ANNUAL REPORT 2014
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FROM THE CHAIRMAN I
t has been my pleasure to serve as the Chairman of your Board since December 2012. This Annual Report is for the period ending December 2014 and completes our fifth year under the Homeowner’s control of the Association. I would like to thank former Directors Costa Berdanis and Kenny Cartwright for their contribution during their tenure which ended in March, 2014. Kenny Cartwright is worth a special mention after serving on the Board since the transition from the development company in 2010. At the last AGM we welcomed two new Board members. Bruce Knowles also sits on our Audit and Finance Committee. Michéle Rassin-Moodie became the de-facto spokesperson for Beach Lane owners. The economy continues to be fragile but decisions taken in recent years to lower fixed expenses have assured the financial security of our Association. This has enabled us to make the highest investment in improvements on record. During the year we invested over $500,000 on improvements without the need for a special assessment. We placed an emphasis on both security and upgrades to our quality of community living. Careful financial planning and control allowed us to end another year without adjusting the maintenance fees. Plus we have been able to maintain a respectable level of cash reserves for future needs.
The Association hosted it’s first social event in November. It was pleasing to see such a high level of participation. Some residents also took the time and effort to contribute food and snacks making the function a more personal affair. This gave us the opportunity to meet new and old friends. Also the Directors could learn, first hand, about what matters most to our community. As Chairman it was reassuring to receive only positive comments about the Association and the improvements that have taken place. An African proverb states “It takes a village to raise a child”. It takes our collective efforts to make our community. Since 2010, 23 Directors have served on the Board on a voluntary basis. Our various committee members also volunteer their time. Each time a resident suggests an improvement, makes a recommendation, posts a comment on our website or reports a concern they are contributing. It isn’t practical to meet every demand but the suggestions offer guidance to the Board and Management. This makes Sandyport a community cultivated by its members. Our team carries out its duties with enthusiasm and with the support of our valued added partners. So on behalf of the Board I would like to express our gratitude to all that have contributed. On behalf of the Board of Directors
There are over $2m of necessary improvements on our program for consideration. To date we have been funding improvements from our maintenance budget. We will continue to do so as the budget permits. Your Board considers the demands of the community and balances them against essential improvements. We review these on a regular basis and determine which to complete in the budgeted period.
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Robert Sands Chairman
WE SHOULD ALL BE DELIGHTED WITH THE NEW BOARD. I’M SURE THEY WILL ALL CONTINUE WITH THE FINE EXAMPLES SET BY THE PREVIOUS BOARD. THANKS TO THEM ALL FOR THE CONTINUING IMPROVEMENTS AND KEEPING US BEAUTIFULLY MAINTAINED AND MANAGED. WE REALLY APPRECIATE ALL THEIR HARD WORK AND DEVOTION TO OUR COMMUNITY. CB
WELCOME 2
FROM THE CHAIRMAN
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MANAGEMENT TEAM
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ACCOMPLISHMENTS
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LOOKING AHEAD
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TREASURER’S REPORT
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2015 FINANCIAL BUDGET
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FINANCIAL STATEMENTS
31
PROFESSIONAL ADVISORS
COMMITTEES Audit & Finance Landscaping & Architectural
CONTRACTORS Gardening Creative Designs by Munroe
Security Candid Commando
Painting Louis Joseph
Waste Disposal Ismi Estesant
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MANAGEMENT TEAM OFFICERS
Steve Roberts Treasurer
Robert Sands Chairman
Eddie Gardner Secretary
DIRECTORS
Bruce Knowles Vice Treasurer
Monique Cartwright
Tony Miaoulis
MichĂŠle Rassin-Moodie
MANAGEMENT
Ronella Francis Asst. Manager
Orpheus Ingraham Maintenance
Simon Cooper General Manager
Charles Cooper Water/Sewerage
Perlissa Munroe Accountant
Sarah Barton Security Services
Kayla Lightbourne Accounts Clerk
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ACCOMPLISHMENTS T
he challenge of prioritizing between visual and ‘back of house’ improvements is ongoing. To put it another way it is deciding between aesthetics and necessities. The Board is in a permanent state of review to determine the most important improvements. The common property includes roads, waterways, sea walls, recreation areas, pools, tennis courts, parking, security booths, utility & storage buildings, offices, gates, fences, barriers, walls, security systems, water and sewer lines, wastewater treatment facilities, lighting, docks, carports and landscaped areas. Our budget includes maintenance of this property with improvements carried out if funding permits.
but made subtle aesthetic changes for a more modern interface. In recognition of the increasing trend in the use of mobile Internet, the website also responds according to the device used to access it. Our first official Owner Guide brings together the various policy documents in a friendly format. The guide is particularly helpful for the many new residents moving into Sandyport every month. The Association hosted it’s first social event in November. We believe it had the highest attendance of a single event ever held within the community. The participation was tremendous and the event was well received. As one owner put it “Sandyport is the best gated community on the Island.”
Behind the scenes
Security
We built a dedicated database to document routine maintenance inspections of common property. The database resides on our servers which we update in real time using iPads. Key personnel receive a prompt when an item is due for inspection, they report the condition and decide if it requires any action.
During late 2013 and early 2014 there had been an increase in the number of boat thefts in The Bahamas and Sandyport was a target. To better control access and egress to the Sandyport waterways we installed a new mechanized canal barrier. The operator controlled barrier opens and closes on demand allowing us to keep it closed as necessary. We added sensors to alert security of passing traffic and upgraded the CCTV systems for high-def video footage.
The website received a makeover. We retained the familiar layout
EVERYTHING LOOKS REALLY GREAT. THANKS TO ALL. ANON
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We networked the three security control points at the main, service and canal entrances to our file servers. By accessing the property database, security can review owner, tenant, vehicle and worker information. The information is live so updates are effective in real time. And we revised the procedures for registration of watercraft requiring detailed mandatory registrant information. As a result, the number of registered boats on file increased by a factor of ten. This has made our ability to police canal traffic much more effective. Our aging security vehicles received some upgrades. We replaced the SUV with a newer model and replaced two older golf carts with brand new models. The enhanced lighting on the new golf carts provide safer night time patrols. Since 2013 an external security company vets all our personnel before hiring. During 2014 we introduced a new policy requiring Licenses for all security personnel. The Ministry for National Security issued the Licenses which are subject to renewal every 6 months. With the upward trend in crime, we are taking extra precautions to keep our community safe.
Wastewater system The wastewater system received an overhaul in 2013. Further works are necessary to optimize the capacity of the system and provide more redundancy. We have deferred these pending the outcome of discussions with Water & Sewerage Corporation. Yet we made some minor improvements to the system. We installed a safety platform around the headworks (where the effluent meets the plant). This allows for safe cleaning and servicing of the screen. Also we replaced the corroded steel risers in our lift stations with heavy duty PVC risers. The risers are pipes that are part of the network of sewer lines running throughout Sandyport to the wastewater plant. The corrosion in steel pipes causes the wastewater to feed back into the system causing the pumps to work more than necessary. We operate a total of seven lift stations, each with two pumps. The pumps send wastewater from each lift station via the risers and on to the next lift station via a gravity feed. Maintaining each of the lift stations and components is critical for effective wastewater collection.
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ACCOMPLISHMENTS CONTINUED Wastewater system continued
Beach Lane
We introduced independent monthly analysis of our wastewater and potable water. The report allows us to notify Water & Sewerage Corporation of any deviations to acceptable standards. And it informs our wastewater team if they should take any action to maintain quality treated wastewater.
To determine our obligations of Beach Lane, our legal team researched the governing documents for the property. After over a year of research and liaising with representatives for Beach Lane owners, they clarified:
Recreation areas We renovated three tennis courts during the year, the two located near the main entrance and one at Governor’s Cay. All three courts received new regulation standard lighting. Governor’s Cay also received a new miniature scale basketball court complete with safety fencing. And we renovated the swimming pool by resurfacing the pool and expanding the deck with new travertine tiles. We replaced all fencing with a single picket fence around the pool which we screened with vegetation. We will complete the area with new parking spaces, curbing, playground and landscaping out of the 2014 budget. Infrastructure We commissioned a firm of structural engineers to perform an inspection of our sea wall. There are about 17,800 linear feet of sea wall of varying types in total. The engineers have classified them into 3 categories of urgency - within a year, within 3 years and over 3 years. But the engineers’ recommendation is to perform most of the works within 1-3 years. The areas most subject to flooding during the wet season received new drains. The five most affected locations were near Governor’s Cay 1 and Sandyport Drive numbers 33, 44, 158 & 183.
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• We own the common property outside of the curtilage of the buildings, except for the private parking and docks. As such maintenance of those areas is our responsibility. • The buildings, parking spaces and docks belong to the respective owners within Beach Lane. As such they, through their respective Associations, are responsible for maintenance of them. The exception is painting which falls under the scope of the License Agreement and is our responsibility. As soon as we determined which areas were our responsibility, we began to renovate them. Also the Board recommended that we renovate the docks although the maintenance responsibility is that of the owners. We completed the first phase of Beach Lane improvements which included: New walkways Replacement staircases New fences around the air conditioning units New landscaping Replacement dock lights The result is amazing.
THANK YOU FOR THE BEAUTIFICATION OF BEACH LANE……WE FINALLY LOOK LIKE PART OF SANDYPORT. GREAT JOB EVERYONE. CR
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IT’S GREAT TO LIVE IN A COMMUNITY WHERE OUR VOICES ARE HEARD. THANK YOU SANDYPORT FOR PUTTING THE DOGGIE BAGS AND CONTAINER ACROSS FROM THE MAIN POOL ON SP DRIVE. ALSO, IT’S A PLEASURE TO DRIVE AROUND SP AND VIEW THE WELL-GROOMED COMMON AREAS. JS
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LOOKING AHEAD O
ur proposed improvements are grouped into essential or optional categories. The Board reviews the improvements program and available budget to determine those that best serve the community.
Security is one of the main reasons people live in a gated community. We secure the majority of the perimeter with chain link fence. There are locations that receive special attention from criminals and would be more secure with a wall.
Essential improvements
The processed wastewater can be safe for irrigating common areas if given further treatment. We are exploring the cost to install a filtration and pumping system for this purpose. The original common irrigation lines are beyond repair so we will also need to consider the cost to replace them. We expect the cost of installing the irrigation system will be offset by a reduction in our water expense.
The wastewater treatment plant is capable of processing 80,000 gallons per day in its present configuration. We currently process about 75,000 gallons per day (gpd) which includes sewerage from Sandyport Olde Towne. We can reconfigure the plant to process it’s full capacity of 100,000 gpd by adding an equalization system. The cost is between $230,000 and $400,000 depending on the options. We estimate the need for an equalization system within 3 years and about 5 years for plant expansion. After we treat the wastewater, we return it to the water table via a deep return well. The engineer’s report recommends the addition of an extra well for redundancy. The return well is about 75% congested. A redundant well will allow us to continue disposing of the treated wastewater in the event of a failure of the existing well. The cost for this redundancy is over $100,000. We commissioned Engineering & Technical Services Ltd. to review the condition of our sea wall and canal inlet. The 17,800 linear feet of sea wall vary in condition and they recommended most of the repairs for completion within 3 years. The engineers provided a design that will end the constant infiltration of sand through the groin at the canal inlet. Dredging costs about $50,000 each year and we should make the repairs a priority to reduce the need for periodic dredging. The estimated cost to repair the canal inlet is $250,000 of which the developer should expect to make a contribution. There are shallow spots in the canal basin that are problematic during low tide. The estimated cost to remedy is $90,000 and, for the moment, is not deemed urgent. Optional improvements One tennis court remains outstanding for renovation near Roberts Isle. The neighboring property was encroaching which delayed making further plans. With the encroachment resolved, we plan to renovate the tennis court and pool areas as they are overdue. The pool area at Clipper Island is also due for renovation. The pool needs resurfacing and we plan to replace the deck at the same time. We have limited parking in the area so we will change the layout to include more parking bays.
Our roads, particularly closer to the main entrance, have deteriorated. When we resurface them, we will consider adding pedestrian walkways where possible. Also the area along the bridge from West Bay Street to our main entrance is unsafe. There is no walkway for pedestrians and it is unappealing. We may approach the government for permission to install a path, it will enhance the entrance and make it safer. We have started to renovate the bridges and added decorative details to give them a finished appearance. And we are replacing the original dock lights with solar powered LEDs. There are about 200 street lights and 70 ‘dusk to dawn’ lights around the property. We may review the lighting and consider consolidating to a single more robust and effective design. We completed the first phase of renovations in Beach Lane. Future plans include remodeling the parking area and modifying the main entrance. The main entrance plans include adding a wall to either side that projects an air of exclusivity about our community.
19% Total of direct expenses invested in improving our community (2013: 16%)
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TREASURER’S REPORT W
e completed the year ahead of budget with a modest $22,910 surplus. Our maintenance revenue increased by 1.9%, or $48,286, with total revenue increasing by $210,862 or 6.8% to $3,316,435 (2013: $3,105,573).
We introduced late payment fees in 2013, at that time about 140 accounts each month incurred the penalty. In 2014 late payment fees contributed $32,257 to our income averaging about 100 accounts, or 14%, per month.
Other services revenue rose by $87,515 or 107%. Most of this is due to a rate revision for the treatment of wastewater from Olde Towne billed to the development company (“Devco”). Devco has not yet agreed to the adjusted rate pending review. We implemented the new rate in 2013 and in the meantime Devco continues to pay the invoices at the former rate.
There was no hurricane damage and our dredging expenses for the canal inlet were lower than usual at $38,924 (2013: $62,610). Amenity expenses were higher than the previous year. Holiday decor, the social event and repairs to the amenity areas were the main contributing factors.
The underpayment of wastewater fees by Devco has affected our receivables balance which increased to $459,167 (2013: $366,827). The increase in our bad debt provision is also affected based on the current policy as set out in the note. At the turn of the year, Devco owed a total of $125,398 with a further $110,371 due from accounts which they are the owner of record. We have instructed our legal counsel to pursue them for the balances outstanding. A further $135,644 is the subject of litigation with other debtors. The court has granted an order for vacant possession enabling us to sell one of the properties to clear a $25,036 debt. We are in discussions with Water & Sewerage Corporation to determine if there are plans to connect Sandyport to a public sewer system. The outcome of those discussions may impact on the agreement between Devco and ourselves. As our wastewater plant reaches capacity, we need to plan for the demand as the community grows. If there is no short to medium term plan to connect Sandyport to a public sewer system, the treatment plant will soon need expansion. Under the terms of the agreement, it is our understanding that Devco has the obligation to carry out the expansion. The outcome of discussions with Water & Sewerage Corporation will determine the next steps in this regard.
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The waste disposal contract came to an end during the year, ending a 3 year fixed price term. We explored competitive options and renewed the contract for a further year with an upward rate revision. We also renewed the gardening contract for a further year on the same terms. We managed to continue with a lean team of 26 personnel (2013: 27). In 2010 our payroll had 64 employees but we have made these reductions without compromising service. Some positions were redundant and many contracted out. This has afforded us better cost control and greater flexibility to make improvements. And we offer competitive pay and a quality working environment for our team. We have also established a track record with our vendors for prompt payment to secure priority service and pricing. Our improvements budget was $367,500 which we were able to increase to $534,707, making it the highest spend to date. Although we invested in much needed improvements, we ended the year with $957,340 in cash, a 65% increase (2013: $578,863). Much of the increase is due to early payment of 2015 fees; owners paid 26% of 2015 maintenance fees by the end of January 2015 to take advantage of the 3% early settlement discount.
IMPROVEMENTS
29+27+258541A 1%
SEAWALL & CANAL
4%
WASTEWATER SYSTEM
5%
ROADS & LIGHTING
8%
SECURITY
29%
GOVERNOR’S CAY
$543k
25%
TENNIS COURTS
27%
BEACH LANE
BAD DEBT The policy for bad debt provision remained the same as the previous year; we provide for all balances over 360 days past due. As a result the provision for bad debts increased by $79,809 to $182,319. The Board believes this policy to be adequate as the legal basis of the license agreement supports most of the receivables.
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VAT REGISTRATION The Government advised that Homeowners’ Associations should be VAT registered. As we met the criteria for registration, we implemented VAT without incident. As registrants we are able to recover the VAT paid to our suppliers, so there is no material cost burden to the Association. But Homeowners are liable for the payment of VAT for goods and services provided by the Association.
CONGRATULATIONS TO THE BOARD ON THE ANNUAL REPORT, AND INFORMATION THEREIN WHICH IS VERY COMPREHENSIVE. THERE ARE MANY POSITIVE OPERATIONAL AND PHYSICAL IMPROVEMENTS THAT HAVE BEEN MADE, AND MUCH WORK STILL TO DO! WELL DONE IN PARTICULAR ON THE RECEIVABLES FRONT AND FINANCIAL HEALTH OF SANDYPORT .... AND THE MANAGEMENT TEAM OF COURSE. ST
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2015 FINANCIAL BUDGET
REVENUE Maintenance fees - 905,807 sq ft @ $2.75 per sq ft (389 homes, 2014 : 378) Indenture fees (109 lots, 2014 : 118) Other maintenance fees fees - 23,734 sq ft (6 under construction, 2014 : 7) Water & meters income Other services Total revenue
2014 2015 2,490,969 172,502 34,313 453,266 50,568 3,201,618
DIRECT EXPENSES Security expenses
693,536
Gardening expenses
418,834
Water & meters
397,877
Maintenance of common areas
360,272
Wastewater management Improvements
301,775 300,000
Painting expenses
173,792
Garbage removal
84,000
Total direct expenses Gross Profit
2,730,087 471,530
OPERATING EXPENSES Salaries, benefits & national insurance
246,475
Office & computer supplies
44,526
Provision for doubtful accounts
41,830
Professional fees
41,016
Rent & utilities
36,600
Telephone & communications
15,516
Insurance
10,512
Finance charges
9,081
Other expenses
2,370
Property & other taxes
1,000
Total operating expenses NET MAINTENANCE FUND
448,930 22,599
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FINANCIAL STATEMENTS Financial Statements For The Year Ended December 31, 2014 And Independent Auditors’ Report
W
e have audited the accompanying financial statements of Sandyport Homeowners Association Limited (“the Homeowners Association”), which comprise the statement of financial position as at December 31, 2014 and the related statements of maintenance fund, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards for Small and Medium-sized Entities, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Sandyport Homeowners Association Limited as at December 31, 2014 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards for Small and Medium-sized Entities.
HLB GALANIS & CO. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
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March 6, 2015
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF FINANCIAL POSITION At December 31, 2014 (Expressed in Bahamian dollars)
ASSETS
2014
2013
Cash and cash equivalents
957,341
580,712
Accounts receivable (Note 4)
276,847
264.316
-
5,538
72,150
73,881
1,306,338
924,447
114,629
137,170
1,420,967
1,061,617
216,516
118,615
647,018
408,479
863,534
527,094
399
395
General reserve fund (Note 8)
534,124
430,593
Maintenance fund
22,910
103,535
557,433
534,523
1,420,967
1,061,617
Current Assets
Loan receivable (Note 5) Prepayments and deposits Total current assets Fixed assets, net (Note 6) TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES Current liabilities Accounts payable and accrued expenses Prepaid maintenance fees and deposits (Note 7) Total current liabilities
SHAREHOLDERS’ EQUITY Share capital 5,000 ordinary shares authorized at $1.00 par value, 399 (2013: 395) shares issued and outstanding
Total shareholders’ equity TOTAL
The accompanying notes form an integral part of these audited financial statements. These financial statements were approved by the board of directors and authorized for issue on March 5, 2015.
Director
Director
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF MAINTENANCE FUND For the year ended December 31, 2014 (Expressed in Bahamian dollars)
REVENUE
2014
2013
2,648,973
2,600,687
Water & meters income
453,887
400,068
Other services
169,233
81,718
Miscellaneous income
44,342
23,100
3,316,435
3,105,573
689,400
609,625
Improvements (Note 10)
543,703
406,834
Gardening expenses (Note 11)
432,158
402,894
Maintenance of common areas (Note 12)
358,535
325,710
Water and meters (Note 13)
349,865
365,336
Waste water management (Note 14)
220,163
271,891
Painting expenses (Note 15)
174,888
159,581
Garbage removal
73,500
66,000
2,842,212
2,607,871
474,223
497,702
Salaries, benefits & national insurance
222,987
210,225
Provision for doubtful accounts (Note 4)
79,809
30,444
Rent & utilities (Note 16)
36,600
36,600
Office & computer supplies
30,219
24,539
Professional fees
28,280
27,553
Telephone & communications
16,615
14,371
Depreciation (Note 6)
14,807
22,118
Finance charges
10,641
15,787
Insurance
10,355
9,722
Property & other taxes
1,000
1,000
-
1,808
Total operating expenses
451,313
394,167
NET MAINTENANCE FUND
22,910
103,535
Maintenance fees
Total revenue
DIRECT EXPENSES Security expenses (Note 9)
Total direct expenses Gross Profit
OPERATING EXPENSES
Other expenses
The accompanying notes form an integral part of these audited financial statements. 20
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY For the year ended December 31, 2014 (Expressed in Bahamian dollars) Share Capital
General Reserve Fund
Maintenance Fund
Total
Balance at December 31, 2012
357
424,826
5,805
430,988
Shares issued during the year
38
(38)
-
-
Maintenance fund distribution
-
5,805
(5,805)
-
Net maintenance fund for the year
-
-
103,535
103,535
395
430,593
103,535
534,523
Shares issued during the year
4
(4)
-
-
Maintenance fund distribution
-
103,535
(103,535)
-
Net maintenance fund for the year
-
-
22,910
22,910
399
534,124
22,910
557,433
Balance at December 31, 2013
Balance at December 31, 2014
The accompanying notes form an integral part of these audited financial statements.
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CASH FLOWS For the year ended December 31, 2014 (Expressed in Bahamian dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
2014
2013
22,910
103,535
65,640
90,438
(860)
44
79,809
30,444
167,499
224,461
(92,340)
56,279
1,731
22,490
Increase in accounts payable and accrued expenses
97,901
13,935
Increase in prepaid maintenance fees and deposits
238,539
32,980
413,330
350,145
(45,089)
(76,622)
Proceeds from disposal of fixed assets
2,850
39
Repayment of loan receivable
5,538
11,064
(36,701)
(65,519)
Net increase in cash and cash equivalents
376,629
284,626
Cash and cash equivalents, beginning of year
580,712
296,086
957,341
580,712
800
2,649
Cash in bank
936,088
557,813
Term deposit
20,453
20,250
957,341
580,712
Net maintenance fund Add non-cash transactions: Depreciation (Note 6) (Profit) loss from disposal of fixed assets Provision for doubtful accounts Operating income before working capital changes (Increase) decrease in accounts receivable Decrease in prepayments and deposits
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets (Note 6)
Net cash used in investing activities
Cash and cash equivalents, end of year
Cash and cash equivalents are comprised of the following: Cash on hand
The accompanying notes form an integral part of these audited financial statements.
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS For the year ended December 31, 2014
1. GENERAL Sandyport Management Company Limited was incorporated under the laws of The Commonwealth of the Bahamas on May 25, 1990 as a wholly owned subsidiary of Sandyport Development Company Limited (“Devco”). On September 14, 1998, the name of the Company was changed to Sandyport Homeowners Association Limited (“the Homeowners Association”) On May 21, 2008, ownership of the common areas and common infrastructure of the Sandyport residential community was transferred from Devco to the Homeowners Association. The principal activity of the Homeowners Association is to manage the Sandyport residential community in accordance with the terms of the authority granted to Devco by licences issued to each property owner defining their rights and obligations in regard to the common areas. Devco assigned the said authority under these licences to the Homeowners Association on November 3, 2009. On January 2, 2010, Devco transferred the ownership of the Homeowners Association to the property owners of the Sandyport residential community. As at December 31, 2014 the Homeowners Association had 26 employees (2013: 27).
2. BASIS OF PREPARATION These financial statements have been prepared in accordance with International Financial Reporting Standards for Small and Medium-sized Entities. The preparation of financial statements in conformity with International Financial Reporting Standards for Small and Medium-sized Entities requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Bahamian dollar is the Homeowners Association’s measurement and reporting currency because its capital and a majority of its transactions are denominated in that currency. Foreign currency transactions are translated into Bahamian dollars at the rates of exchange prevailing at the time of the transaction.
3. SUMMARY OF ACCOUNTING POLICIES a. Cash and cash equivalents - Cash and cash equivalents include cash on hand and at bank and short term deposit which have a maturity period of less than three months. b. Accounts receivable - Accounts receivable are stated at cost less provision for doubtful accounts and any impairment losses. Management records provisions when in their opinion amounts are irrecoverable based on historical performance and solvency of the customer. c. Fixed assets - Fixed assets are stated at cost less accumulated depreciation and any impairment losses. Depreciation is calculated on the straight-line basis to write-off assets over their estimated useful lives as follows: Waste water system Maintenance equipment Computer and office equipment Security equipment
3-5 years 3 years 3 years 3 years
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014
d. Revenue recognition - Revenue is measured at the fair value of the consideration received or receivable and represents the monthly maintenance fee charged to the homeowners. This fee is based on square footage of the house on each property and owners of empty lots are charged a flat fee. e. Income and expense recognition - Income and expenses are recorded on an accrual basis of accounting. f. Impairment of assets - An assessment is made at each financial position date to determine whether there is any indication of impairment of any assets, or whether there is any indication that an impairment loss previously recognized on an asset in prior years may no longer exists, the asset’s recoverable amount is estimated. An asset’s recoverable amount is computed as the higher of the asset’s value in use or its net selling price. An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to operations in the period in which it arises unless the asset is carried at a revalued amount in which case the impairment is charged to revaluation. A previously recognized impairment is reversed only if there has been a change in the estimates used to determine the recoverable amount of the asset, however, not to an amount higher than the carrying amount that would have been determined (net of any depreciation), had no impairment loss been recognized for the asset in prior years.
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014
4. ACCOUNTS RECEIVABLE Accounts receivable is comprised as follows: 2014
2013
459,167
366,827
(182,320)
(102,511)
276,847
264,316
Balance, beginning of year
102,511
80,000
Add: provision made during the year
79,809
30,444
-
(7,933)
182,320
102,511
Current
111,140
104,801
31 to 60 days
28,857
31,102
61 to 90 days
11,988
10,426
91 to 360 days
124,862
117,516
Over 360 days
182,320
102,982
459,167
366,827
Accounts receivable Less: provision for doubtful accounts Accounts receivable, net
The movement in the provision for doubtful accounts is as follows:
Less: amounts written off during the year Balance, end of year
The ageing of receivables are as follows:
Balance, end of year
5. LOAN RECEIVABLE The Homeowners Association loaned $33,192 to Ismi Estasant on July 1, 2011 to purchase a 1998 Mack Truck for collection and disposal of garbage, refuse and yard waste. Payments of $922 are made monthly. No interest is charged on the loan unless payments are not received when due, then interest is charged at 10% per annum. The Truck is held as collateral along with a promissory note. The balance at December 31, 2014 was $ nil (2013: $5,538).
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014
6. FIXED ASSETS The movement of fixed assets during the year is as follows:
Waste Water System
Maintenance Equipment
Computer & Office Equipment
Security Equipment
Total
170,562
12,085
67,996
32,871
283,484
Additions
70,841
-
2,388
3,393
76,622
Disposals
(27,727)
-
(500)
-
(28,227)
Balance at December 31, 2013
213,676
12,085
69,854
36,264
331,879
23,538
1,698
(2,939)
22,792
45,089
-
(2,875)
-
(5,000)
(7,875)
237,214
10,908
66,915
54,056
369,093
100,500
2,366
12,851
16,698
132,415
54,983
4,028
22,118
9,309
90,348
Disposals
(27,727)
-
(417)
-
(28,144)
Balance at December 31, 2013
127,756
6,394
34,552
26,007
194,709
Depreciation
41,236
4,353
14,807
5,244
65,640
-
(1,579)
-
(4,306)
(5,885)
168,992
9,168
49,359
26,945
254,464
As at December 31, 2014
68,222
1,740
17,556
27,111
114,629
As at December 31, 2013
85,920
5,691
35,302
10,257
137,170
COST Balance at December 31, 2012
Additions/Transfer Disposals Balance at December 31, 2014
ACCUMULATED DEPRECIATION Balance at December 31, 2012 Depreciation
Disposals Balance at December 31, 2014
CARRYING VALUE
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014
7. PREPAID MAINTENANCE FEES AND DEPOSITS Prepaid maintenance fees and deposits are as follows: 2014
2013
Advance payments
550,018
311,728
Water deposits
97,000
96,751
647,018
408,479
2014
2013
Wages
402,810
406,745
Service contract
205,437
151,662
Security maintenance
54,487
22,716
Supplies
20,328
17,448
Depreciation (Note 6)
5,244
9,309
Uniforms
1,094
845
-
900
689,400
609,625
2014
2013
Governor’s Cay - Recreation Area
159,484
-
Beach Lane Common Area
148,296
-
Tennis courts
133,359
-
Security
46,093
20,148
Other
34,739
88,265
Wastewater system
21,732
173,962
-
124,459
543,703
406,834
Total
8. GENERAL RESERVE FUND This amount represents a reserve established to provide for future contingencies.
9. SECURITY EXPENSES
Other Total
10. IMPROVEMENTS
Sandyport Drive - Recreation Area Total
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014
11. GARDENING EXPENSES 2014
2013
366,000
366,000
Extermination
36,882
36,459
Garden supplies
24,667
-
Miscellaneous
4,609
435
432,158
402,894
2014
2013
Utilities
137,565
139,031
Wages
77,645
71,624
51,178
14,705
Dredging
38,925
62,610
Swimming pool
28,097
17,653
Contract service
8,253
1,600
Cleaning repairs
7,250
6,455
Roads and lights
5,269
7,749
Depreciation of equipment (Note 6)
4,353
4,028
-
255
358,535
325,710
2014
2013
346,428
362,765
3,437
2,571
349,865
365,336
Contract services
Total
12. MAINTENANCE OF COMMON AREAS
Supplies and tools
Equipment rental and tools Total
13. WATER AND METERS Water Water meters Total
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014
14. WASTE WATER MANAGEMENT 2014
2013
Wages
75,866
77,313
Materials
43,651
51,152
Services
43,468
44,721
Depreciation (Note 6)
41,236
54,983
Repairs and maintenance
15,942
43,722
220,163
271,891
2014
2013
110,000
94,753
64,888
64,828
174,888
159,581
Total
15. PAINTING EXPENSES Painting contractors Paint and supplies Total
16. RENT AND UTILITIES The Homeowners Association rents office space from Artech Bahamas Ltd. at $36,600 per annum, inclusive of electricity and water. The lease expires on August 31, 2015 with an option to renew for a further 2 years.
17. CONTINGENT LIABILITIES Following an evaluation of the wastewater treatment system in 2012, Harris Civil Engineers recommended a series of improvements and repairs. Certain of the work was completed by the end of 2014 and it is estimated that completion of the remaining will require an expenditure of $430,000. The Board believes that the recommended work can be completed out of budgeted income streams but will consider the need for a special assessment should this become necessary. In addition, the wastewater system is almost at its operational capacity: the preliminary budget to expand the capacity to meet anticipated future requirements is $1 million. Under the terms of an Agreement dated November 3, 2009, the cost of such expansion will be borne by the developer, Sandyport Development Company Limited. The Board continues to explore alternative cost effective and production solutions to this issue.
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS CONTINUED For the year ended December 31, 2014
18. FINANCIAL RISK MANAGEMENT The Homeowners Association is exposed to a variety of risks including liquidity risk, credit risk, interest rate risk and capital risk management arising in the normal course of the Homeowners Association’s business activities. The Homeowners Association does not have any written risk management policies and guidelines. Management monitors the financial risks of the Homeowners Association and takes such measures as considered necessary from time to time to minimize such financial risks. LIQUIDITY RISK - Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. Prudent liquidity risk management implies maintaining sufficient cash. The Homeowners Association monitors and maintains a level of bank balances deemed adequate to finance its operations. The Homeowners Association deposits cash with financial institutions of good standing. CREDIT RISK – Credit risk arises from the possibility that customers may not be able to settle obligations within the normal terms of transactions. The Homeowners Association performs ongoing credit evaluation of the debtors’ financial condition and maintains an account for allowance for doubtful trade and other accounts receivable based upon the expected collectibles of all trade and other accounts receivable. The Homeowners Association has no significant concentration of credit risks with any single counterparty or group counterparties. INTEREST RATE RISK – Cash flow interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rate. Demand deposits and term deposits are the only significant interest bearing assets and liabilities. Accordingly, the Homeowners Association’s income and operating cash flow are substantially independent of changes in market interest rates. CAPITAL RISK MANAGEMENT – The Homeowners Association manages their capital to ensure that they will be able to continue as going concern while maximizing the return to homeowners through the optimization of the debts and equity balance. The Homeowners Association’s overall strategy remains unchanged from 2010. The Capital structure of the Homeowners Association consists of debt, cash and equity attributable to equity holders comprising of share capital, general reserve fund and maintenance fund.
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Auditors: HLB Galanis & Co. 7 North Buckner Square Olde Towne, Sandyport P. O. Box N-3205 Nassau, The Bahamas Tel: (242) 327-0689 Fax: (242) 327-0696 Web: www.hlbgalanis.com Legal Advisors: Kahlil D. Parker Cedric L. Parker & Co. Chambers No.9 Rusty Bethel Drive P.O. Box N-1953 Nassau, The Bahamas Tel: (242) 322-4954/5 Fax: (242) 328-3706 Email: kdp@parkerslaw.net Consulting Architects: Alberto G. Suighi Artech Bahamas Ltd. Lagoon Court Nassau, The Bahamas Tel: (242) 327-2335 Fax: (242) 327-2337 Web: www.artechbahamas.com Bankers: CIBC First Caribbean Sandyport Branch Nassau, The Bahamas P.O. Box N-8350 / N-7125 Tel: (242) 327-8364 / 327-4957 Fax: (242) 327-4955 Account: 200-167527 Web: www.cibcfirstcaribbeanbank.com Scotiabank Cable Beach P.O Box N-7518 Tel: (242) 702-8100 Fax: (242) 327-5728 Nassau, The Bahamas Account: 70045-72613 Web: www.bahamas.scotiabank.com Insurance Agents: Tavares & Higgs Blake Road P. O. Box SP-64003 Nassau, The Bahamas Tel: (242) 327-8606 Fax: (242) 327-8607 Email: stavares@tavareshiggs.com
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