Sandyport 2017 Annual Report

S

2017 ANNUAL REPORT SANDYPORT HOMEOWNERS ASSOCIATION LTD.

www.sandyport.management

Dear Owner It is my pleasure to present to you our 2017 Annual Report.

I have served as Chairman of the Board since 2012. Every year we have done our very best to improve our community.

Maintaining the common property is our highest priority and we strive to find the balance between form and function.

For instance, repairs to canal walls or the wastewater plant are not very obvious, but they are essential. Whenever we

FROM THE

improve a recreation area, such as we did at Clipper Island, we are able to address both visual appeal and functionality.

The demands on our budget always exceed our ability to

CHAIRMAN

meet them without increasing fees. We are proud that we

ROBERT SANDS

of the community has increased, but hardly above inflation.

Chairman since 2012

Meanwhile the demands have also increased given the

Sandyport Homeowners

have invested in improvements from our maintenance budget,

without

raising

fees.

The

last

maintenance

assessment increase took place in 2006. Granted, the size

expansion of the community.

Association Ltd. We had no damage from extreme weather events, which experience shows can cost over $100K. Some delinquent accounts settled, resulting in a reduction in our doubtful debts provision. To a large extent these two factors contributed to the surplus. And that is after we invested over $300K on improvements. The surplus will go to much needed repairs and improvements in early 2018. This includes expansion of the CCTV system and a new perimeter wall to enhance security.

During the year we revisited some of our policies. These impact security, construction and the use of common

facilities. In particular, we addressed deviations from the standards set out in the guidelines. We recognise that some of these changes may have been difficult to take on board, but they are for the betterment of our community.

As we continue to improve the common property, we should uphold the standards for the private properties also. This is how we expect our whole community to progress.

For the past four years we have held an annual social event.

It’s a wonderful opportunity for residents to meet but also to hear your feedback. Our 2017 social event had the biggest attendance to date. It is our hope that we can continue to enjoy this event for years to come.

The work that we do here requires everybody’s cooperation.

Our management team do a great job handling our resources. They have tasks that are, sometimes, met with resistance. Please be mindful that the team are acting on behalf of the Board that represents you. Continue providing your feedback, we do listen and adapt as necessary.

I would like to extend thanks to my fellow Directors who have volunteered their time. They provide the guidance that makes the community one that reflects us. On behalf of the Board, we thank the committee members who have also contributed their time and expertise for the benefit of the community.

On behalf of the Board of Directors

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

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CONTENTS 2

FROM THE CHAIRMAN

5

OUR BOARD OF DIRECTORS

6

MANAGEMENT TEAM

7

OPERATIONS SUMMARY

14

TREASURER’S REPORT

16

2017 FINANCIAL BUDGET

17

AUDITOR’S REPORT

35

PROFESSIONAL ADVISORS

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

GILBERT WARD

Chairman Re-elected 2017

Treasurer Re-elected 2016

Secretary Elected 2017

KOSTA BERDANIS

EDWARD GARDNER

MICHELE MOODIE

TONY MIAOULIS

Director Re-elected 2017

Director Re-elected 2017

Director Re-elected 2016

Director Elected 2017

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

SHAMARA BURROWS

CHARLES COOPER

Accountant

Water / Sewerage

KAYLA LIGHTBOURNE

KOORARAM RAMBURUN

Accounts Clerk

Progress Chaser

OPERATIONS SUMMARY “I HAVE LIVED IN SANDYPORT FOR 25 YEARS AND CAN HONESTLY SAY THE COMMUNITY IS THE BEST IT HAS EVER BEEN.” RR

POLICY UPDATES The Board has listened and considered the demands from our owners. The Directors review the impact of recommendations on the whole community. We adapt policies when doing so is in the best interests and progression of Sandyport. A summary of the changes follows. Visit the Helpdesk at our website for current details of all policies and guidelines.

are reasons for the restrictions which are both functional and aesthetic. We now consider gazebo installations within the setbacks subject to meeting certain criteria. In all cases submit a construction application for review.

We permit certain types of worker in the community outside of the normal working hours of 7:30am until 5pm on business days. We received complaints of work on construction sites outside of standard permitted hours. We no longer permit any type of work on any construction site, other than for

“QUICK RESPONSE, FRIENDLY AND RIGHT FEEDBACK FOR MY QUESTION. MANY THANKS.” MD CHANGES AFFECTING CONSTRUCTION There are a small number of ‘estate’ lots within Sandyport, those intended for larger homes. Given the size and value of the typical Sandyport home, it is a reality that that these lots are unlikely to be developed in their current state soon. The Restrictive Covenants do not permit the subdividing of lots.

But we have made exception where the property can divide into 2 lots each of not less than 5,000 square feet. We want to encourage the development of all vacant lots. There are criteria to meet but generally if an estate lot is eligible for subdivision, we will grant approval.

From time to time we receive construction applications that include gazebos. Like most structures, gazebos cannot construct outside of the building envelope. i.e. inside the setbacks where no construction should take place. There

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emergencies, outside of permitted hours.

CHANGES AFFECTING THE USE OF COMMON PROPERTY The common facilities are for the enjoyment of all residents.

Sometimes residents use the facilities beyond the intended purpose. We have implemented greater controls to curtail this behaviour.

Common parking areas are not for the long-term storage of vehicles. Abandoned vehicles are subject to removal.

This makes available parking spaces for other residents and maintains an orderly appearance.

The pool areas, and in particular in Phase V, have certain restrictions to ensure that residents are not disturbed when in use. We have further restricted use for residents only that must remain in attendance throughout the event. For instance, a resident cannot host a wedding for a relative (unless they too live in Sandyport). It is fair to say that the venue may not be suitable given the restrictions in place.

We recommend paying careful attention to these guidelines before booking. It may be more practical to host the function elsewhere.

Private coaches are welcome in Sandyport, if they are at the invitation and tuition of the resident. Solicitation is not permitted, and the coach may not use facilities for the benefit of non-residents.

CHANGES AFFECTING PRIVATE PROPERTY Raising standards in Sandyport requires the participation of our residents. We took a decision in 2017 to become more proactive at upholding the standards set out in the guidelines. In May 2017, we circulated a general notice and an infraction checklist for owners to review. We were mindful of the timing and deferred administering the process until the New Year. It may have come as a surprise to many since it is the first time we have undertaken this exercise on such a scale. We appreciate your cooperation which will serve to enhance our community.

“WE ARE HONORED TO HAVE SUCH FINE PROFESSIONAL INDIVIDUALS SERVE ON OUR BOARD. WITH MANY THANKS FOR THEIR SERVICE.�

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

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COMMON PROPERTY MAINTENANCE We contract our garbage collection, painting and gardening services to third party companies. We changed gardening contractor in 2017. The maintenance of the private and common gardens has continued improving since handover.

We have retained the same garbage and painting contractors for 2017 into 2018.

COMMON PROPERTY IMPROVEMENTS In 2016, we made major improvements to Beach Lane. We

There are ongoing repairs and improvements necessary for the canal walls throughout Sandyport. Engineers performed a study in 2014 that identified the repairs needed over a 10year period. We have started the exercise with repairs to canal walls along parts of Sandyport Drive, Governor’s Cay and the canal inlet.

“I’M VERY SATISFIED WITH THE QUALITY OF SUPPORT.. THANKS AGAIN.” SF

completed the work in 2017 by adding new lighting, signs and resurfacing. The main entrance also benefitted from

We modified the speed bumps in response to concerns

new acceleration and deceleration lanes together with a

about the height, which affected lower vehicles. The public

pedestrian crossing and sidewalk. These features serve to

bathrooms all received electric hand dryers. These are more

improve pedestrian and traffic safety. The security control

hygienic, reduce waste and cut the need for paper towels

room at the main entrance enjoyed a facelift with new

which were often found blocking the toilets.

windows, shutters, blinds and lighting. We replaced the

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signs at both the main and service entrances with a more

We have fenced off the under-utilized area in the north-

contemporary logo.

east corner of the community (in Phase V) to create an area

for accompanied pets to exercise. And we reserved the neighbouring section around the batting cage for residents to enjoy, pet (and animal waste) free. The area received treatment with vegetation, softening its appearance when in bloom.

The main entrance, in Beach Lane and along the eastern perimeter wall received new landscaping. When we plan new landscaping projects, we factor in maintenance costs and extreme weather events. Minimal landscaping is best for maintenance, but extreme weather can destroy a wonderful theme. We aim for a balance between manageability and beautification.

The largest single project in 2017 by value was the renovation of the Clipper Island recreation area. We rebuilt the entire area except for the pool. The deck got enlarged, the pool resurfaced, new vinyl fencing installed and the area landscaped. We also built a new pump house, garbage corral and extra parking. The total investment was $130K.

SECURITY SERVICES The primary function of security services is the protection of people and assets. After the devastation from hurricane Matthew in 2016, we invested in emergency supplies and equipment ahead of the 2017 hurricane season. This improves our ability to respond and function during an extreme weather event. Being mindful of this we have also replaced older golf carts with gas powered carts. This reduces the dependency on electricity and they can almost operate non-stop as they do not need recharging. This may be counter to the global trend toward clean energy but it is the reality we live in, in our environment.

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

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We

made

improvements

to

our

communications

infrastructure also. All security offices are contactable by

be possible in a single financial year without increasing the maintenance assessment.

dialling the main number. But in the event of an emergency, pressing zero at any time directs the call to an operator. The handheld radios used by security services have a limited range which decreases as the building density increases.

To address this, we invested in equipment that extends the range so that we have full coverage in all areas throughout the community. This may seem trivial, but in the event of an emergency seconds count and being able to reach the control room immediately could be critical.

Our security team comprises of core personnel employed by the Association and staff from two contractors. Although

“THANK YOU, SANDYPORT MANAGEMENT FOR SUCH A GREAT HOLIDAY PARTY. WE LOVE THIS EVENT AND ENJOY ALL OF THE STAFFS’ EFFORTS FOR MAKING IT SUCH A SUCCESS!” TA

it is not required by law for our employees, we ensure that the Ministry of National Security licenses all officers. Besides

The Directors are considering the viability of building an

the third-party vetting that all personnel undergo, security

administration office on our property. Whilst this does not

licenses are subject to annual renewal. This gives us a level

add any direct benefit to the residents, the Association would

of confidence that the people employed to protect our

no longer need to rent office space.

community meet the highest security standards.

FUTURE PLANS

We had no major security breaches in 2017, but we are not complacent and always improving our security. The CCTV system will receive further expansion in 2018, providing

We focus on the ongoing canal wall repairs according to

coverage for the recreation areas and in current ‘dead zones’.

safety first, then condition. The developer used a range of

We will build a perimeter wall to the North of the property,

different standards to build the canal walls. We consult with

heading west from the tennis courts located near the main

engineers to determine the best solution for each repair on a

entrance.

case by case basis. We are responsible for maintaining over 17,000 linear feet of canal wall. The average cost to date for

Our wastewater plant is well maintained and in reasonable

the repairs is $510 per linear foot.

condition. We will replace a major component in early 2018 at an estimated cost of $78K. The system is close to

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The estimated cost to rebuild the road infrastructure is about

capacity and will need expanding to be able to handle the

$350 per linear foot. For example, the cost to rebuild the road

increasing demands of both our community and Olde Towne.

from the main entrance to the first pool on Sandyport drive is

The original developer has the obligation of expanding the

over $400K. So, it is a major undertaking that would likely not

system, at an estimated cost of $1m.

TREASURER’S REPORT Revenue declined by under 1% compared to 2016 and direct

The receivables with the greatest reductions year on year are

costs also fell in line with revenue. This decline includes a

as shown below. Note that in some instances, the properties

$45K assessment correction. The following table summarises

are under new ownership:

the changes in maintenance income year on year:

Total assessed properties Total assessed square feet Under construction Vacant lots

2017 398 949,635 3 102

2016 393 924,736 6 103

We did not suffer any major hurricane related expenses during the year. Our bad debt provision reduced by $276K. These are the most significant factors contributing to the surplus of $285K for the year (2016 : $17K). The surplus will enable us to advance certain projects earlier than planned in 2018. These include the CCTV expansion, new perimeter wall and major wastewater plant repairs.

Property / Debtor Coral Beach 12A Kingfisher Island 17 Kingfisher Island 4 Sandyport Development Sandyport Drive 15 Sandyport Drive 154 Sandyport Drive 157 Sandyport Drive 84 The Arches 6 Watercolor Cay 32 Watercolor Cay 6 Total reduction

Reduction 12,636 2,421 6,588 244,529 19,111 12,472 2,784 4,501 24,476 43,413 2,817 375,748

QUICK FACT: LATE FEE REVENUE MATCHED THE COST OF THE ANNUAL SOCIAL EVENT

Our revenue from other services declined in part due to an agreed rate change for the wastewater processing from Olde Towne. As part of a settlement agreement, we credited $167K (including VAT) to adjust the rate back to 2013. The rate per gallon was 0.116¢ before the change, we proposed an increase to 1.71¢ and the matter settled at 0.939¢ - an 806% improvement. They settled the remaining balance which contributed to the reduced bad debt provision.

Cash and cash equivalents increased by 34% to $1,045K (2016 : $782K) and net receivables decreased by 13% to $184K (2016 : $212K). Note that net receivables factors in a bad debt provision of $276K. Maintenance paid in full at the start of the year came from 99 properties or 23.9% by value (2016 : 98 properties or 23.3% by value). The average number of accounts that incurred monthly late fees increased by 11% to 82 (2016 : 74).

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NOTABLE DEBTORS

Revenue 3,500,000

We assign all old unpaid debts to our legal team for processing unless there is a payment plan in place. Some matters have

3,400,000

proceeded to litigation and are ongoing. Below are details of those accounts with balances exceeding $20K at the year-

3,300,000

end:

NATHANIAL BAIN (ROYAL PALM CAY 23) $60,854

3,200,000

3,100,000

2013

2014

2015

2016

2017

The balance relates to unpaid maintenance fees and penalties.

The Court of Appeal overturned the original ruling in favor of the owner’s application to build without Association consent.

23.9%

The matter is ongoing.

LIONEL LEVINE (GOVERNOR’S CAY 34) $50,722

OF ACCOUNTS PAID EARLY

The balance relates to unpaid maintenance fees and penalties.

We are awaiting a hearing date. The matter is ongoing.

We invested $334K in improvements without increasing the fees for the 13th consecutive year.

DEREK RYAN (BEACH LANE 5) $38,115 The balance relates to unpaid maintenance fees and

Improvements

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

600,000

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

450,000

JES-EL CAR CO. LTD. (SANDYPORT DRIVE 124) $27,994

300,000

The balance relates to disputed maintenance fees and penalties. The owner is challenging the date maintenance

150,000

fees commenced, and the calculation of the property size.

0

The matter is ongoing.

2013

2014

2015

2016

2017

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2018 FINANCIAL BUDGET REVENUE Maintenance fees Water and meters income Other services Total revenue

2018 Budget in B$ 2,938,000 380,000 50,000 3,368,000

DIRECT EXPENSES Security expenses

807,000

Gardening expenses

520,000

Maintenance of common areas

433,000

Water & meters

412,000

Waste water management

275,000

Improvements

225,000

Painting expenses

221,000

Garbage removal

69,000

Total direct expenses GROSS PROFIT

2,962,000 406,000

OPERATING EXPENSES Salaries, benefits & NI

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255,000

Rent and utilities

39,000

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

3,000

Total operating expenses

398,000

NET MAINTENANCE FUND

8,000

FINANCIAL STATEMENTS AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 AND INDEPENDENT AUDITORS’ REPORT

statements in the Commonwealth of the Bahamas, and we

OPINION

have fulfilled our other ethical responsibilities in accordance

We have audited the accompanying financial statements of

SANDYPORT

HOMEOWNERS

ASSOCIATION

LIMITED

(“the Homeowners Association”) which is comprised of the statement of financial position as at December 31, 2017 and the related statements of maintenance fund, changes in 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, 2017, 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

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.

requirements that are relevant to our audit of the financial 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

used and the reasonableness of accounting estimates

whether the financial statements as a whole are free from

and related disclosures made by management;

material misstatement, whether due to fraud or error, and to

•

Conclude on the appropriateness of management’s use

issue an auditor’s report that includes our opinion. Reasonable

of the going concern basis of accounting and, based

assurance is a high level of assurance but is not a guarantee

on the audit evidence obtained, whether a material

that an audit conducted in accordance with ISAs will always

uncertainty exists related to events or conditions

detect a material misstatement when it exists. Misstatements

that may cast significant doubt on the Homeowners

can arise from fraud or error and are considered material

Association’s ability to continue as a going concern. If we

if, individually or in the aggregate, they could reasonably be

conclude that a material uncertainty exists, then we are

expected to influence the economic decisions of users taken

required to draw attention in our auditors’ report to the

on the basis of these financial statements.

related disclosure in the financial statement or, if such disclosure is inadequate, to modify our opinion. Our

As part of an audit in accordance with ISAs, we exercise

conclusions are based on the audit evidence obtained

professional judgement and maintain professional skepticism

up to the date of our auditors’ report.

throughout the audit. We also:

•

However, future events or conditions may cause the Homeowners Association to cease to continue as a going

•

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or

concern; and •

Evaluate the overall presentation, structure and content

error, design and perform audit procedures responsive

of the financial statement, including the disclosures,

to those risks, and obtain audit evidence that is sufficient

and whether the financial statement represent the

and appropriate to provide a basis for our opinion. The

underlying transactions and events in a manner that

risk of not detecting a material misstatement resulting

achieves fair presentation.

from fraud is higher than for one resulting from error,

•

as fraud may involve collusion, forgery, intentional

We communicated with those charged with governance

omission, misrepresentation or the override of internal

regarding, among other matters, the planned scope and

control;

timing of the audit and significant audit findings, including

Obtain an understanding of internal control relevant

any significant deficiencies in internal control that we identify

to the audit in order to design audit procedures that

during our audit.

are appropriate in the circumstances, but not for the

• 18

purpose of expressing an opinion on the effectiveness

HLB Galanis & Co.

of the Homeowners Association’s internal control;;

Nassau, Bahamas

Evaluate the appropriateness of accounting policies

February 16, 2018

SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2017 (Expressed in Bahamian dollars) ASSETS Current Assets

2017

2016

1,044,645

781,514

184,304

212,880

87,932

157,070

1,316,881

1,151,464

57,421

89,942

1,374,302

1,241,406

Accounts payable and accrued expenses

138,279

295,980

Prepaid maintenance fees and deposits (Note 6)

529,018

523,443

667,297

819,423

429

416

General reserve fund (Note 7)

421,554

404,251

Maintenance fund

285,022

17,316

707,005

421,983

1,374,302

1,241,406

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 Current Liabilities

Total current liabilities

SHAREHOLDERS’ EQUITY Share capital: 5,000 ordinary shares authorized at $1.00 par value, 429 (2016: 416) shares issued and outstanding

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 on March 8, 2018 and are signed on its behalf by:

Director

Director

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF MAINTENANCE FUND FOR THE YEAR ENDED DECEMBER 31, 2017 (Expressed in Bahamian dollars) REVENUE

2017

2016

2,894,775

2,917,573

Water and meters income

381,749

365,325

Other services

126,129

151,427

36,584

33,695

3,439,237

3,468,020

Security expenses (Note 8)

778,534

769,290

Improvements (Note 9)

334,347

395,911

Gardening expenses (Note 10)

498,178

436,977

Maintenance of common areas (Note 11)

375,373

474,542

Water and meters (Note 12)

411,207

352,374

Waste water management (Note 13)

172,027

195,148

Painting expenses (Note 14)

222,561

178,837

68,400

81,785

2,860,627

2,884,864

578,610

583,156

Maintenance fees

Miscellaneous income Total revenue DIRECT EXPENSES

Garbage removal

Total direct expenses GROSS PROFIT OPERATING EXPENSES

257,764

246,498

Rent and utilities (Note 15)

38,200

40,963

Office and computer supplies

28,238

23,092

Professional fees

22,955

32,388

Telephone and communications

11,654

14,937

Finance charges

13,223

11,408

Insurance

9,777

9,882

Property and other taxes

2,188

1,000

Depreciation (Note 5)

1,611

1,598

(92,022)

184,073

Total operating expenses

293,588

565,839

NET MAINTENANCE FUND

285,022

17,317

Salaries, benefits & national insurance

(Recovery)/Provision for doubtful accounts (Note 4)

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

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2017 (Expressed in Bahamian dollars)

(ACCUMULATED GENERAL

DEFICIT) /

SHARE

RESERVE

MAINTENANCE

CAPITAL

FUND

FUND

TOTAL

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

Balance at December 31, 2016

416

404,251

17,316

421,983

Shares issued during the year

13

(13)

-

-

Maintenance fund distribution

-

17,316

(17,316)

-

Net maintenance fund for the year

-

-

285,022

285,022

429

421,554

285,022

707,005

Balance at January 1, 2016

Balance at December 31, 2017

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, 2017 (Expressed in Bahamian dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Net maintenance fund

2017

2016

285,022

17,317

52,931

43,056

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

-

(458)

(Recovery)/Provision for doubtful accounts

(92,022)

184,073

Operating income before working capital changes

245,931

243,988

120,598

(99,808)

69,138

(70,949)

Decrease / (Increase) in accounts receivable Decrease / (Increase) in prepayments and deposits (Decrease) / Increase in accounts payable and accrued expenses

(157,701)

202,782

5,575

(69,226)

283,541

206,787

(20,410)

(55,655)

-

458

Net cash used in investing activities

(20,410)

(55,197)

Net increase in cash and cash equivalents

263,131

151,590

Cash and cash equivalents, beginning of year

781,514

629,924

1,044,645

781,514

Increase / (Decrease) in prepaid maintenance fees and deposits Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (Note 5) Proceeds from disposals of fixed assets

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

800

800

Cash in bank

420,652

358,236

Term deposit

623,193

422,478

1,044,645

781,514

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, 2017 (Expressed in Bahamian dollars)

1. GENERAL INFORMATION Sandyport Management Association Limited was incorporated under the laws of The Commonwealth of the Bahamas on May 25, 1990 as a wholly-owned subsidiary of Sandyport Development Association Limited (“Devco”). On September 14, 1998, the name of the Association 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 licenses issued to each property owner defining their rights and obligations in regard to the common areas. Devco assigned the said authority under these licenses 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, 2017 the Homeowners Association had 28 employees (2016: 26).

2. BASIS OF PREPARATION AND ADOPTION OF IFRS Statement of compliance – These financial statements include the accounts of Sandyport Homeowners Association Limited and have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) for Small and Medium-sized Entities, issued by the International Accounting Standards Board (IASB). These accounting policies are disclosed in Note 3 of the financial statements.

Basis of measurement – These financial statements have been prepared under the historical cost convention.

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED) (Expressed in Bahamian dollars)

2. BASIS OF PREPARATION AND ADOPTION OF IFRS (CONTINUED) Functional and presentation currency - 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.

Use of estimates and judgments - The preparation of financial statements in conformity with IFRS for Small and Mediumsized 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.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Foreign currency - Translations in foreign currencies have been converted into Bahamian dollars at the rate of exchange prevailing at the date of each transaction. At the balance sheet date, foreign currency assets and liabilities are translated into Bahamian dollars using year-end rates of exchange; differences arising are included in the statement of maintenance fund for the year. b. 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. c. 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. d. Trade and other receivables - Accounts receivable is 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.

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED) (Expressed in Bahamian dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) e. 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

f. Income and expense recognition - Income and expenses are recorded on an accrual basis of accounting. g. 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. h. 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. i. Related party transactions - Related parties include members of the board who are also homeowners. 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, 2017 (CONTINUED) (Expressed in Bahamian dollars)

4. ACCOUNTS RECEIVABLE Accounts receivable is comprised as follows: Accounts receivable Less: provision for doubtful accounts Accounts receivable, net

2017

2016

460,684

737,325

(276,380)

(524,445)

184,304

212,880

The movement in the provision for doubtful accounts is as follows: Balance, beginning of year

524,445

340,372

Add: (recovery)/provision made during the year

(92,022)

184,073

(156,043)

-

276,380

524,445

Current

43,223

31,989

31 to 90 days

82,780

36,990

91 to 360 days

58,301

143,901

Over 360 days

276,380

524,445

460,684

737,325

Less: amounts written off during the year Balance, end of year The aging of receivables are as follows:

Balance, end of year

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED) (Expressed in Bahamian dollars)

5. FIXED ASSETS The movement of fixed assets during the year is as follows: Waste COST

Computer

Water

Maintenance

and Office

Security

System

Equipment

Equipment

Equipment

Total

237,871

11,157

66,915

71,019

386,962

Additions

-

20,534

(317)

35,438

55,655

Disposals

(11,652)

(736)

-

-

(12,388)

Balance as at December 31, 2016

226,219

30,955

66,598

106,457

430,229

Additions

305

-

2,270

17,835

20,410

Disposals

-

-

(1,284)

-

(1,284)

226,524

30,955

67,584

124,292

449,355

199,243

10,513

63,550

36,313

309,619

18,533

593

1,598

22,332

43,056

Balance as at December 31, 2015

Balance at December 31, 2017

ACCUMULATED DEPRECIATION Balance as December 31, 2015 Depreciation Disposals

(11,652)

(736)

-

-

(12,388)

Balance at December 31, 2016

206,124

10,370

65,148

58,645

340,287

13,730

7,007

1,611

30,583

52,931

-

-

(1,284)

-

(1,284)

219,854

17,377

65,475

89,228

391,934

Balance as at December 31, 2017

6,670

13,578

2,109

35,064

57,421

Balance as at December 31, 2016

20,095

20,585

1,450

47,812

89,942

Depreciation Disposals Balance as at December 31, 2017

CARRYING VALUE

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED) (Expressed in Bahamian dollars)

5. FIXED ASSETS (CONTINUED) Depreciation expense by functional categories is as follows: 2017

2016

Waste water management (Note 13)

13,730

18,533

Security equipment (Note 8)

30,583

22,332

Computer and office equipment

1,611

1,598

Maintenance equipment (Note 11)

7,007

593

52,931

43,056

2017

2016

Advance payments

426,768

421,693

Water deposits

102,250

101,750

529,018

523,443

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, 2017 (CONTINUED) (Expressed in Bahamian dollars)

8. SECURITY EXPENSES Security expenses are as follows: 2017

2016

Wages

435,006

425,934

Service contract

246,657

259,380

Supplies

35,152

29,838

Security maintenance

30,433

28,886

Depreciation (Note 5)

30,583

22,332

703

2,920

778,534

769,290

Uniforms Total

9. IMPROVEMENTS During the fiscal year, there were key projects undertaken which included Clipper Island and Seawall and canal. Overall improvement expenses are as follows: 2017

2016

129,763

-

Seawall and canal

92,727

174,129

Beach Lane Common Area

67,872

75,920

Other

23,320

21,064

Eastern Perimeter Wall

20,665

-

-

124,798

334,347

395,911

Clipper Island

Main entrance Total

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED) (Expressed in Bahamian dollars)

10. GARDENING EXPENSES Gardening expenses are as follows: 2017

2016

378,521

366,000

Extermination

53,865

56,920

Garden supplies

46,786

9,349

Miscellaneous

19,006

4,708

498,178

436,977

2017

2016

123,803

84,575

Wages

87,384

85,798

Utilities

83,179

81,758

Roads and lights

23,344

17,141

Swimming pool

Contract services

Total

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

21,346

20,876

Dredging

9,880

54,448

Depreciation of equipment (Note 5)

7,007

593

Tennis courts

6,925

11,540

Hurricane expenses

6,886

113,855

Contract service

5,619

3,958

375,373

474,542

Total

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED) (Expressed in Bahamian dollars)

12. WATER & METERS Water and meters expenses are as follows: 2017

2016

409,817

350,716

1,390

1,658

411,207

352,374

2017

2016

Wages

63,563

62,389

Services

39,886

45,532

Materials

38,190

42,551

Repairs and maintenance

16,658

26,143

Depreciation (Note 5)

13,730

18,533

172,027

195,148

2017

2016

135,159

109,987

87,402

68,850

222,561

178,837

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

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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED) (Expressed in Bahamian dollars)

15. RENT The Homeowners Association rents office space from Artech Bahamas Ltd. at $39,000 per annum, inclusive of electricity and water. The lease will expire on August 31, 2019.

16. CONTINGENT LIABILITIES 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 Association Limited (Devco). The Board continues to explore alternative cost effective and productive solutions to this issue.

Seawall - 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, 2017 (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.

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. 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, 2017 (CONTINUED) (Expressed in Bahamian dollars)

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.

CIBC First Caribbean

Olde Towne

Sandyport Branch

Sandyport

P.O. Box N-8350 / N-7125

P. O. Box N-3205

Nassau, The Bahamas

Nassau, The Bahamas

Tel: (242) 327-8364 / 327-4957

Tel: (242) 327-0689

Fax: (242) 327-4955

Fax: (242) 327-0696

Account: 200-167527

Web: www.hlbgalanis.com

Web: www.cibcfirstcaribbeanbank.com Scotiabank

Legal Advisors:

Cable Beach

Kahlil D. Parker

P.O Box N-7518

Cedric L. Parker & Co.

Nassau, The Bahamas

Chambers

Tel: (242) 702-8100

No.9 Rusty Bethel Drive

Fax: (242) 327-5728

P.O. Box N-1953

Account: 70045-72613

Nassau, The Bahamas

Web: www.bahamas.scotiabank.com

Tel: (242) 322-4954/5 Fax: (242) 328-3706

Insurance Agents:

Email: kdp@parkerslaw.net

Tavares & Higgs Blake Road

Consulting Architects:

P. O. Box SP-64003

Alberto G. Suighi

Nassau, The Bahamas

Artech Bahamas Ltd.

Tel: (242) 327-8606

Lagoon Court

Fax: (242) 327-8607

Nassau, The Bahamas

Email: stavares@tavareshiggs.com

Tel: (242) 327-2335 Fax: (242) 327-2337 Web: www.artechbahamas.com

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

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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