ANNUAL REPORT 2015
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www.sandyport.management Serving our community
A NOTE FROM THE CHAIRMAN
CONTENTS A NOTE FROM THE CHAIRMAN
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BOARD OF DIRECTORS
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MANAGEMENT TEAM
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COMPLETED IN 2015
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PROJECTS UNDER REVIEW
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TREASURER’S REPORT
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2016 FINANCIAL BUDGET
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FINANCIAL STATEMENTS
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PROFESSIONAL ADVISORS
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It is my pleasure to present this Annual Report for the year ending December 2015 to our shareholders. It was a challenging year for the country with high crime rates and continued economic uncertainty. But your Homeowners Association performed well with no major security incidents. It’s finances are also healthy despite a 4.5% deficit for the year. In previous years we accumulated a reserve by maintaining financial prudence. This has allowed us to fund the deficit without increasing the maintenance assessment. At our 2014 Annual General Meeting Eddie Gardner was re-elected together with myself. Two replacement Directors were also elected, Constantinos Berdanis and Scott Farrington (Secretary). Both had served on our Board in previous rotations. Steve Roberts and Monique Cartwright concluded their two years of service. Bruce Knowles took over as the Treasurer. He continues his service together with Tony Miaoulis and MichÊle Rassin-Moodie. Directors volunteer their time for the benefit of the community. Oftentimes they deal with difficult decisions and situations. On behalf of the shareholders I thank the Directors for their dedication and service. Our Committees provide support and guidance to the Board. The members of the Audit & Finance and Architectural & Landscaping Committees are volunteers. Like the Directors they contribute their time for the benefit of the community. I extend our thanks to the various committee members for their contributions. The dynamics have shifted in our community over the years. We have noticed more Bahamians are enjoying life in Sandyport. Tastes are changing as are the demands of living in our current economic climate. Requests for generator and solar installations are becoming standard. Owners sometimes wish to build a feature or home that falls outside of the Sandyport specification. Whilst we are bound by the design intent as set out in the Restrictive Covenants, we understand that things change. To address this, we released a new revision of our Architectural Guidelines. They provide greater clarity and maintain the integrity of the Sandyport design. We have done our best to address the most common unusual features in this revision. During the year, we carried out some of the improvements we committed to. We installed 593 linear feet of wall along the eastern perimeter for security purposes. And we completed the renovations of the amenity area near Roberts Isle. This large project included the renovation of the tennis court, pool and landscaping. We also added a new restroom facility. We had planned our social event with the official reopening of the area. Unfortunately the weather did not co-operate and we cancelled the event. In short we closed the year with a better community, a strong balance sheet and with no increase to our maintenance fees. On behalf of the Board of Directors
Robert Sands Chairman 3
“VAST IMPROVEMENT AND THANK YOU VERY MUCH.”
SF
BOARD OF DIRECTORS
Robert Sands Chairman
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Bruce Knowles Treasurer
Michéle Moodie Director
Eddie Gardner Director
Scott Farrington Secretary
Kosta Berdanis Director
Tony Miaoulis Director
MANAGEMENT TEAM
Orpheus Ingraham Maintenance
Sarah Barton Security Services
Ronella Francis Assistant Manager
Charles Cooper Water/Sewerage
Kayla Lightbourne Accounts Clerk
Perlissa Munroe Accountant
Simon Cooper General Manager
“AS ALWAYS, SERVICE WAS SWIFT AND SWEET. IT’S A PLEASURE TO SEE HOW TEAMWORK REALLY WORKS. EXCELLENT SERVICE!!” CB 5
“VERY GOOD SERVICE AND VERY QUICK. MANY THANKS FOR THE GOOD WORK!” ML
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COMPLETED IN 2015
Amenity areas In 2014 we carried out a major renovation of the Governor’s Cay recreation area. We completed outstanding work early 2015 including parking, curbing, feature wall, playground and landscaping. The area has been completely transformed. We installed safety railings and a disabled ramp to the gazebo in phase 5, for safety reasons. In the neighbouring recreation area, we added disc golf practice baskets. Some residents had no idea what they were, now you know! The renovation of the recreation area next to Roberts Isle was our largest project of the year. We expanded the pool deck, renovated the pool and replaced the pool fence. On the land we reclaimed between the tennis courts and Sandyport Drive 158, we built a path. The path provides access to a new expanded deck overlooking the canal. The tennis court was also renovated with a new surface, fencing and lighting. We added new pathways and fencing, increased lighting and refreshed the landscaping. The playground and parking lot received new curbing and a new restroom was also added.
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COMPLETED IN 2015 CONTINUED Roads We improved road safety in a few areas. In Royal Palm Cay we widened the road and added landscaping and curbing. This provides a natural barrier between the road and canal. Along the two curves on Sandyport Drive south, we installed rumble strips, reflectors and road markings. One of the curves is situate near the school entrance. Many of the bridges leading from Sandyport Drive into the various islands appeared unfinished. We rendered them and added a detail for a consistent, finished look.
Security We foiled several attempts to enter the property through the fence on the Eastern side in 2015. This area has little traffic and lighting on the outside of the perimeter. Intruders may consider the area a good point of entry without detection.
Despite budget constraints, we believed it was necessary to secure this vulnerability. We replaced almost 600 linear feet of chain link fence with a new wall. We also replaced the fence that borders with the school as it was in a poor state of repair and posed a security risk. Our golf cart fleet received a new replacement, 3 out of the 5 carts in service are less than 2 years old. Installed high intensity law enforcement hazard warning strobe lights increase visibility at night.
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“I OWN IN POINCIANA CAY AND AM OVER FOR THE WEEK FROM LONDON. SINCE MY LAST VISIT A YEAR AGO, I WOULD LIKE TO SAY HOW GREAT SANDYPORT LOOKS. THE LANDSCAPING, BOUNDARY WALL AND NEW BUILDS ARE A GREAT IMPROVEMENT AND IN GENERAL PHASE 5 HAS COME ON LEAPS AND BOUNDS. I JUST WANTED TO THANK YOU AND THE COMMITTEE FOR A SUPER JOB.” MF 9
PROJECTS UNDER REVIEW Canal
Wastewater System
The cost to dredge the canal inlet has continued to climb and now averages $6,300 per month. According to our engineers, sand infiltrates through boulders that make up the groin. In 2014 we applied for a permit to perform the repairs by installing a barrier inside the groin. Preliminary estimates to carry out the repairs are $250,000. We recently received approval to proceed with the work.
We are in discussions with Water & Sewerage Corporation to determine if they can treat our wastewater. They have indicated that there are no plans to install the necessary infrastructure. They have prepared a request for a proposal (RFP) to conduct an engineering review. We are at the review stage and have not approved the RFP yet.
The canal basin needs dredging to address the low spots and clear any debris that has accumulated. The cost of the exercise is approximately $90,000.
If it is not possible to connect to a government facility, we plan to increase the plant capacity as the community grows. Since we process wastewater from Sandyport Olde Towne, we must also factor in it’s growth.
There are 17,800 linear feet of seawall that we are responsible for maintaining. Conditions vary but in 2014 engineers recommended completing most repairs within 3 years. To the best of our knowledge, there are no sections of sea wall that are unsafe at the present time.
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The wastewater system has a capacity of 100,000 gallon per day, assuming a steady flow. Our wastewater peaks twice daily and to compensate for the surges, experts rate the system at 80,000 gpd capacity. We average about 76,000 gpd production. The cost
to expand the plant is about $1 million to handle the completed development. Under the terms of an Agreement dated November 3, 2009, the expansion cost will be borne by Sandyport Development Company Ltd. An interim solution to increase plant capacity involves adding a surge tank. This equalizes the flow and allows the plant to operate at full capacity. The cost for such a system is between $230,000 and $400,000. At the present time the wastewater system is in good condition and performing well. The level of total dissolved solids (TDS) impacts on system performance. This is the presence of salt water and indicative of breaches in the collection system. Levels have been increasing and we expect the trend to continue. High TDS levels harm the bacteria and can cause the system to go septic. Once the system is septic it can result in an unpleasant odour until we are able to restore the proper balance. Reducing the TDS levels will reduce the likelihood
of septicity. The cost for engineers to investigate the source of the breaches is $30,000. This does not include the repairs requiring specialized treatment. A deodorizing system costs $24,000 and can mask odour levels. But it is our preference to operate the wastewater system to the standard that it is free of odour. This is only possible with proper maintenance which, in part, addresses the TDS infiltration. We send treated wastewater into the ground via a deep well. The well depth was 400’ but has reduced over time to 75’. Engineers have recommended drilling a redundant well. If the existing well fails, the wastewater has nowhere to go. A new well costs $110,000. A use for the treated wastewater is for common area irrigation. The wastewater requires further treatment before it is suitable for this purpose. The cost to install a filtration system together with main irrigation lines is $170,000.
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PROJECTS UNDER REVIEW CONTINUED
Amenity Areas The pool area located at Clipper Island is the last of those in need of renovation. The plans for the area include expanding the deck in a similar style to that at Roberts Isle. Rearranging the garbage enclosure and pool pump house adds 2 new parking spaces. A new landscaping scheme will complete the renovation. The areas next to the new fence along the school boundary and eastern wall will receive a new landscaping scheme and extra parking spaces. Parking spaces are also planned along Sandyport Drive in front of The Arches townhouses.
Main Entrance We completed the first phase of improvements at Beach Lane in 2014. A new design for the area increases parking capacity. A wall will replace the chain link fence and extend to the security booth. The wall will continue on the western side of the main entrance. We will further improve the main entrance with a new building that offers storage and a waiting area. A new path leads from the building to a new lay-by that will function as a bus stop and acceleration lane. The path extends from the western side of the property to the brow of the bridge. These improvements will improve security and also enhance the appearance of the entrance.
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Other Improvements Under Consideration We have CCTV coverage in key areas that can expand with the installation of a wide area network. A wireless network provides flexibility to install cameras anywhere within the network area. This will offer the potential to provide coverage at all choke points. Worn roads need resurfacing and we would like to add walkways, where possible. We are also considering upgrading the street lighting for better visibility. We are also considering building an office and / or clubhouse near the phase 5 pool area. The cost of building a new office will be offset by the savings in rent.
“THE RESPONSE AS ALWAYS WAS EXCELLENT” DH
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TREASURER’S REPORT Expenses We concluded the year with a deficit of $152,767 compared to a small surplus for the previous year. Revenue growth was modest at 1.8% and costs have generally increased. We have continued to fund improvements from our maintenance budget, where finances have permitted. The growth in revenue is in line with the growth of the community, with 6 new homes added during the year. Revenue exceeded budget by $172,831. We funded the deficit from the special reserve account, without a maintenance fee increase. Direct expenses exceeded budget by $265,505 of which $188,223 is improvements. We invested $488,223 in improvements including $136,312 spent securing our perimeter. This involved addition a new wall to the east and a replacement fence around the school perimeter.
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Maintenance expenses exceeded budget by $68,131. Dredging that was necessary in the year cost an extra $29,499. The remaining excess was for overdue repairs to amenity areas. We increased security during the year and spent a notable $19,818 on project security. During the construction of the new wall we added security personnel in the area. The depreciation charge increased arising from investment in equipment, in particular golf carts. We also experienced general increases in the cost of security personnel. The management office lease expired in September. We renewed the lease for a further two years with a small increase of $1,200 per annum.
Receivables
Sandyport Development Company (SDCL)
The number of accounts that incurred late fees during the year dropped from an average of 107 per month in 2014 to 78. In line with previous years, the value of accounts that settled maintenance early and qualified for the settlement discount was 26% of the total assessed area, or approximately one in four owners.
Year end balance
Our policy for the provision of doubtful debts assumes all balances unpaid 360 days past the due date. In 2015 this provision increased by $158,052 bringing the total to $340,372. We publish the current list of delinquent accounts on the website monthly. The debtors with balances over $20,000 at the year end are as follows:
$254,234
Sandyport Homeowners Association Limited (SHAL) is still in a dispute with SDCL over the interpretation and application of a certain covenant contained within the ‘handover’ indenture made between SDCL and SHAL on 21st May, 2008. The covenant provides for SHAL to maintain the sewerage plant of Sandyport in good operating condition and for SDCL to pay to SHAL a proportion of the reasonable direct costs without overhead of the maintenance and repair and replacement of the sewerage plant.
“QUALITY OF SUPPORT WAS VERY GOOD. I RECEIVED A RESPONSE WITHIN A FEW MINUTES.” JP 15
“THE GARDENING TEAM IS ALWAYS VERY QUICK TO RESPOND AND GET THE ISSUE TAKEN CARE OF. KUDOS.” SR
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TREASURER’S REPORT CONTINUED Specifically, is a disagreement over what costs ought to be included in determining how much ought to be paid by SDCL to SHAL. In an effort to resolve the matter without recourse to litigation, SHAL gave representatives of SDCL the opportunity to inspect the supporting records and documents relating to the costs of maintaining and operating the sewerage plant. Following the inspection, on 19th January 2016, SDCL made a proposal to SHAL for settlement of the dispute. SHAL and SDCL are in discussions to settle the dispute. SDCL continues to maintain they are not the legal owners of the delinquent lots totalling $103,526. Our legal team is conducting a search to verify the accuracy of the representations made by SDCL and ascertain the identity of the current legal owner(s) of the delinquent lots. Governors Cay 33 & 34 Year end balance $46,647 The owner of both properties is withholding payment based on a claim his law practice has brought against the Association for alleged legal expenses, which were not authorized. Several judges have recused themselves from this matter for a variety of reasons, principally involving conduct on the part of, or allegations made by, the owner, and as a result there have been delays getting the matter to trial. However, the matter has resumed and we are working toward a timely resolution. Royal Palm Cay 23 Year end balance $44,424 There are two legal matters in relation to this property. The owner is delinquent with respect to the outstanding Association fees and has not satisfied the requirements to continue construction on the property. At trial the construction matter was ruled in favour of the owner however following an extensive appeal process, the ruling was overturned and the matter has now been returned to the Supreme Court for conclusion. In the meantime the Association has secured an injunction against the owner preventing any further construction activity. Sandyport Drive 124 Year end balance $27,053 The balance on this account has been disputed by the owner on two grounds. The method used to calculate the assessed area of the 17
TREASURER’S REPORT CONTINUED homes has been challenged on the basis that it is not consistent with the building code. The second argument relates to maintenance fees that were backdated to the occupancy date on record. The matters are ongoing.
Funds that are not used in the short term are held in an interest bearing 30 day term deposit account.
Beach Lane 5
The number of personnel on our payroll remained stable with 27 employees. The waste disposal contract expired in July 2015. Services are ongoing with the same contractor by mutual agreement at the rate agreed in 2014. We renewed the gardening contract at the rate agreed in 2014. Instead of an increase, we agreed to a variation in the contract, with the removal of project labour. There were no hurricane related expenses during the year.
Year end balance $26,771 In August 2015 the Association took vacant possession of the unit by way of an order of the court with a view to selling it. However, the owner of record broke into the property with the assistance of the Royal Bahamas Police Force and has continued his trespass to the unit, preventing us from marketing the unit. In the meantime new actions have been brought against the owner of record, and we are actively pursuing the owner and the Commissioner of Police with respect to this contempt of court.
Cash Cash on hand reduced by $364,794 during the year. Gross margin lowered, advance payments decreased by $68,215 and accounts receivables increased by $245,064.
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General notes
We applied unique serial numbers to every water meter installation. A new billing platform provides more detailed information about the meter consumption. The platform helps to reduce read errors and improve operational efficiency. Vacant lots are subject to an annual indenture charge subject to review every 5 years. The next revision is in fiscal year 2016 and adjusted according to a formula determined by the conveyance.
2016 FINANCIAL BUDGET REVENUE Maintenance fees - 921,383 sq ft @ $2.75 per sq ft (394 homes, 2015 : 389)
2014 2016 Budget 2,533,803
Indenture fees (103 lots, 2015 : 109)
177,795
Other maintenance fees - 22,792 sq ft (7 under construction, 2015 : 6)
52,104
Water & meters income
453,887
Other services
8,235
Total revenue
3,225,824
DIRECT EXPENSES Security expenses
794,222
Gardening expenses
432,158
Maintenance of common areas
426,824
Water & meters
407,685
Waste water management
301,775
Painting expenses
206,145
Improvements Garbage removal Total direct expenses Gross Profit
150,000 84,000 2,802,809 423,015
OPERATING EXPENSES Salaries, benefits & NI
246,476
Office & computer
45,026
Professional fees
41,016
Rent and utilities
37,800
Telephone & communications Insurance
16,615 11,171
Finance charges
10,355
Other expense
2,371
Property & other taxes Total operating expenses NET MAINTENANCE FUND
1,000 411,830 11,185
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FINANCIAL STATEMENTS Financial Statements For The Year Ended December 31, 2015 And Independent Auditors’ Report
We 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, 2015 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.
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, 2015 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 statements. The procedures selected depend on the auditor’s
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March 16, 2016 Nassau, Bahamas
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF FINANCIAL POSITION At December 31, 2015 (Expressed in Bahamian dollars)
ASSETS
2015
2014
629,924
957,341
297,145
276,847
86,121
72,150
1,013,190
1,306,338
77,343
114,629
1,090,533
1,420,967
93,198
216,516
592,669
647,018
685,867
863,534
409
399
General reserve fund (Note 7)
557,024
534,124
Maintenance fund (deficit)
(152,767)
22,910
Total shareholders’ equity
404,666
557,433
1,090,533
1,420,967
Current Assets Cash and cash equivalents Accounts receivable (Note 4) Prepayments and deposits Total current assets Fixed assets, net (Note 5) TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES Current Liabilities Accounts payable and accrued expenses Prepaid maintenance fees and deposits (Note 6) Total current liabilities
SHAREHOLDERS’ EQUITY Share capital 5,000 ordinary shares authorized at $1.00 par value, 409 (2014:399) shares issued and outstanding
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
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 issuance on March 16, 2016.
Director Director
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF MAINTENANCE FUND For the year ended December 31, 2015 (Expressed in Bahamian dollars)
REVENUE
2015
2014
2,689,683
2,648,973
Water & meters income
499,016
453,887
Other services
150,329
169,233
35,242
44,342
3,374,450
3,316,435
Security expenses (Note 8)
750,984
689,400
Improvements (Note 9)
488,223
543,703
Gardening expenses (Note 10)
428,328
432,158
Maintenance of common areas (Note 11)
428,405
358,535
Water and meters (Note 12)
386,772
349,865
Waste water management (Note 13)
242,213
220,163
Painting expenses (Note 14)
186,668
174,888
Garbage removal
84,000
73,500
2,995,593
2,842,212
378,857
474,223
Salaries, benefits & national insurance
232,779
222,987
Provision for doubtful accounts (Note 4)
158,052
79,809
Rent & utilities (Note 15)
37,100
36,600
Office & computer supplies
17,564
30,219
Professional fees
33,543
28,280
Telephone & communications
15,602
16,615
Depreciation (Note 5)
14,191
14,807
Finance charges
11,895
10,641
Insurance
9,895
10,355
Property & other taxes
1,000
1,000
531,624
451,313
(152,767)
22,910
Maintenance fees
Miscellaneous income Total revenue
DIRECT EXPENSES
Total direct expenses GROSS PROFIT
OPERATING EXPENSES
Total operating expenses NET MAINTENANCE FUND (DEFICIT)
The accompanying notes form an integral part of these audited financial statements.
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY For the year ended December 31, 2015 (Expressed in Bahamian dollars)
Share Capital
General Reserve Fund
Maintenance Fund
Total
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
Balance at December 31, 2014
399
534,124
22,910
557,433
Shares issued during the year
10
(10)
-
-
Maintenance fund distribution
-
22,910
(22,910)
-
Net maintenance fund (deficit) for the year
-
-
(152,767)
(152,767)
409
557,024
(152,767)
404,666
Balance at December 31, 2013
Balance at December 31, 2015
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, 2015 (Expressed in Bahamian dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
2015
2014
(152,767)
22,910
60,494
65,640
-
(860)
158,052
79,809
65,779
167,499
(178,350)
(92,340)
(13,971)
1,731
(Decrease) / Increase in accounts payable and accrued expenses
(123,318)
97,901
(Decrease) / Increase in prepaid maintenance fees and deposits
(54,349)
238,539
(304,209)
413,330
(23,208)
(45,089)
Proceeds from disposal of fixed assets
-
2,850
Repayment of loan receivable
-
5,538
(23,208)
(36,701)
(327,417)
376,629
957,341
580,712
629,924
957,341
800
800
Cash in bank
357,565
936,088
Term deposit
271,559
20,453
629,924
957,341
Net maintenance fund (deficit) Add non-cash transactions: Depreciation (Note 5) (Profit) from disposal of fixed assets Provision for doubtful accounts Operating income before working capital changes (Increase) in accounts receivable Decrease / (Increase) in prepayments and deposits
Net cash (used in) provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (Note 5)
Net cash used in investing activities
Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents, beginning of year 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, 2015 (Expressed in Bahamian dollars)
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, 2015 the Homeowners Association had 27 employees (2014: 26).
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.
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2015 (Expressed in Bahamian dollars)
3. SUMMARY OF ACCOUNTING POLICIES Significant accounting policies adopted in the preparation of these financial statements are as follows: a. Cash and cash equivalents - Cash and cash equivalents include cash on hand and at bank and short term deposits 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. The provision for doubtful accounts policy is based on accounts that are 360 days old and remains unpaid. 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
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. Improvements – These are various projects that are undertaken for the improvement of common areas. These projects are additions and modifications to existing infrastructure within the community. The costs associated with these projects are expensed in the period incurred, but is accounted for on the accrual basis for projects not completed within the fiscal year. Improvements are itemized separately and by project for clarity. g. 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. h. Related party transactions - Related parties include members of the board who are also homeowners.
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2015 (Expressed in Bahamian dollars)
4. ACCOUNTS RECEIVABLE Accounts receivable is comprised as follows: 2015
2014
637,517
459,167
(340,372)
(182,320)
297,145
276,847
Balance, beginning of year
182,320
102,511
Add: provision made during the year
158,052
79,809
-
-
340,372
182,320
46,074
111,140
31 to 60 days
52,358
28,857
61 to 90 days
46,238
11,988
91 to 360 days
152,475
124,862
Over 360 days
340,372
182,320
637,517
459,167
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 aging of receivables are as follows: Current
Balance, end of year
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2015 (Expressed in Bahamian dollars)
5. FIXED ASSETS The movement of fixed assets during the year is as follows:
Waste Water System
Maintenance Equipment
Computer & Office Equipment
Security Equipment
Total
213,676
12,085
69,854
36,264
331,879
Additions
23,538
1,698
(2,939)
22,792
45,089
Disposals
-
(2,875)
-
(5,000)
(7,875)
237,214
10,908
66,915
54,056
369,093
Additions
657
249
-
22,302
23,208
Disposals
-
-
-
(5,339)
(5,339)
237,871
11,157
66,915
71,019
386,962
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
30,251
1,345
14,191
14,707
60,494
-
-
-
((5,339)
(5,339)
199,243
10,513
63,550
36,313
309,619
As at December 31, 2015
38,628
644
3,365
34,706
77,343
As at December 31, 2014
68,222
1,740
17,556
27,111
114,629
2015
2014
30,251
41,236
Maintenance equipment (Note 11)
1,345
4,353
Computer and office equipment
14,191
14,807
14,707
5,244
60,494
65,640
COST Balance at December 31, 2013
Balance at December 31, 2014
Balance at December 31, 2015
ACCUMULATED DEPRECIATION
Disposals Balance at December 31, 2014 Depreciation Disposals Balance at December 31, 2015
CARRYING VALUE
Depreciation expense by functional categories is as follows:
Waste water management (Note 13)
Security equipment (Note 8) Total
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2015 (Expressed in Bahamian dollars)
6. PREPAID MAINTENANCE FEES AND DEPOSITS Prepaid maintenance fees and deposits are as follows: 2015
2014
Advance payments
494,169
550,018
Water deposits
98,500
97,000
592,669
647,018
2015
2014
Wages
408,763
402,810
Service contract
262,282
205,437
34,137
54,487
29,630
20,328
14,707
5,244
1,465
1,094
750,984
689,400
Total
7. GENERAL RESERVE FUND This amount represents a reserve established to provide for future contingencies.
8. SECURITY EXPENSES Security expenses are as follows:
Security maintenance Supplies Depreciation (Note 5) Uniforms Total
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2015 (Expressed in Bahamian dollars)
9. IMPROVEMENTS During the fiscal year, there were key projects undertaken which included improvement to Robert Isle and erection of the Eastern Perimeter Wall. Overall improvement expenses are as follows: 2015
2014
239,499
-
Eastern Perimeter Wall
112,164
-
Other
54,870
34,739
Beach Lane Common Area
33,680
148,296
Governor’s Cay – Recreation Area
23,861
159,484
Fencing
24,149
-
Tennis courts
-
133,359
Security
-
46,093
Waste water system
-
21,732
488,223
543,703
2015
2014
366,000
366,000
48,567
36,882
7,173
24,667
6,588
4,609
428,328
432,158
Roberts Isle
Total
10. GARDENING EXPENSES Gardening expenses are as follows:
Contract services Extermination Garden supplies Miscellaneous Total
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2015 (Expressed in Bahamian dollars)
11. MAINTENANCE OF COMMON AREAS The expenses associated with the maintenance of common areas are as follows: 2015
2014
Utilities
114,899
137,565
Wages
85,098
77,645
Supplies and tools
83,770
51,178
Dredging
68,424
38,925
Swimming pool
39,295
28,097
Roads and lights
25,661
5,269
Contract service
6,313
8,253
Cleaning repairs
3,600
7,250
1,345
4,353
428,405
358,535
2015
2014
382,930
346,428
3,842
3,437
386,772
349,865
Depreciation of equipment (Note 5) Total
12. WATER AND METERS Water and meters expenses are as follows:
Water Water meters Total
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2015 (Expressed in Bahamian dollars)
13. WASTE WATER MANAGEMENT Waste water management expenses are as follows: 2015
2014
Wages
66,668
75,866
Materials
61,463
43,651
Services
48,998
43,468
Repairs and maintenance
34,833
15,942
Depreciation (Note 5)
30,251
41,236
242,213
220,163
2015
2014
Painting contractors
110,411
110,000
Paint and supplies
76,257
64,888
186,668
174,888
Total
14. PAINTING EXPENSES Painting expenses are as follows:
Total
15. 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 expired on August 31, 2015 with the option to renew for a further 2 years. The Association exercised the option at an agreed rent of $37,800 per annum.
16. CONTINGENT LIABILITIES Following an evaluation of the waste water 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 work 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 waste water 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 (Devco). The Board continues to explore alternative cost effective and productive solutions to this issue.
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2015 (Expressed in Bahamian dollars)
17. 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 its capital to ensure that it will be able to continue as a going concern while maximizing the return to homeowners through the optimization of the debt 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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PROFESSIONAL ADVISORS
Auditors:
Bankers:
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
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
Legal Advisors:
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
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 Robert K. Adams Graham Thompson Star General Insurance Building 2nd Floor P O Box F-42451 Freeport Grand Bahama, The Bahamas Tel: (242) 351-7474 Email: rka@gtclaw.com Web: www.grahamthompson.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
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
Photography: www.marionixon.com
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