,894

Maintenance of common areas (Note 12)

358,535

325,710

Water and meters (Note 13)

349,865

365,336

Waste water management (Note 14)

220,163

271,891

Painting expenses (Note 15)

174,888

159,581

Garbage removal

73,500

66,000

2,842,212

2,607,871

474,223

497,702

Salaries, benefits & national insurance

222,987

210,225

Provision for doubtful accounts (Note 4)

79,809

30,444

Rent & utilities (Note 16)

36,600

36,600

Office & computer supplies

30,219

24,539

Professional fees

28,280

27,553

Telephone & communications

16,615

14,371

Depreciation (Note 6)

14,807

22,118

Finance charges

10,641

15,787

Insurance

10,355

9,722

Property & other taxes

1,000

1,000

-

1,808

Total operating expenses

451,313

394,167

NET MAINTENANCE FUND

22,910

103,535

Maintenance fees

Total revenue

DIRECT EXPENSES Security expenses (Note 9)

Total direct expenses Gross Profit

OPERATING EXPENSES

Other expenses

The accompanying notes form an integral part of these audited financial statements. 20

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY For the year ended December 31, 2014 (Expressed in Bahamian dollars) Share Capital

General Reserve Fund

Maintenance Fund

Total

Balance at December 31, 2012

357

424,826

5,805

430,988

Shares issued during the year

38

(38)

-

-

Maintenance fund distribution

-

5,805

(5,805)

-

Net maintenance fund for the year

-

-

103,535

103,535

395

430,593

103,535

534,523

Shares issued during the year

4

(4)

-

-

Maintenance fund distribution

-

103,535

(103,535)

-

Net maintenance fund for the year

-

-

22,910

22,910

399

534,124

22,910

557,433

Balance at December 31, 2013

Balance at December 31, 2014

The accompanying notes form an integral part of these audited financial statements.

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CASH FLOWS For the year ended December 31, 2014 (Expressed in Bahamian dollars)

CASH FLOWS FROM OPERATING ACTIVITIES:

2014

2013

22,910

103,535

65,640

90,438

(860)

44

79,809

30,444

167,499

224,461

(92,340)

56,279

1,731

22,490

Increase in accounts payable and accrued expenses

97,901

13,935

Increase in prepaid maintenance fees and deposits

238,539

32,980

413,330

350,145

(45,089)

(76,622)

Proceeds from disposal of fixed assets

2,850

39

Repayment of loan receivable

5,538

11,064

(36,701)

(65,519)

Net increase in cash and cash equivalents

376,629

284,626

Cash and cash equivalents, beginning of year

580,712

296,086

957,341

580,712

800

2,649

Cash in bank

936,088

557,813

Term deposit

20,453

20,250

957,341

580,712

Net maintenance fund Add non-cash transactions: Depreciation (Note 6) (Profit) loss from disposal of fixed assets Provision for doubtful accounts Operating income before working capital changes (Increase) decrease in accounts receivable Decrease in prepayments and deposits

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (Note 6)

Net cash used in investing activities

Cash and cash equivalents, end of year

Cash and cash equivalents are comprised of the following: Cash on hand

The accompanying notes form an integral part of these audited financial statements.

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2014

1. GENERAL Sandyport Management Company Limited was incorporated under the laws of The Commonwealth of the Bahamas on May 25, 1990 as a wholly owned subsidiary of Sandyport Development Company Limited (“Devco”). On September 14, 1998, the name of the Company was changed to Sandyport Homeowners Association Limited (“the Homeowners Association”) On May 21, 2008, ownership of the common areas and common infrastructure of the Sandyport residential community was transferred from Devco to the Homeowners Association. The principal activity of the Homeowners Association is to manage the Sandyport residential community in accordance with the terms of the authority granted to Devco by licences issued to each property owner defining their rights and obligations in regard to the common areas. Devco assigned the said authority under these licences to the Homeowners Association on November 3, 2009. On January 2, 2010, Devco transferred the ownership of the Homeowners Association to the property owners of the Sandyport residential community. As at December 31, 2014 the Homeowners Association had 26 employees (2013: 27).

2. BASIS OF PREPARATION These financial statements have been prepared in accordance with International Financial Reporting Standards for Small and Medium-sized Entities. The preparation of financial statements in conformity with International Financial Reporting Standards for Small and Medium-sized Entities 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 Bahamian dollar is the Homeowners Association’s measurement and reporting currency because its capital and a majority of its transactions are denominated in that currency. Foreign currency transactions are translated into Bahamian dollars at the rates of exchange prevailing at the time of the transaction.

3. SUMMARY OF ACCOUNTING POLICIES a. Cash and cash equivalents - Cash and cash equivalents include cash on hand and at bank and short term deposit which have a maturity period of less than three months. b. Accounts receivable - Accounts receivable are stated at cost less provision for doubtful accounts and any impairment losses. Management records provisions when in their opinion amounts are irrecoverable based on historical performance and solvency of the customer. c. Fixed assets - Fixed assets are stated at cost less accumulated depreciation and any impairment losses. Depreciation is calculated on the straight-line basis to write-off assets over their estimated useful lives as follows: Waste water system Maintenance equipment Computer and office equipment Security equipment

3-5 years 3 years 3 years 3 years

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014

d. Revenue recognition - Revenue is measured at the fair value of the consideration received or receivable and represents the monthly maintenance fee charged to the homeowners. This fee is based on square footage of the house on each property and owners of empty lots are charged a flat fee. e. Income and expense recognition - Income and expenses are recorded on an accrual basis of accounting. f. Impairment of assets - An assessment is made at each financial position date to determine whether there is any indication of impairment of any assets, or whether there is any indication that an impairment loss previously recognized on an asset in prior years may no longer exists, the asset’s recoverable amount is estimated. An asset’s recoverable amount is computed as the higher of the asset’s value in use or its net selling price. An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to operations in the period in which it arises unless the asset is carried at a revalued amount in which case the impairment is charged to revaluation. A previously recognized impairment is reversed only if there has been a change in the estimates used to determine the recoverable amount of the asset, however, not to an amount higher than the carrying amount that would have been determined (net of any depreciation), had no impairment loss been recognized for the asset in prior years.

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014

4. ACCOUNTS RECEIVABLE Accounts receivable is comprised as follows: 2014

2013

459,167

366,827

(182,320)

(102,511)

276,847

264,316

Balance, beginning of year

102,511

80,000

Add: provision made during the year

79,809

30,444

-

(7,933)

182,320

102,511

Current

111,140

104,801

31 to 60 days

28,857

31,102

61 to 90 days

11,988

10,426

91 to 360 days

124,862

117,516

Over 360 days

182,320

102,982

459,167

366,827

Accounts receivable Less: provision for doubtful accounts Accounts receivable, net

The movement in the provision for doubtful accounts is as follows:

Less: amounts written off during the year Balance, end of year

The ageing of receivables are as follows:

Balance, end of year

5. LOAN RECEIVABLE The Homeowners Association loaned $33,192 to Ismi Estasant on July 1, 2011 to purchase a 1998 Mack Truck for collection and disposal of garbage, refuse and yard waste. Payments of $922 are made monthly. No interest is charged on the loan unless payments are not received when due, then interest is charged at 10% per annum. The Truck is held as collateral along with a promissory note. The balance at December 31, 2014 was $ nil (2013: $5,538).

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014

6. FIXED ASSETS The movement of fixed assets during the year is as follows:

Waste Water System

Maintenance Equipment

Computer & Office Equipment

Security Equipment

Total

170,562

12,085

67,996

32,871

283,484

Additions

70,841

-

2,388

3,393

76,622

Disposals

(27,727)

-

(500)

-

(28,227)

Balance at December 31, 2013

213,676

12,085

69,854

36,264

331,879

23,538

1,698

(2,939)

22,792

45,089

-

(2,875)

-

(5,000)

(7,875)

237,214

10,908

66,915

54,056

369,093

100,500

2,366

12,851

16,698

132,415

54,983

4,028

22,118

9,309

90,348

Disposals

(27,727)

-

(417)

-

(28,144)

Balance at December 31, 2013

127,756

6,394

34,552

26,007

194,709

Depreciation

41,236

4,353

14,807

5,244

65,640

-

(1,579)

-

(4,306)

(5,885)

168,992

9,168

49,359

26,945

254,464

As at December 31, 2014

68,222

1,740

17,556

27,111

114,629

As at December 31, 2013

85,920

5,691

35,302

10,257

137,170

COST Balance at December 31, 2012

Additions/Transfer Disposals Balance at December 31, 2014

ACCUMULATED DEPRECIATION Balance at December 31, 2012 Depreciation

Disposals Balance at December 31, 2014

CARRYING VALUE

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014

7. PREPAID MAINTENANCE FEES AND DEPOSITS Prepaid maintenance fees and deposits are as follows: 2014

2013

Advance payments

550,018

311,728

Water deposits

97,000

96,751

647,018

408,479

2014

2013

Wages

402,810

406,745

Service contract

205,437

151,662

Security maintenance

54,487

22,716

Supplies

20,328

17,448

Depreciation (Note 6)

5,244

9,309

Uniforms

1,094

845

-

900

689,400

609,625

2014

2013

Governor’s Cay - Recreation Area

159,484

-

Beach Lane Common Area

148,296

-

Tennis courts

133,359

-

Security

46,093

20,148

Other

34,739

88,265

Wastewater system

21,732

173,962

-

124,459

543,703

406,834

Total

8. GENERAL RESERVE FUND This amount represents a reserve established to provide for future contingencies.

9. SECURITY EXPENSES

Other Total

10. IMPROVEMENTS

Sandyport Drive - Recreation Area Total

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014

11. GARDENING EXPENSES 2014

2013

366,000

366,000

Extermination

36,882

36,459

Garden supplies

24,667

-

Miscellaneous

4,609

435

432,158

402,894

2014

2013

Utilities

137,565

139,031

Wages

77,645

71,624

51,178

14,705

Dredging

38,925

62,610

Swimming pool

28,097

17,653

Contract service

8,253

1,600

Cleaning repairs

7,250

6,455

Roads and lights

5,269

7,749

Depreciation of equipment (Note 6)

4,353

4,028

-

255

358,535

325,710

2014

2013

346,428

362,765

3,437

2,571

349,865

365,336

Contract services

Total

12. MAINTENANCE OF COMMON AREAS

Supplies and tools

Equipment rental and tools Total

13. WATER AND METERS Water Water meters Total

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014

14. WASTE WATER MANAGEMENT 2014

2013

Wages

75,866

77,313

Materials

43,651

51,152

Services

43,468

44,721

Depreciation (Note 6)

41,236

54,983

Repairs and maintenance

15,942

43,722

220,163

271,891

2014

2013

110,000

94,753

64,888

64,828

174,888

159,581

Total

15. PAINTING EXPENSES Painting contractors Paint and supplies Total

16. RENT AND UTILITIES The Homeowners Association rents office space from Artech Bahamas Ltd. at $36,600 per annum, inclusive of electricity and water. The lease expires on August 31, 2015 with an option to renew for a further 2 years.

17. CONTINGENT LIABILITIES Following an evaluation of the wastewater treatment system in 2012, Harris Civil Engineers recommended a series of improvements and repairs. Certain of the work was completed by the end of 2014 and it is estimated that completion of the remaining will require an expenditure of $430,000. The Board believes that the recommended work can be completed out of budgeted income streams but will consider the need for a special assessment should this become necessary. In addition, the wastewater system is almost at its operational capacity: the preliminary budget to expand the capacity to meet anticipated future requirements is $1 million. Under the terms of an Agreement dated November 3, 2009, the cost of such expansion will be borne by the developer, Sandyport Development Company Limited. The Board continues to explore alternative cost effective and production solutions to this issue.

29


SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014

18. FINANCIAL RISK MANAGEMENT The Homeowners Association is exposed to a variety of risks including liquidity risk, credit risk, interest rate risk and capital risk management arising in the normal course of the Homeowners Association’s business activities. The Homeowners Association does not have any written risk management policies and guidelines. Management monitors the financial risks of the Homeowners Association and takes such measures as considered necessary from time to time to minimize such financial risks. LIQUIDITY RISK - Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. Prudent liquidity risk management implies maintaining sufficient cash. The Homeowners Association monitors and maintains a level of bank balances deemed adequate to finance its operations. The Homeowners Association deposits cash with financial institutions of good standing. CREDIT RISK – Credit risk arises from the possibility that customers may not be able to settle obligations within the normal terms of transactions. The Homeowners Association performs ongoing credit evaluation of the debtors’ financial condition and maintains an account for allowance for doubtful trade and other accounts receivable based upon the expected collectibles of all trade and other accounts receivable. The Homeowners Association has no significant concentration of credit risks with any single counterparty or group counterparties. INTEREST RATE RISK – Cash flow interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rate. Demand deposits and term deposits are the only significant interest bearing assets and liabilities. Accordingly, the Homeowners Association’s income and operating cash flow are substantially independent of changes in market interest rates. CAPITAL RISK MANAGEMENT – The Homeowners Association manages their capital to ensure that they will be able to continue as going concern while maximizing the return to homeowners through the optimization of the debts and equity balance. The Homeowners Association’s overall strategy remains unchanged from 2010. The Capital structure of the Homeowners Association consists of debt, cash and equity attributable to equity holders comprising of share capital, general reserve fund and maintenance fund.

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Auditors: HLB Galanis & Co. 7 North Buckner Square Olde Towne, Sandyport P. O. Box N-3205 Nassau, The Bahamas Tel: (242) 327-0689 Fax: (242) 327-0696 Web: www.hlbgalanis.com Legal Advisors: Kahlil D. Parker Cedric L. Parker & Co. Chambers No.9 Rusty Bethel Drive P.O. Box N-1953 Nassau, The Bahamas Tel: (242) 322-4954/5 Fax: (242) 328-3706 Email: kdp@parkerslaw.net Consulting Architects: Alberto G. Suighi Artech Bahamas Ltd. Lagoon Court Nassau, The Bahamas Tel: (242) 327-2335 Fax: (242) 327-2337 Web: www.artechbahamas.com Bankers: CIBC First Caribbean Sandyport Branch Nassau, The Bahamas P.O. Box N-8350 / N-7125 Tel: (242) 327-8364 / 327-4957 Fax: (242) 327-4955 Account: 200-167527 Web: www.cibcfirstcaribbeanbank.com Scotiabank Cable Beach P.O Box N-7518 Tel: (242) 702-8100 Fax: (242) 327-5728 Nassau, The Bahamas Account: 70045-72613 Web: www.bahamas.scotiabank.com Insurance Agents: Tavares & Higgs Blake Road P. O. Box SP-64003 Nassau, The Bahamas Tel: (242) 327-8606 Fax: (242) 327-8607 Email: stavares@tavareshiggs.com


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Profile for Sandyport Management

Sandyport 2014 Annual Report  

The 2014 Annual Report of the Sandyport Homeowners Association Ltd.

Sandyport 2014 Annual Report  

The 2014 Annual Report of the Sandyport Homeowners Association Ltd.

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