Sandyport 2016 Annual Report

S

2016 ANNUAL REPORT SANDYPORT HOMEOWNERS ASSOCIATION LTD.

www.sandyport.management

2016 was another busy year for your Association, made more challenging with the arrival of hurricane Matthew. In spite of extensive damage and expense, we were able to prepare in time for holiday celebrations. Our third annual social event was a great success and it was my pleasure to receive so much positive feedback from fellow owners.

This Annual Report details some of the improvements that we performed in the year. There are always upgrades and

FROM THE

remedial works in the pipeline that the Board reviews and prioritizes. At the 2016 AGM we discussed the possibility of making a special assessment to fund repairs to the canal inlet. The cost of clearing the inlet has risen over the years.

CHAIRMAN

Boaters were also inconvenienced whenever the inlet

ROBERT SANDS

fundraising exercise to a vote. We determined that if 50% +

Chairman since 2012

1 vote of the members agreed to the proposal, that it would

Sandyport Homeowners

proceed. We also agreed that a no vote constituted a vote

Association Ltd.

in favor of the proposal. Of the votes received, 49.8% had

was impassable. The Directors have the authority to issue assessments as needed, but we felt we should get your input. The members attending the AGM agreed to put the

no objection. There were 311 non-votes, bringing the total in favor to 81%. Whilst this was enough support to proceed, we decided against issuing the assessment. The high number of non-votes together with an almost even split amongst the voters suggested support was weak.

IMPROVEMENTS Nonetheless, we took the decision to defer most projects and make the canal inlet repairs a priority. Our most pessimistic projection indicated it was worth doing if it saved 50% of the cost of dredging. Since the work was complete, we have experienced severe weather, including hurricane Matthew.

The effectiveness of the repairs has exceeded even our most

I thank my fellow Directors for their devotion over this

pessimistic projections. We expect a return on the $175,000

past year. On behalf of the Association we also thank the

investment within 3-5 years. Add to that the inconvenience

members of the Landscaping & Architectural and Audit &

we have spared boaters, it seems we made the right decision.

Finance Committees. Like the Directors, they have brought

POLICY REVIEWS The extreme weather caused us to review the building

the benefit of their experience and expertise to the table as volunteers. The management team have continued to do an excellent job executing our demands.

standards permitted in Sandyport. There was extensive roof damage island-wide and our community was no exception.

It has been my pleasure to serve as your Chairman since

To that end, we agreed to relax the requirements for roofing

December 2012. In the past year, we experienced a once-in-

materials somewhat.

a-hundred-year severe weather event and performed major improvements. Yet we closed the financial year with a small

We also reviewed other policies. We no longer insist on as-

surplus and, I’m pleased to report, without raising any fees.

built drawings upon completion of a new home, although we still encourage them. We decided to maintain the

On behaf of the Board of Directors

addressing convention inherited from the developer. We have documented the government numbers but for our purposes, continue with the legacy numbers. We received several requests to subdivide larger lots. Our treatment of these requests has been consistent, we have found no

Robert Sands

reason to contravene the first restrictive covenant. There were several complaints about the use of homes for vacation rentals. After checking with our legal team, we took steps to stop this activity.

There were no material security breaches which is in part down to the amazing work our security team do. But we have also taken steps each year to improve security. In 2016 we improved CCTV coverage, enhanced the perimeter and conducted an independent security review. We also

“A LOT OF WORK (AND EXPENSE) BEFORE AND AFTER THE STORM. THANK YOU FOR TAKING CARE OF US.”

CB, CLIPPER ISLAND

took steps to ensure that all departments had adequate succession plans in place.

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CONTENTS

2

FROM THE CHAIRMAN

14

TREASURER’S REPORT

5

OUR BOARD OF DIRECTORS

16

2017 FINANCIAL BUDGET

6

MANAGEMENT TEAM

17

AUDITOR’S REPORT

7

OPERATIONS SUMMARY

35

PROFESSIONAL ADVISORS

10

CREATING ADDED VALUE

OUR BOARD OF DIRECTORS CHOSEN BY YOU TO SERVE OUR COMMUNITY Our Articles of Association requires that a Board of 7 volunteer Directors each serve a term of 2 years. Every year at least 3 Directors’ tenure comes to an end and we vote at our Annual General Meeting to elect their replacements. Former Directors may be re-elected.

ROBERT SANDS

BRUCE KNOWLES

SCOTT FARRINGTON

Chairman Re-elected 2015

Treasurer Re-elected 2016

Secretary Elected 2015

KOSTA BERDANIS

EDWARD GARDNER

MICHELE MOODIE

STEPHEN ROBERTS

Director Elected 2015

Director Re-elected 2015

Director Re-elected 2016

Director Elected 2016

tel. +1 (242) 676-8990 l www.sandyport.management

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MANAGEMENT TEAM

6

SIMON COOPER

SARAH BARTON

General Manager

Security Services

RONELLA FRANCIS

ORPHEUS INGRAHAM

Assistant Manager

Maintenance

PERLISSA MUNROE

CHARLES COOPER

Accountant

Water / Sewerage

KAYLA LIGHTBOURNE

KOORARAM RAMBURUN

Accounts Clerk

Progress Chaser

OPERATIONS

SUMMARY

“CONGRATULATIONS ... FOR THE SUPERB EVENT LAST NIGHT!!! A WONDERFUL START TO THE FESTIVE SEASON!!!”

CR, BEACH LANE

“Good security is not one thing, but multiple overlapping

OVERVIEW The operations of the Association comprise the following departments: •

Security Services

•

General Maintenance

secure community via this layered approach to security.

Clearly there is basic understanding of this, exemplified by the process in play on the property. For this the management and security team should be commended.”

Water & Sewerage Management

SECURITY SERVICES

We installed a network that connects the various security

Security Services has a Manager, Deputy and shift supervisors. They are responsible for the protection of persons and property. They also check the community for infractions and other transgressions. Enforcement of the rules and regulations helps us to maintain a quality standard of living. When enforcement meets with resistance, remember security are working in our collective interests. We continue to work with transgressors, preferring cooperation to coercion.

booths. The network carries voice, data and CCTV information.

We have expanded CCTV coverage and improved the availability and operability of the phone system. The network connection between the booths is now persistent, allowing for faster real time access to various management systems.

We have finalized the installation of generators at all security and maintenance locations. For nighttime safety purposes, we have installed road reflectors and ‘daylight’ bulbs in all street lights. As a precautionary measure, we have also

We hire our core security personnel with support from a primary security contractor. This provides flexibility and redundancy. An independent security review reached the following conclusion:

failsafes. Sandyport POA has taken some very important first steps in delivering and maintaining a safe and

• Gardening •

initiatives and strategies designed to create numerous

installed warning signs prohibiting diving from the bridge.

GENERAL MAINTENANCE Our core Maintenance team includes a Manager, Assistant

“MAY WE TAKE THIS OPPORTUNITY TO SAY THANKS TO THE GARDENING CREW FOR THE WORK DONE IN OUR YARD TODAY.” DT, GOVERNOR’S CAY 8

and Progress Chaser. We perform most minor maintenance

on owners to check their private property. For the gardening

work

The

service, we introduced door hangers as a quality control tool.

department also oversees the performance of the painting

The contractor leaves one following each service to identify

and garbage collection contractors.

the work performed. But they also serve as a prompt that we

ourselves,

and

outsource

larger

projects.

serviced the garden.

The waste disposal contractor was unable to continue servicing Sandyport. We identified a replacement and service continued without interruption. We also considered a recycling program but decided that it was not practical in the prescribed format.

The three-year paint cycle ended in 2016. We decided to continue with the existing contractor and materials suppliers for the 2017-2019 cycle.

When we were sure that hurricane Matthew was on track to hit Nassau, we made preparations for the clean-up.

Concerned about the level of devastation, we decided to clear both common and private properties. This was a huge undertaking as there were very limited available resources

WATER & SEWERAGE MANAGEMENT

on the island. The volume of debris that we removed was

Our Water & Sewerage department operates the wastewater

staggering, much of it being vegetation.

collection, treatment plant and water metering. The team consists of a Manager, Assistant and an independent

As a result, we have since invested in a wood chipping

consultant.

machine to process green debris. We built bunkers at the maintenance compound and process the vegetation on site.

GARDENING

There were no major developments in the department during the year. The plant and collection systems are in reasonable condition and the independent laboratory analyses are

Our landscaping contractor has operated the gardening

satisfactory. The treatment plant is operating close to

division for the past 4 years. The contract ended in December

capacity and expansion plans are under consideration.

2016 which we extended by 3 months. The replacement contractor takes over the division from March 2017.

The department also oversees the management of the swimming pools. Of the five pools, we fitted four with

Feedback is important in helping us to maintain our

automatic pool chlorinators. We also replaced the pool

standards. Our team checks common property and relies

maintenance contractor for better consistency. tel. +1 (242) 676-8990 l www.sandyport.management

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CREATING ADDED VALUE APPROVED IMPROVEMENTS We invested $175K (net of a contribution of $18K from Sandyport Development Company Ltd.) to repair the canal inlet.

Engineers had determined that sand was infiltrating the inlet through the groin. By integrating a concrete wall, we were able to reduce the amount of sand entering the inlet. In the 6 months since the work was complete, the canal inlet has remained clear.

This is despite experiencing the strongest hurricane in 100 years. Based on recent average costs, we have saved approximately $33K in dredging expenses since we completed the work.

BEACH LANE AND MAIN ENTRANCE We continued with improvements to Beach Lane and the main entrance. The investment to date for the combined projects is $201K. At the year-end work was ongoing but included the following:

10

•

Add a perimeter wall between the canal security

booth and the security control room

•

Add an equipment compound

•

Remove planter and increase parking spaces

•

Resurface Beach Lane parking lot

The major improvements exhausted most of the available

•

Add a turning lane

budget. Minor improvements included the following:

•

Extend the public sidewalk and add a pedestrian

crossing

•

Extension of the Sand Dollar Island marina

•

Update the security control room appearance

•

Add a new property wide wireless network for

•

Update landscaping

communications, CCTV and server access

•

Add signage

•

Professional grade batting cage

•

Update lighting

•

Installation of a tennis backboard

URGENT

DEFERRED PROJECTS

We conducted a survey of our sea walls in 2014 which concluded that there were 17,800 linear feet of wall in various states of repair. A recent survey has identified those sections of sea wall requiring urgent attention. The Directors have

The demands for improvements always far exceed

instructed management to make these repairs a priority for

the available funds. Over the past few years we

2017. The costs are not well understood as repairs vary due

have generated reserves from the maintenance

to the different levels of decay and the types of construction

budget for improvements. It becomes more

methods used. Since we have not yet established the cost,

challenging over time as the growth in revenue

we do not know how much of the work we will be able to

does not keep pace with inflation. The Directors

perform in 2017, due to budget constraints.

review the available budget and decide which projects receive priority.

SEMI-ELECTIVE These improvements are necessary, but not urgent, to

Some projects impact the aesthetic of the

maintain the security, safety and function of the community.

community, thus its appeal and impact on

We modified the layout west of the main entrance, and built

property value. Other projects are less visible

the new sidewalk inside our property. The land to the north

but, if left unchecked, will result in significant

of the new sidewalk is government property. The Ministry

expenditure in the future. So, we look for a

of Works have committed to building an acceleration lane-

balance between urgent, semi-elective and

cum-bus stop in that area. We plan to build a waiting area

elective projects.

for residential workers and a wall extending east from the tennis court.

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The condition of the roads varies. In general, the condition is poorer in the more established parts of the development.

We carry out repairs as necessary, but with each repair the quality and appearance of the roads deteriorates.

The wastewater treatment plant is in fair operating condition, although close to capacity. We can increase capacity by 25% installing an equalization system at a cost of $235K. There is an obligation in place for the original developer to expand the system, which we prefer. The expanded system is able to handle the volume of the finished development and may cost in the order of $1M. We send the treated water to one well.

Engineers have recommended drilling a redundant well at a cost of $100K. If the existing well fails, there is no alternative for the storage of treated wastewater.

We could use treated wastewater for irrigation. But the

over time which will lead to more imbalances at the plant.

investment is approximately $170K for the system and main

An imbalance is generally noticed in the community by the

lines. That estimate excludes individual irrigation zones.

presence of a foul odor.

When a main water line breaks, we disconnect the water supply that precedes the break. The main water line runs

“I LIKE THE MAKEOVER AT THE ENTRANCE OF SANDYPORT!�

KC, CLIPPER ISLAND

from the main entrance in a loop to the service entrance.

Thus, the closer the break is to the main entrance, the more homes that will be affected. An option to consider is adding a secondary supply from the service gate. If implemented, a broken line should only affect the homes in the neighborhood as the water will distribute up to the isolation valves either side of the break zone.

12

The wastewater collection system transfers sewerage from

The repairs to the canal inlet has retarded the infiltration

the community to the plant. The system has infiltration of

of sand. Yet there are areas in the waterways that are

ground water which affects the chemical balance at the

particularly shallow. Time will tell if the inlet repairs has had

plant. A review of the system to determine what repairs are

any impact on the depth of the waterways. We will continue

necessary will cost about $30K. The infiltration will worsen

to track this problem and review as required.

The last major recreation area renovation planned is the

a single project. We have had conceptual drawings prepared

Clipper Island pool. It is not particularly well known but it has

for a building in the north-eastern corner of the property.

amazing potential. Parking has been a challenge for years

Otherwise this area requires attention. Draft plans near the

so the plans increase capacity. The plans show an enlarged

batting cage show an area sectioned off for dog exercise, and

deck and a reduction of the visual barrier between the pool

a separate area for children to play.

and waterways. There is also potential to span a bridge from Clipper Island to Beach Lane, which would also be a nice

The eastern perimeter extending south towards the school

feature.

needs landscaping. There are plans drawn up to develop

ELECTIVE

the area opposite Sandyport Drive 31-45. They include landscaping, a pedestrian crossing and bathroom facility.

These improvements have the potential to enhance lifestyle

Plans for parking spaces and minimal landscaping are also

and property values. They are non-essential, but are for

drawn for The Arches townhouses and the school boundary

consideration subject to available budget.

line.

An administration office for the Association will provide a

Another item on the wish list is to replace the street lights

permanent home and end rental payments. We also lack a

with a more stylish design. There are about 200 in service

clubhouse so it is possible to combine these two ideas into

and the replacement cost exceeds $400K.

TREASURER’S REPORT We saw modest revenue growth year on year of $93,570

We have not amended our doubtful debt policy. We provide

(2.8%). Assessed properties increased by 25,792 square

for all balances over 12 months old irrespective. A large

feet (2.7%). Indenture fee income was lower as we assess

proportion of the doubtful debt provision is for disputed

developed homes. But the indenture fees per property

wastewater

increased as provided for in the conveyance. The next review

ongoing with Sandyport Development Company Ltd. and an

will be in 2021. The average number of accounts incurring

agreement is pending.

treatment

fees.

Negotiations

have

been

late fees throughout the year decreased to 74 (2015 : 78).

We transfer funds that are not in use to an interest-bearing Our direct costs were down 3.7% compared to the previous

account until required. Our lawyers advised that we may

year. This includes $113K of Hurricane Matthew related

invest in Bahamas Government Registered Stock if the

expenses. Excluding improvements direct costs were

opportunity arises. We continue to bank with CIBC and

comparable to FY 2015 (2016 : $2,488K, 2015 : $2,507K).

Scotiabank. We explored adding RBC so that their customers

Expenses increased by $34,215 or 6.4% with the increase in

could pay via their online banking but the costs outweighed

provision for doubtful accounts of $26,021 being the main

the benefits.

factor. We ended the year with a modest surplus of $17K which the Directors transferred to reserves (2015 : $152K

At the year-end, our staff levels remained steady with

loss).

26 on the payroll. Our team received a cost of living and

23.3%

competitive we are able to recruit and keep dedicated personnel.

OF ACCOUNTS PAID EARLY

We assign all old unpaid debts to our legal team for

The number of accounts that prepaid in 2016 fell compared

matters have proceeded to litigation and are ongoing. Below

to 2015. 104 accounts paid 25.7% of the assessments in full

are details of those accounts with balances exceeding $20K

at the start of 2015. In 2016 that number fell to 98 accounts

at the year-end:

paying 23.3% of the assessments early.

14

performance based increase in the 2-4% range. By remaining

processing unless there is a payment plan in place. Some

PAIGE RYAN LTD. (WATERCOLOR CAY 32) $43,719

Revenue 3,600,000

The balance relates to unpaid indenture fees and penalties.

We understand that the property is in foreclosure but we have filed a writ and informed the bank.

2,700,000

LIONEL LEVINE (GOVERNOR’S CAY 34) $43,467

2.8%

1,800,000

The balance relates to unpaid maintenance fees and penalties. We are awaiting a hearing date. The matter is ongoing.

REVENUE GROWTH

DEREK RYAN (BEACH LANE 5) $32,419

900,000

The balance relates to unpaid maintenance fees and 0

penalties. We took possession of the property in 2015, the 2010

2011

2012

2013

2014

2015

2016

principal amount of the judgment was then settled. The matter is now awaiting a new trial date.

SANDYPORT DEVELOPMENT COMPANY LTD. $244,417 The pending agreement will result in a reduction of their account by $179K, if executed. This will not result in a net loss since the amount will be set off by a reduction in the doubtful debt provision.

NATHANIAL BAIN (ROYAL PALM CAY 23) $52,625 The balance relates to unpaid maintenance fees and

JES-EL CAR CO. LTD. (SANDYPORT DRIVE 124) $26,869 The balance relates to disputed maintenance fees and penalties. The owner is challenging the date maintenance fees commenced, and the calculation of the property size. A trial date is set for October 2017.

CRAIG BOWE (THE ARCHES 6) $24,810

penalties. The Court of Appeal overturned the original

The balance relates to unpaid maintenance fees. We have

ruling in favor of the owner’s application to build without

secured judgment and await sale of the property.

Association consent. The matter is ongoing.

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2017 FINANCIAL BUDGET REVENUE Maintenance fees - 947,175 sq ft @ $2.75 per sq ft (399 homes, 2016 : 394)

2017 BUDGET 2,605,000

Indenture fees (102 lots, 2016 : 103)

176,000

Other maintenance fees

151,000

Water & meters income

356,000

Other services Total revenue

9,000 3,297,000

DIRECT EXPENSES Security expenses

807,000

Gardening expenses

471,000

Maintenance of common areas

427,000

Water & meters

334,000

Waste water management

302,000

Improvements

260,000

Painting expenses

219,000

Garbage removal

84,000

Total direct expenses Gross Profit

2,904,000 393,000

OPERATING EXPENSES Salaries, benefits & NI

16

248,000

Rent and utilities

38,000

Office & computer

33,000

Professional fees

25,000

Telephone & communications

17,000

Finance charges

13,000

Insurance

10,000

Other expense

3,000

Property & other taxes

1,000

Total operating expenses

388,000

NET MAINTENANCE FUND

5,000

FINANCIAL STATEMENTS FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 AND INDEPENDENT AUDITORS’ REPORT OPINION

statements in the Commonwealth of the Bahamas, and we have fulfilled our other ethical responsibilities in accordance

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, 2016 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

with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS

information.

Management is responsible for the preparation and fair In our opinion, the accompanying financial statements

presentation of the financial statements in accordance

present fairly, in all material respects, the financial position of

with IFRSs, and for such internal control as management

the Homeowners Association as at December 31, 2016, and

determines is necessary to enable the preparation of financial

its financial performance and its cash flows for the year then

statements that are free from material misstatement,

ended in accordance with International Financial Reporting

whether due to fraud or error.

Standards (IFRSs).

In preparing the financial statements, management is

BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Homeowners Association in accordance with the ethical requirements that are relevant to our audit of the financial

responsible for assessing the Homeowners Association’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Homeowners Association or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Homeowners Association’s financial reporting process. tel. +1 (242) 676-8990 l www.sandyport.management

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AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

HLB Galanis & Co.

March 13, 2017 Nassau, Bahamas

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2016 (Expressed in Bahamian dollars) ASSETS Current Assets

2016

2015

Cash and cash equivalents

781,514

629,924

Accounts receivable (Note 4)

212,880

297,145

Prepayments and deposits

157,070

86,121

1,151,464

1,013,190

89,942

77,343

1,241,406

1,090,533

Accounts payable and accrued expenses

295,980

93,198

Prepaid maintenance fees and deposits (Note 6)

523,443

592,669

819,423

685,867

416

409

404,251

557,024

17,316

(152,767)

421,983

404,666

1,241,406

1,090,533

Total current assets Fixed assets, net (Note 5) TOTAL ASSETS

LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES Current Liabilities

Total current liabilities

SHAREHOLDERS’ EQUITY Share capital 5,000 ordinary shares authorized at $1.00 par value, 416 (2015: 409) shares issued and outstanding General reserve fund (Note 7) Maintenance fund (deficit) Total shareholders’ equity 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 13, 2017.

Director

Director

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF MAINTENANCE FUND FOR THE YEAR ENDED DECEMBER 31, 2016 (Expressed in Bahamian dollars) REVENUE

2016

2015

2,917,573

2,809,863

Water and meters income

365,325

379,016

Other services

151,427

150,329

33,695

35,242

3,468,020

3,374,450

Security expenses (Note 8)

769,290

750,984

Improvements (Note 9)

395,911

488,223

Gardening expenses (Note 10)

436,977

428,328

Maintenance of common areas (Note 11)

474,542

428,405

Water and meters (Note 12)

352,374

386,772

Waste water management (Note 13)

195,148

242,213

Painting expenses (Note 14)

178,837

186,668

81,785

84,000

2,884,864

2,995,593

583,156

378,857

Salaries, benefits & national insurance

246,498

232,779

Provision for doubtful accounts (Note 4)

184,073

158,052

Rent and utilities (Note 15)

40,963

37,100

Office and computer supplies

23,092

17,564

Professional fees

32,388

33,543

Telephone and communications

14,937

15,602

Maintenance fees

Miscellaneous income Total revenue DIRECT EXPENSES

Garbage removal

Total direct expenses GROSS PROFIT OPERATING EXPENSES

1,598

14,191

11,408

11,895

Insurance

9,882

9,898

Property and other taxes

1,000

1,000

565,839

531,624

17,317

(152,767)

Depreciation (Note 5) Finance charges

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, 2016 (Expressed in Bahamian dollars)

SHARE

GENERAL RESERVE

MAINTENANCE

CAPITAL

FUND

FUND

TOTAL

Balance at December 31, 2014

399

534,124

22,910

557,433

Shares issued during the year

10

(10)

-

-

-

22,910

(22,910)

-

Maintenance fund distribution

Net maintenance fund for the year Balance at December 31, 2015

-

-

(152,767)

(152,767)

409

557,024

(152,767)

404,666

Shares issued during the year

7

(7)

-

-

Maintenance fund distribution

-

(152,766)

152,766

-

Net maintenance fund for the year

-

-

17,317

17,317

416

404,251

17,316

421,983

Balance at December 31, 2016

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

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED DECEMBER 31, 2016 (Expressed in Bahamian dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Net maintenance fund (deficit)

2016

2015

17,317

(152,767)

43,056

60,494

Add non-cash transactions: Depreciation (Note 5) (Profit) from disposal of fixed assets

(458)

-

184,073

158,052

243,988

65,779

(Increase) in accounts receivable

(99,808)

(178,350)

(Increase) in prepayments and deposits

(70,949)

(13,971)

Increase/(Decrease) in accounts payable and accrued expenses

202,782

(123,318)

(Decrease) in prepaid maintenance fees and deposits

(69,226)

(54,349)

206,787

(304,209)

(55,655)

(23,208)

458

-

Net cash used in investing activities

(55,197)

(23,208)

Net increase/(decrease) in cash and cash equivalents

151,590

(327,417)

629,924

957,341

781,514

629,924

Provision for doubtful accounts Operating income before working capital changes

Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (Note 5) Proceeds from disposals of fixed assets

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

800

800

Cash in bank

358,236

357,565

Term deposit

422,478

271,559

781,514

629,924

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, 2016 (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, 2016 the Homeowners Association had 26 employees (2015: 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. tel. +1 (242) 676-8990 l www.sandyport.management

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (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

-

3 - 5 years

Maintenance equipment

-

3 years

Computer and office equipment

-

3 years

Security equipment

-

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.

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)

3. SUMMARY OF ACCOUNTING POLICIES (CONTINUED) 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 FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)

4. ACCOUNTS RECEIVABLE Accounts receivable is comprised as follows: 2016

2015

737,325

637,517

(524,445)

(340,372)

212,880

297,145

Balance, beginning of year

340,372

182,320

Add: provision made during the year

184,073

158,052

-

-

524,445

340,372

Current

31,989

46,074

31 to 90 days

36,990

98,596

91 to 360 days

143,901

152,475

Over 360 days

524,445

340,372

737,325

637,517

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:

Balance, end of year

We have not amended our doubtful debt policy. We provided for all balances over 12 months old, irrespective. A large proportion of the doubtful debt provision is for disputed wastewater treatment fees. Negotiations have been ongoing with Sandyport Development Company Ltd. and an agreement is pending.

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)

5. FIXED ASSETS The movement of fixed assets during the year is as follows: Waste COST Balance at December 31, 2014 Additions Disposals

Computer

Water

Maintenance

and Office

Security

System

Equipment

Equipment

Equipment

Total

237,214

10,908

66,915

54,056

369,093

657

249

-

22,302

23,208

-

-

-

(5,339)

(5,339)

237,871

11,157

66,915

71,019

386,962

Additions

-

20,534

(317)

35,438

55,655

Disposals

(11,652)

(736)

-

-

(12,388)

226,219

30,955

66,598

106,457

430,229

168,992

9,168

49,359

26,945

254,464

30,251

1,345

14,191

14,707

60,494

Balance at December 31, 2015

Balance at December 31, 2016

ACCUMULATED DEPRECIATION Balance at December 31, 2014 Depreciation Disposals Balance at December 31, 2015 Depreciation

-

-

-

(5,339)

(5,339)

199,243

10,513

63,550

36,313

309,619

18,533

593

1,598

22,332

43,056

(11,652)

(736)

-

-

(12,388)

206,124

10,370

65,148

58,645

340,287

As at December 31, 2016

20,095

20,585

1,450

47,812

89,942

As at December 31, 2015

38,628

644

3,365

34,706

77,343

Disposals Balance at December 31, 2016

CARRYING VALUE

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)

5. FIXED ASSETS (CONTINUED) Depreciation expense by functional categories is as follows: 2016

2015

Waste water management (Note 13)

18,533

30,251

Security equipment (Note 8)

22,332

14,707

1,598

14,191

593

1,345

43,056

60,494

2016

2015

Advance payments

421,693

494,169

Water deposits

101,750

98,500

523,443

592,669

Computer and office equipment Maintenance equipment (Note 11) Total

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

Total

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

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)

8. SECURITY EXPENSES Security expenses are as follows: 2016

2015

Wages

425,934

408,763

Service contract

259,380

262,282

Supplies

29,838

29,630

Security maintenance

28,886

34,137

Depreciation (Note 5)

22,332

14,707

2,920

1,465

769,290

750,984

Uniforms Total

9. IMPROVEMENTS During the fiscal year, there were key projects undertaken which included the canal and main entrance. Overall improvement expenses are as follows: 2016

2015

Seawall and canal

174,129

-

Main entrance

124,798

-

Beach Lane Common Area

75,920

33,680

Other

21,064

54,870

Roberts Isle

-

239,499

Eastern Perimeter Wall

-

112,164

Fencing

-

24,149

Governor’s Cay – Recreation Area

-

23,861

395,911

488,223

Total

tel. +1 (242) 676-8990 l www.sandyport.management

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)

10. GARDENING EXPENSES Gardening expenses are as follows: Contract services Extermination

2016

2015

366,000

366,000

56,920

48,567

Garden supplies

9,349

7,173

Miscellaneous

4,708

6,588

436,977

428,328

2016

2015

113,855

-

Wages

85,798

85,098

Supplies and tools

84,575

83,130

Utilities

81,758

114,899

Swimming pool

20,876

39,295

Roads and lights

17,141

25,661

Tennis courts

11,540

4,240

3,958

6,313

593

1,345

474,542

428,405

Total

11. MAINTENANCE OF COMMON AREAS The expenses associated with the maintenance of common areas are as follows: Hurricane expenses

Contract service Depreciation of equipment (Note 5) Total

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)

12. WATER & METERS Water and meters expenses are as follows: 2016

2015

350,716

382,930

1,658

3,842

352,374

386,772

2016

2015

Wages

62,389

66,668

Services

45,532

48,998

Materials

42,551

61,463

Repairs and maintenance

26,143

34,833

Depreciation (Note 5)

18,533

30,251

195,148

242,213

2016

2015

109,987

110,411

68,850

76,257

178,837

186,668

Water Water meters Total

13. WASTE WATER MANAGEMENT Waste water management expenses are as follows:

Total

14. PAINTING EXPENSES Painting expenses are as follows:

Painting contractors Paint and supplies Total

tel. +1 (242) 676-8990 l www.sandyport.management

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)

15. RENT The Homeowners Association rents office space from Artech Bahamas Ltd. at $37,800 per annum, inclusive of electricity and water. The lease will expire on August 31, 2017.

16. CONTINGENT LIABILITIES a) Waste water 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. b) Sea wall With the exception of a few unstable and incomplete sections of wall noted in an engineer’s report commissioned by the Association, the seawall is in fair condition with primarily corrosion damage to the coping beam. Engineers have advised that the durability and appearance of the wall can be improved significantly by completing the noted repairs and coating the concrete surface. The overall cost of the repairs has not been fully quantified.

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (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.

tel. +1 (242) 676-8990 l www.sandyport.management

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (Expressed in Bahamian dollars)

17. FINANCIAL RISK MANAGEMENT (CONTINUED) Interest rate risk (continued) 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: HLB Galanis & Co. Olde Towne Sandyport P. O. Box N-3205 Nassau, The Bahamas Tel: (242) 327-0689 Fax: (242) 327-0696 Web: www.hlbgalanis.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 Bankers: CIBC First Caribbean Sandyport Branch Nassau, The Bahamas

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

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

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

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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S PO BOX SP 64016 | SANDYPORT | NASSAU | BAHAMAS BAH +1 242 676 8990 USA +1 305 831 8921 FAX +1 305 705 6599 WWW.SANDYPORT.MANAGEMENT