S
2016 ANNUAL REPORT SANDYPORT HOMEOWNERS ASSOCIATION LTD.
www.sandyport.management
2016 was another busy year for your Association, made more challenging with the arrival of hurricane Matthew. In spite of extensive damage and expense, we were able to prepare in time for holiday celebrations. Our third annual social event was a great success and it was my pleasure to receive so much positive feedback from fellow owners. This Annual Report details some of the improvements that we performed in the year. There are always upgrades and
FROM THE
remedial works in the pipeline that the Board reviews and prioritizes. At the 2016 AGM we discussed the possibility of making a special assessment to fund repairs to the canal inlet. The cost of clearing the inlet has risen over the years.
CHAIRMAN
Boaters were also inconvenienced whenever the inlet
ROBERT SANDS
fundraising exercise to a vote. We determined that if 50% +
Chairman since 2012
1 vote of the members agreed to the proposal, that it would
Sandyport Homeowners
proceed. We also agreed that a no vote constituted a vote
Association Ltd.
in favor of the proposal. Of the votes received, 49.8% had
was impassable. The Directors have the authority to issue assessments as needed, but we felt we should get your input. The members attending the AGM agreed to put the
no objection. There were 311 non-votes, bringing the total in favor to 81%. Whilst this was enough support to proceed, we decided against issuing the assessment. The high number of non-votes together with an almost even split amongst the voters suggested support was weak.
IMPROVEMENTS Nonetheless, we took the decision to defer most projects and make the canal inlet repairs a priority. Our most pessimistic projection indicated it was worth doing if it saved 50% of the cost of dredging. Since the work was complete, we have experienced severe weather, including hurricane Matthew.
The effectiveness of the repairs has exceeded even our most
I thank my fellow Directors for their devotion over this
pessimistic projections. We expect a return on the $175,000
past year. On behalf of the Association we also thank the
investment within 3-5 years. Add to that the inconvenience
members of the Landscaping & Architectural and Audit &
we have spared boaters, it seems we made the right decision.
Finance Committees. Like the Directors, they have brought
POLICY REVIEWS The extreme weather caused us to review the building
the benefit of their experience and expertise to the table as volunteers. The management team have continued to do an excellent job executing our demands.
standards permitted in Sandyport. There was extensive roof damage island-wide and our community was no exception.
It has been my pleasure to serve as your Chairman since
To that end, we agreed to relax the requirements for roofing
December 2012. In the past year, we experienced a once-in-
materials somewhat.
a-hundred-year severe weather event and performed major improvements. Yet we closed the financial year with a small
We also reviewed other policies. We no longer insist on as-
surplus and, I’m pleased to report, without raising any fees.
built drawings upon completion of a new home, although we still encourage them. We decided to maintain the
On behaf of the Board of Directors
addressing convention inherited from the developer. We have documented the government numbers but for our purposes, continue with the legacy numbers. We received several requests to subdivide larger lots. Our treatment of these requests has been consistent, we have found no
Robert Sands
reason to contravene the first restrictive covenant. There were several complaints about the use of homes for vacation rentals. After checking with our legal team, we took steps to stop this activity. There were no material security breaches which is in part down to the amazing work our security team do. But we have also taken steps each year to improve security. In 2016 we improved CCTV coverage, enhanced the perimeter and conducted an independent security review. We also
“A LOT OF WORK (AND EXPENSE) BEFORE AND AFTER THE STORM. THANK YOU FOR TAKING CARE OF US.”
CB, CLIPPER ISLAND
took steps to ensure that all departments had adequate succession plans in place.
tel. +1 (242) 676-8990 l www.sandyport.management
3
CONTENTS
2
FROM THE CHAIRMAN
14
TREASURER’S REPORT
5
OUR BOARD OF DIRECTORS
16
2017 FINANCIAL BUDGET
6
MANAGEMENT TEAM
17
AUDITOR’S REPORT
7
OPERATIONS SUMMARY
35
PROFESSIONAL ADVISORS
10
CREATING ADDED VALUE
OUR BOARD OF DIRECTORS CHOSEN BY YOU TO SERVE OUR COMMUNITY Our Articles of Association requires that a Board of 7 volunteer Directors each serve a term of 2 years. Every year at least 3 Directors’ tenure comes to an end and we vote at our Annual General Meeting to elect their replacements. Former Directors may be re-elected.
ROBERT SANDS
BRUCE KNOWLES
SCOTT FARRINGTON
Chairman Re-elected 2015
Treasurer Re-elected 2016
Secretary Elected 2015
KOSTA BERDANIS
EDWARD GARDNER
MICHELE MOODIE
STEPHEN ROBERTS
Director Elected 2015
Director Re-elected 2015
Director Re-elected 2016
Director Elected 2016
tel. +1 (242) 676-8990 l www.sandyport.management
5
MANAGEMENT TEAM
6
SIMON COOPER
SARAH BARTON
General Manager
Security Services
RONELLA FRANCIS
ORPHEUS INGRAHAM
Assistant Manager
Maintenance
PERLISSA MUNROE
CHARLES COOPER
Accountant
Water / Sewerage
KAYLA LIGHTBOURNE
KOORARAM RAMBURUN
Accounts Clerk
Progress Chaser
OPERATIONS
SUMMARY
“CONGRATULATIONS ... FOR THE SUPERB EVENT LAST NIGHT!!! A WONDERFUL START TO THE FESTIVE SEASON!!!”
CR, BEACH LANE
“Good security is not one thing, but multiple overlapping
OVERVIEW The operations of the Association comprise the following departments: •
Security Services
•
General Maintenance
secure community via this layered approach to security. Clearly there is basic understanding of this, exemplified by the process in play on the property. For this the management and security team should be commended.”
Water & Sewerage Management
SECURITY SERVICES
We installed a network that connects the various security
Security Services has a Manager, Deputy and shift supervisors. They are responsible for the protection of persons and property. They also check the community for infractions and other transgressions. Enforcement of the rules and regulations helps us to maintain a quality standard of living. When enforcement meets with resistance, remember security are working in our collective interests. We continue to work with transgressors, preferring cooperation to coercion.
booths. The network carries voice, data and CCTV information. We have expanded CCTV coverage and improved the availability and operability of the phone system. The network connection between the booths is now persistent, allowing for faster real time access to various management systems. We have finalized the installation of generators at all security and maintenance locations. For nighttime safety purposes, we have installed road reflectors and ‘daylight’ bulbs in all street lights. As a precautionary measure, we have also
We hire our core security personnel with support from a primary security contractor. This provides flexibility and redundancy. An independent security review reached the following conclusion:
failsafes. Sandyport POA has taken some very important first steps in delivering and maintaining a safe and
• Gardening •
initiatives and strategies designed to create numerous
installed warning signs prohibiting diving from the bridge.
GENERAL MAINTENANCE Our core Maintenance team includes a Manager, Assistant
“MAY WE TAKE THIS OPPORTUNITY TO SAY THANKS TO THE GARDENING CREW FOR THE WORK DONE IN OUR YARD TODAY.” DT, GOVERNOR’S CAY 8
and Progress Chaser. We perform most minor maintenance
on owners to check their private property. For the gardening
work
The
service, we introduced door hangers as a quality control tool.
department also oversees the performance of the painting
The contractor leaves one following each service to identify
and garbage collection contractors.
the work performed. But they also serve as a prompt that we
ourselves,
and
outsource
larger
projects.
serviced the garden. The waste disposal contractor was unable to continue servicing Sandyport. We identified a replacement and service continued without interruption. We also considered a recycling program but decided that it was not practical in the prescribed format. The three-year paint cycle ended in 2016. We decided to continue with the existing contractor and materials suppliers for the 2017-2019 cycle. When we were sure that hurricane Matthew was on track to hit Nassau, we made preparations for the clean-up. Concerned about the level of devastation, we decided to clear both common and private properties. This was a huge undertaking as there were very limited available resources
WATER & SEWERAGE MANAGEMENT
on the island. The volume of debris that we removed was
Our Water & Sewerage department operates the wastewater
staggering, much of it being vegetation.
collection, treatment plant and water metering. The team consists of a Manager, Assistant and an independent
As a result, we have since invested in a wood chipping
consultant.
machine to process green debris. We built bunkers at the maintenance compound and process the vegetation on site.
GARDENING
There were no major developments in the department during the year. The plant and collection systems are in reasonable condition and the independent laboratory analyses are
Our landscaping contractor has operated the gardening
satisfactory. The treatment plant is operating close to
division for the past 4 years. The contract ended in December
capacity and expansion plans are under consideration.
2016 which we extended by 3 months. The replacement contractor takes over the division from March 2017.
The department also oversees the management of the swimming pools. Of the five pools, we fitted four with
Feedback is important in helping us to maintain our
automatic pool chlorinators. We also replaced the pool
standards. Our team checks common property and relies
maintenance contractor for better consistency. tel. +1 (242) 676-8990 l www.sandyport.management
9
CREATING ADDED VALUE APPROVED IMPROVEMENTS We invested $175K (net of a contribution of $18K from Sandyport Development Company Ltd.) to repair the canal inlet. Engineers had determined that sand was infiltrating the inlet through the groin. By integrating a concrete wall, we were able to reduce the amount of sand entering the inlet. In the 6 months since the work was complete, the canal inlet has remained clear. This is despite experiencing the strongest hurricane in 100 years. Based on recent average costs, we have saved approximately $33K in dredging expenses since we completed the work.
BEACH LANE AND MAIN ENTRANCE We continued with improvements to Beach Lane and the main entrance. The investment to date for the combined projects is $201K. At the year-end work was ongoing but included the following:
10
•
Add a perimeter wall between the canal security
booth and the security control room
•
Add an equipment compound
•
Remove planter and increase parking spaces
•
Resurface Beach Lane parking lot
The major improvements exhausted most of the available
•
Add a turning lane
budget. Minor improvements included the following:
•
Extend the public sidewalk and add a pedestrian
crossing
•
Extension of the Sand Dollar Island marina
•
Update the security control room appearance
•
Add a new property wide wireless network for
•
Update landscaping
communications, CCTV and server access
•
Add signage
•
Professional grade batting cage
•
Update lighting
•
Installation of a tennis backboard
URGENT
DEFERRED PROJECTS
We conducted a survey of our sea walls in 2014 which concluded that there were 17,800 linear feet of wall in various states of repair. A recent survey has identified those sections of sea wall requiring urgent attention. The Directors have
The demands for improvements always far exceed
instructed management to make these repairs a priority for
the available funds. Over the past few years we
2017. The costs are not well understood as repairs vary due
have generated reserves from the maintenance
to the different levels of decay and the types of construction
budget for improvements. It becomes more
methods used. Since we have not yet established the cost,
challenging over time as the growth in revenue
we do not know how much of the work we will be able to
does not keep pace with inflation. The Directors
perform in 2017, due to budget constraints.
review the available budget and decide which projects receive priority.
SEMI-ELECTIVE These improvements are necessary, but not urgent, to
Some projects impact the aesthetic of the
maintain the security, safety and function of the community.
community, thus its appeal and impact on
We modified the layout west of the main entrance, and built
property value. Other projects are less visible
the new sidewalk inside our property. The land to the north
but, if left unchecked, will result in significant
of the new sidewalk is government property. The Ministry
expenditure in the future. So, we look for a
of Works have committed to building an acceleration lane-
balance between urgent, semi-elective and
cum-bus stop in that area. We plan to build a waiting area
elective projects.
for residential workers and a wall extending east from the tennis court.
tel. +1 (242) 676-8990 l www.sandyport.management
11
The condition of the roads varies. In general, the condition is poorer in the more established parts of the development. We carry out repairs as necessary, but with each repair the quality and appearance of the roads deteriorates. The wastewater treatment plant is in fair operating condition, although close to capacity. We can increase capacity by 25% installing an equalization system at a cost of $235K. There is an obligation in place for the original developer to expand the system, which we prefer. The expanded system is able to handle the volume of the finished development and may cost in the order of $1M. We send the treated water to one well. Engineers have recommended drilling a redundant well at a cost of $100K. If the existing well fails, there is no alternative for the storage of treated wastewater. We could use treated wastewater for irrigation. But the
over time which will lead to more imbalances at the plant.
investment is approximately $170K for the system and main
An imbalance is generally noticed in the community by the
lines. That estimate excludes individual irrigation zones.
presence of a foul odor. When a main water line breaks, we disconnect the water supply that precedes the break. The main water line runs
“I LIKE THE MAKEOVER AT THE ENTRANCE OF SANDYPORT!�
KC, CLIPPER ISLAND
from the main entrance in a loop to the service entrance. Thus, the closer the break is to the main entrance, the more homes that will be affected. An option to consider is adding a secondary supply from the service gate. If implemented, a broken line should only affect the homes in the neighborhood as the water will distribute up to the isolation valves either side of the break zone.
12
The wastewater collection system transfers sewerage from
The repairs to the canal inlet has retarded the infiltration
the community to the plant. The system has infiltration of
of sand. Yet there are areas in the waterways that are
ground water which affects the chemical balance at the
particularly shallow. Time will tell if the inlet repairs has had
plant. A review of the system to determine what repairs are
any impact on the depth of the waterways. We will continue
necessary will cost about $30K. The infiltration will worsen
to track this problem and review as required.
The last major recreation area renovation planned is the
a single project. We have had conceptual drawings prepared
Clipper Island pool. It is not particularly well known but it has
for a building in the north-eastern corner of the property.
amazing potential. Parking has been a challenge for years
Otherwise this area requires attention. Draft plans near the
so the plans increase capacity. The plans show an enlarged
batting cage show an area sectioned off for dog exercise, and
deck and a reduction of the visual barrier between the pool
a separate area for children to play.
and waterways. There is also potential to span a bridge from Clipper Island to Beach Lane, which would also be a nice
The eastern perimeter extending south towards the school
feature.
needs landscaping. There are plans drawn up to develop
ELECTIVE
the area opposite Sandyport Drive 31-45. They include landscaping, a pedestrian crossing and bathroom facility.
These improvements have the potential to enhance lifestyle
Plans for parking spaces and minimal landscaping are also
and property values. They are non-essential, but are for
drawn for The Arches townhouses and the school boundary
consideration subject to available budget.
line.
An administration office for the Association will provide a
Another item on the wish list is to replace the street lights
permanent home and end rental payments. We also lack a
with a more stylish design. There are about 200 in service
clubhouse so it is possible to combine these two ideas into
and the replacement cost exceeds $400K.
TREASURER’S REPORT We saw modest revenue growth year on year of $93,570
We have not amended our doubtful debt policy. We provide
(2.8%). Assessed properties increased by 25,792 square
for all balances over 12 months old irrespective. A large
feet (2.7%). Indenture fee income was lower as we assess
proportion of the doubtful debt provision is for disputed
developed homes. But the indenture fees per property
wastewater
increased as provided for in the conveyance. The next review
ongoing with Sandyport Development Company Ltd. and an
will be in 2021. The average number of accounts incurring
agreement is pending.
treatment
fees.
Negotiations
have
been
late fees throughout the year decreased to 74 (2015 : 78). We transfer funds that are not in use to an interest-bearing Our direct costs were down 3.7% compared to the previous
account until required. Our lawyers advised that we may
year. This includes $113K of Hurricane Matthew related
invest in Bahamas Government Registered Stock if the
expenses. Excluding improvements direct costs were
opportunity arises. We continue to bank with CIBC and
comparable to FY 2015 (2016 : $2,488K, 2015 : $2,507K).
Scotiabank. We explored adding RBC so that their customers
Expenses increased by $34,215 or 6.4% with the increase in
could pay via their online banking but the costs outweighed
provision for doubtful accounts of $26,021 being the main
the benefits.
factor. We ended the year with a modest surplus of $17K which the Directors transferred to reserves (2015 : $152K
At the year-end, our staff levels remained steady with
loss).
26 on the payroll. Our team received a cost of living and
23.3%
competitive we are able to recruit and keep dedicated personnel.
OF ACCOUNTS PAID EARLY
We assign all old unpaid debts to our legal team for
The number of accounts that prepaid in 2016 fell compared
matters have proceeded to litigation and are ongoing. Below
to 2015. 104 accounts paid 25.7% of the assessments in full
are details of those accounts with balances exceeding $20K
at the start of 2015. In 2016 that number fell to 98 accounts
at the year-end:
paying 23.3% of the assessments early. 14
performance based increase in the 2-4% range. By remaining
processing unless there is a payment plan in place. Some
PAIGE RYAN LTD. (WATERCOLOR CAY 32) $43,719
Revenue 3,600,000
The balance relates to unpaid indenture fees and penalties. We understand that the property is in foreclosure but we have filed a writ and informed the bank. 2,700,000
LIONEL LEVINE (GOVERNOR’S CAY 34) $43,467
2.8%
1,800,000
The balance relates to unpaid maintenance fees and penalties. We are awaiting a hearing date. The matter is ongoing.
REVENUE GROWTH
DEREK RYAN (BEACH LANE 5) $32,419
900,000
The balance relates to unpaid maintenance fees and 0
penalties. We took possession of the property in 2015, the 2010
2011
2012
2013
2014
2015
2016
principal amount of the judgment was then settled. The matter is now awaiting a new trial date.
SANDYPORT DEVELOPMENT COMPANY LTD. $244,417 The pending agreement will result in a reduction of their account by $179K, if executed. This will not result in a net loss since the amount will be set off by a reduction in the doubtful debt provision.
NATHANIAL BAIN (ROYAL PALM CAY 23) $52,625 The balance relates to unpaid maintenance fees and
JES-EL CAR CO. LTD. (SANDYPORT DRIVE 124) $26,869 The balance relates to disputed maintenance fees and penalties. The owner is challenging the date maintenance fees commenced, and the calculation of the property size. A trial date is set for October 2017.
CRAIG BOWE (THE ARCHES 6) $24,810
penalties. The Court of Appeal overturned the original
The balance relates to unpaid maintenance fees. We have
ruling in favor of the owner’s application to build without
secured judgment and await sale of the property.
Association consent. The matter is ongoing.
tel. +1 (242) 676-8990 l www.sandyport.management
15
2017 FINANCIAL BUDGET REVENUE Maintenance fees - 947,175 sq ft @ $2.75 per sq ft (399 homes, 2016 : 394)
2017 BUDGET 2,605,000
Indenture fees (102 lots, 2016 : 103)
176,000
Other maintenance fees
151,000
Water & meters income
356,000
Other services Total revenue
9,000 3,297,000
DIRECT EXPENSES Security expenses
807,000
Gardening expenses
471,000
Maintenance of common areas
427,000
Water & meters
334,000
Waste water management
302,000
Improvements
260,000
Painting expenses
219,000
Garbage removal
84,000
Total direct expenses Gross Profit
2,904,000 393,000
OPERATING EXPENSES Salaries, benefits & NI
16
248,000
Rent and utilities
38,000
Office & computer
33,000
Professional fees
25,000
Telephone & communications
17,000
Finance charges
13,000
Insurance
10,000
Other expense
3,000
Property & other taxes
1,000
Total operating expenses
388,000
NET MAINTENANCE FUND
5,000
FINANCIAL STATEMENTS FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 AND INDEPENDENT AUDITORS’ REPORT OPINION
statements in the Commonwealth of the Bahamas, and we have fulfilled our other ethical responsibilities in accordance
We have audited the accompanying financial statements of
Sandyport
Homeowners
Association
Limited
(“the
Homeowners Association”), which comprise the statement of financial position as at December 31, 2016 and the related statements of maintenance fund, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
information. Management is responsible for the preparation and fair In our opinion, the accompanying financial statements
presentation of the financial statements in accordance
present fairly, in all material respects, the financial position of
with IFRSs, and for such internal control as management
the Homeowners Association as at December 31, 2016, and
determines is necessary to enable the preparation of financial
its financial performance and its cash flows for the year then
statements that are free from material misstatement,
ended in accordance with International Financial Reporting
whether due to fraud or error.
Standards (IFRSs). In preparing the financial statements, management is
BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Homeowners Association in accordance with the ethical requirements that are relevant to our audit of the financial
responsible for assessing the Homeowners Association’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Homeowners Association or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Homeowners Association’s financial reporting process. tel. +1 (242) 676-8990 l www.sandyport.management
17
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. HLB Galanis & Co.
March 13, 2017 Nassau, Bahamas
18
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2016 (Expressed in Bahamian dollars) ASSETS Current Assets
2016
2015
Cash and cash equivalents
781,514
629,924
Accounts receivable (Note 4)
212,880
297,145
Prepayments and deposits
157,070
86,121
1,151,464
1,013,190
89,942
77,343
1,241,406
1,090,533
Accounts payable and accrued expenses
295,980
93,198
Prepaid maintenance fees and deposits (Note 6)
523,443
592,669
819,423
685,867
416
409
404,251
557,024
17,316
(152,767)
421,983
404,666
1,241,406
1,090,533
Total current assets Fixed assets, net (Note 5) TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES Current Liabilities
Total current liabilities
SHAREHOLDERS’ EQUITY Share capital 5,000 ordinary shares authorized at $1.00 par value, 416 (2015: 409) shares issued and outstanding General reserve fund (Note 7) Maintenance fund (deficit) Total shareholders’ equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
The accompanying notes form an integral part of these audited financial statements. These financial statements were approved by the Board of Directors and authorized for issuance on March 13, 2017.
Director
Director
tel. +1 (242) 676-8990 l www.sandyport.management
19
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF MAINTENANCE FUND FOR THE YEAR ENDED DECEMBER 31, 2016 (Expressed in Bahamian dollars) REVENUE
2016
2015
2,917,573
2,809,863
Water and meters income
365,325
379,016
Other services
151,427
150,329
33,695
35,242
3,468,020
3,374,450
Security expenses (Note 8)
769,290
750,984
Improvements (Note 9)
395,911
488,223
Gardening expenses (Note 10)
436,977
428,328
Maintenance of common areas (Note 11)
474,542
428,405
Water and meters (Note 12)
352,374
386,772
Waste water management (Note 13)
195,148
242,213
Painting expenses (Note 14)
178,837
186,668
81,785
84,000
2,884,864
2,995,593
583,156
378,857
Salaries, benefits & national insurance
246,498
232,779
Provision for doubtful accounts (Note 4)
184,073
158,052
Rent and utilities (Note 15)
40,963
37,100
Office and computer supplies
23,092
17,564
Professional fees
32,388
33,543
Telephone and communications
14,937
15,602
Maintenance fees
Miscellaneous income Total revenue DIRECT EXPENSES
Garbage removal
Total direct expenses GROSS PROFIT OPERATING EXPENSES
1,598
14,191
11,408
11,895
Insurance
9,882
9,898
Property and other taxes
1,000
1,000
565,839
531,624
17,317
(152,767)
Depreciation (Note 5) Finance charges
Total operating expenses NET MAINTENANCE FUND (DEFICIT) The accompanying notes form an integral part of these audited financial statements. 20
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED DECEMBER 31, 2016 (Expressed in Bahamian dollars)
SHARE
GENERAL RESERVE
MAINTENANCE
CAPITAL
FUND
FUND
TOTAL
Balance at December 31, 2014
399
534,124
22,910
557,433
Shares issued during the year
10
(10)
-
-
-
22,910
(22,910)
-
Maintenance fund distribution
Net maintenance fund for the year Balance at December 31, 2015
-
-
(152,767)
(152,767)
409
557,024
(152,767)
404,666
Shares issued during the year
7
(7)
-
-
Maintenance fund distribution
-
(152,766)
152,766
-
Net maintenance fund for the year
-
-
17,317
17,317
416
404,251
17,316
421,983
Balance at December 31, 2016
The accompanying notes form an integral part of these audited financial statements.
tel. +1 (242) 676-8990 l www.sandyport.management
21
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED DECEMBER 31, 2016 (Expressed in Bahamian dollars)
CASH FLOWS FROM OPERATING ACTIVITIES Net maintenance fund (deficit)
2016
2015
17,317
(152,767)
43,056
60,494
Add non-cash transactions: Depreciation (Note 5) (Profit) from disposal of fixed assets
(458)
-
184,073
158,052
243,988
65,779
(Increase) in accounts receivable
(99,808)
(178,350)
(Increase) in prepayments and deposits
(70,949)
(13,971)
Increase/(Decrease) in accounts payable and accrued expenses
202,782
(123,318)
(Decrease) in prepaid maintenance fees and deposits
(69,226)
(54,349)
206,787
(304,209)
(55,655)
(23,208)
458
-
Net cash used in investing activities
(55,197)
(23,208)
Net increase/(decrease) in cash and cash equivalents
151,590
(327,417)
629,924
957,341
781,514
629,924
Provision for doubtful accounts Operating income before working capital changes
Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (Note 5) Proceeds from disposals of fixed assets
Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Cash and cash equivalents are comprised of the following: Cash on hand
800
800
Cash in bank
358,236
357,565
Term deposit
422,478
271,559
781,514
629,924
The accompanying notes form an integral part of these audited financial statements.
22
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (Expressed in Bahamian dollars)
1. GENERAL Sandyport Management Company Limited was incorporated under the laws of The Commonwealth of the Bahamas on May 25, 1990 as a wholly-owned subsidiary of Sandyport Development Company Limited (“Devco”). On September 14, 1998, the name of the Company was changed to Sandyport Homeowners Association Limited (“the Homeowners Association”). On May 21, 2008, ownership of the common areas and common infrastructure of the Sandyport residential community was transferred from Devco to the Homeowners Association. The principal activity of the Homeowners Association is to manage the Sandyport residential community in accordance with the terms of the authority granted to Devco by licences issued to each property owner defining their rights and obligations in regard to the common areas. Devco assigned the said authority under these licences to the Homeowners Association on November 3, 2009. On January 2, 2010, Devco transferred the ownership of the Homeowners Association to the property owners of the Sandyport residential community. As at December 31, 2016 the Homeowners Association had 26 employees (2015: 27).
2. BASIS OF PREPARATION These financial statements have been prepared in accordance with International Financial Reporting Standards for Small and Medium-sized Entities. The preparation of financial statements in conformity with International Financial Reporting Standards for Small and Medium-sized Entities requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Bahamian dollar is the Homeowners Association’s measurement and reporting currency because its capital and a majority of its transactions are denominated in that currency. Foreign currency transactions are translated into Bahamian dollars at the rates of exchange prevailing at the time of the transaction. tel. +1 (242) 676-8990 l www.sandyport.management
23
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)
3. SUMMARY OF ACCOUNTING POLICIES Significant accounting policies adopted in the preparation of these financial statements are as follows: a. Cash and cash equivalents - Cash and cash equivalents include cash on hand and at bank and short term deposits which have a maturity period of less than three months. b. Accounts receivable - Accounts receivable are stated at cost less provision for doubtful accounts and any impairment losses. Management records provisions when in their opinion, amounts are irrecoverable based on historical performance and solvency of the customer. The provision for doubtful accounts policy is based on accounts that are 360 days old and remains unpaid. c. Fixed assets - Fixed assets are stated at cost less accumulated depreciation and any impairment losses. Depreciation is calculated on the straight-line basis to write-off assets over their estimated useful lives as follows:
Waste water system
-
3 - 5 years
Maintenance equipment
-
3 years
Computer and office equipment
-
3 years
Security equipment
-
3 years
d. Revenue recognition - Revenue is measured at the fair value of the consideration received or receivable and represents the monthly maintenance fee charged to the homeowners. This fee is based on square footage of the house on each property and owners of empty lots are charged a flat fee. e. Income and expense recognition - Income and expenses are recorded on an accrual basis of accounting. f. Improvements – These are various projects that are undertaken for the improvement of common areas. These projects are additions and modifications to existing infrastructure within the community. The costs associated with these projects are expensed in the period incurred, but is accounted for on the accrual basis for projects not completed within the fiscal year. Improvements are itemized separately and by project for clarity. 24
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)
3. SUMMARY OF ACCOUNTING POLICIES (CONTINUED) g. Impairment of assets - An assessment is made at each financial position date to determine whether there is any indication of impairment of any assets, or whether there is any indication that an impairment loss previously recognized on an asset in prior years may no longer exists; the asset’s recoverable amount is estimated. An asset’s recoverable amount is computed as the higher of the asset’s value in use or its net selling price. An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to operations in the period in which it arises unless the asset is carried at a revalued amount in which case the impairment is charged to revaluation. A previously recognized impairment is reversed only if there has been a change in the estimates used to determine the recoverable amount of the asset, however, not to an amount higher than the carrying amount that would have been determined (net of any depreciation), had no impairment loss been recognized for the asset in prior years. h. Related party transactions - Related parties include members of the board who are also homeowners.
tel. +1 (242) 676-8990 l www.sandyport.management
25
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)
4. ACCOUNTS RECEIVABLE Accounts receivable is comprised as follows: 2016
2015
737,325
637,517
(524,445)
(340,372)
212,880
297,145
Balance, beginning of year
340,372
182,320
Add: provision made during the year
184,073
158,052
-
-
524,445
340,372
Current
31,989
46,074
31 to 90 days
36,990
98,596
91 to 360 days
143,901
152,475
Over 360 days
524,445
340,372
737,325
637,517
Accounts receivable Less: provision for doubtful accounts Accounts receivable, net The movement in the provision for doubtful accounts is as follows:
Less: amounts written off during the year Balance, end of year The aging of receivables are as follows:
Balance, end of year
We have not amended our doubtful debt policy. We provided for all balances over 12 months old, irrespective. A large proportion of the doubtful debt provision is for disputed wastewater treatment fees. Negotiations have been ongoing with Sandyport Development Company Ltd. and an agreement is pending.
26
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)
5. FIXED ASSETS The movement of fixed assets during the year is as follows: Waste COST Balance at December 31, 2014 Additions Disposals
Computer
Water
Maintenance
and Office
Security
System
Equipment
Equipment
Equipment
Total
237,214
10,908
66,915
54,056
369,093
657
249
-
22,302
23,208
-
-
-
(5,339)
(5,339)
237,871
11,157
66,915
71,019
386,962
Additions
-
20,534
(317)
35,438
55,655
Disposals
(11,652)
(736)
-
-
(12,388)
226,219
30,955
66,598
106,457
430,229
168,992
9,168
49,359
26,945
254,464
30,251
1,345
14,191
14,707
60,494
Balance at December 31, 2015
Balance at December 31, 2016
ACCUMULATED DEPRECIATION Balance at December 31, 2014 Depreciation Disposals Balance at December 31, 2015 Depreciation
-
-
-
(5,339)
(5,339)
199,243
10,513
63,550
36,313
309,619
18,533
593
1,598
22,332
43,056
(11,652)
(736)
-
-
(12,388)
206,124
10,370
65,148
58,645
340,287
As at December 31, 2016
20,095
20,585
1,450
47,812
89,942
As at December 31, 2015
38,628
644
3,365
34,706
77,343
Disposals Balance at December 31, 2016
CARRYING VALUE
tel. +1 (242) 676-8990 l www.sandyport.management
27
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)
5. FIXED ASSETS (CONTINUED) Depreciation expense by functional categories is as follows: 2016
2015
Waste water management (Note 13)
18,533
30,251
Security equipment (Note 8)
22,332
14,707
1,598
14,191
593
1,345
43,056
60,494
2016
2015
Advance payments
421,693
494,169
Water deposits
101,750
98,500
523,443
592,669
Computer and office equipment Maintenance equipment (Note 11) Total
6. PREPAID MAINTENANCE FEES AND DEPOSITS Prepaid maintenance fees and deposits are as follows:
Total
7. GENERAL RESERVE FUND This amount represents a reserve established to provide for future contingencies.
28
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)
8. SECURITY EXPENSES Security expenses are as follows: 2016
2015
Wages
425,934
408,763
Service contract
259,380
262,282
Supplies
29,838
29,630
Security maintenance
28,886
34,137
Depreciation (Note 5)
22,332
14,707
2,920
1,465
769,290
750,984
Uniforms Total
9. IMPROVEMENTS During the fiscal year, there were key projects undertaken which included the canal and main entrance. Overall improvement expenses are as follows: 2016
2015
Seawall and canal
174,129
-
Main entrance
124,798
-
Beach Lane Common Area
75,920
33,680
Other
21,064
54,870
Roberts Isle
-
239,499
Eastern Perimeter Wall
-
112,164
Fencing
-
24,149
Governor’s Cay – Recreation Area
-
23,861
395,911
488,223
Total
tel. +1 (242) 676-8990 l www.sandyport.management
29
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)
10. GARDENING EXPENSES Gardening expenses are as follows: Contract services Extermination
2016
2015
366,000
366,000
56,920
48,567
Garden supplies
9,349
7,173
Miscellaneous
4,708
6,588
436,977
428,328
2016
2015
113,855
-
Wages
85,798
85,098
Supplies and tools
84,575
83,130
Utilities
81,758
114,899
Swimming pool
20,876
39,295
Roads and lights
17,141
25,661
Tennis courts
11,540
4,240
3,958
6,313
593
1,345
474,542
428,405
Total
11. MAINTENANCE OF COMMON AREAS The expenses associated with the maintenance of common areas are as follows: Hurricane expenses
Contract service Depreciation of equipment (Note 5) Total
30
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)
12. WATER & METERS Water and meters expenses are as follows: 2016
2015
350,716
382,930
1,658
3,842
352,374
386,772
2016
2015
Wages
62,389
66,668
Services
45,532
48,998
Materials
42,551
61,463
Repairs and maintenance
26,143
34,833
Depreciation (Note 5)
18,533
30,251
195,148
242,213
2016
2015
109,987
110,411
68,850
76,257
178,837
186,668
Water Water meters Total
13. WASTE WATER MANAGEMENT Waste water management expenses are as follows:
Total
14. PAINTING EXPENSES Painting expenses are as follows:
Painting contractors Paint and supplies Total
tel. +1 (242) 676-8990 l www.sandyport.management
31
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)
15. RENT The Homeowners Association rents office space from Artech Bahamas Ltd. at $37,800 per annum, inclusive of electricity and water. The lease will expire on August 31, 2017.
16. CONTINGENT LIABILITIES a) Waste water Following an evaluation of the waste water treatment system in 2012, Harris Civil Engineers recommended a series of improvements and repairs. Certain of the work was completed by the end of 2014 and it is estimated that completion of the remaining work will require an expenditure of $430,000. The Board believes that the recommended work can be completed out of budgeted income streams but will consider the need for a special assessment should this become necessary. In addition, the waste water system is almost at its operational capacity: the preliminary budget to expand the capacity to meet anticipated future requirements is $1 million. Under the terms of an Agreement dated November 3, 2009, the cost of such expansion will be borne by the developer, Sandyport Development Company Limited (Devco). The Board continues to explore alternative cost effective and productive solutions to this issue. b) Sea wall With the exception of a few unstable and incomplete sections of wall noted in an engineer’s report commissioned by the Association, the seawall is in fair condition with primarily corrosion damage to the coping beam. Engineers have advised that the durability and appearance of the wall can be improved significantly by completing the noted repairs and coating the concrete surface. The overall cost of the repairs has not been fully quantified.
32
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (CONTINUED) (Expressed in Bahamian dollars)
17. FINANCIAL RISK MANAGEMENT The Homeowners Association is exposed to a variety of risks including liquidity risk, credit risk, interest rate risk and capital risk management arising in the normal course of the Homeowners Association’s business activities. The Homeowners Association does not have any written risk management policies and guidelines. Management monitors the financial risks of the Homeowners Association and takes such measures as considered necessary from time to time to minimize such financial risks. Liquidity risk - Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a financial asset quickly, at close to its fair value. Prudent liquidity risk management implies maintaining sufficient cash. The Homeowners Association monitors and maintains a level of bank balances deemed adequate to finance its operations. The Homeowners Association deposits cash with financial institutions of good standing. Credit risk – Credit risk arises from the possibility that customers may not be able to settle obligations within the normal terms of transactions. The Homeowners Association performs ongoing credit evaluation of the debtors’ financial condition and maintains an account for allowance for doubtful trade and other accounts receivable based upon the expected collectibles of all trade and other accounts receivable. The Homeowners Association has no significant concentration of credit risks with any single counterparty or group counterparties. Interest rate risk – Cash flow interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rate.
tel. +1 (242) 676-8990 l www.sandyport.management
33
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 (Expressed in Bahamian dollars)
17. FINANCIAL RISK MANAGEMENT (CONTINUED) Interest rate risk (continued) Demand deposits and term deposits are the only significant interest bearing assets and liabilities. Accordingly, the Homeowners Association’s income and operating cash flow are substantially independent of changes in market interest rates. Capital risk management – The Homeowners Association manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to homeowners through the optimization of the debt and equity balance. The Homeowners Association’s overall strategy remains unchanged from 2010. The capital structure of the Homeowners Association consists of debt, cash and equity attributable to equity holders comprising of share capital, general reserve fund and maintenance fund.
34
PROFESSIONAL ADVISORS Auditors: HLB Galanis & Co. Olde Towne Sandyport P. O. Box N-3205 Nassau, The Bahamas Tel: (242) 327-0689 Fax: (242) 327-0696 Web: www.hlbgalanis.com
Consulting Architects: Alberto G. Suighi Artech Bahamas Ltd. Lagoon Court Nassau, The Bahamas Tel: (242) 327-2335 Fax: (242) 327-2337 Web: www.artechbahamas.com Bankers: CIBC First Caribbean Sandyport Branch Nassau, The Bahamas
Legal Advisors: Kahlil D. Parker Cedric L. Parker & Co. Chambers No.9 Rusty Bethel Drive P.O. Box N-1953 Nassau, The Bahamas Tel: (242) 322-4954/5 Fax: (242) 328-3706 Email: kdp@parkerslaw.net
P.O. Box N-8350 / N-7125 Tel: (242) 327-8364 / 327-4957 Fax: (242) 327-4955 Account: 200-167527 Web: www.cibcfirstcaribbeanbank.com Scotiabank Cable Beach P.O Box N-7518 Tel: (242) 702-8100 Fax: (242) 327-5728 Nassau, The Bahamas
Robert K. Adams Graham Thompson Star General Insurance Building 2nd Floor P O Box F-42451 Freeport Grand Bahama, The Bahamas Tel: (242) 351-7474 Email: rka@gtclaw.com Web: www.grahamthompson.com
Account: 70045-72613 Web: www.bahamas.scotiabank.com Insurance Agents: Tavares & Higgs Blake Road P. O. Box SP-64003 Nassau, The Bahamas Tel: (242) 327-8606 Fax: (242) 327-8607 Email: stavares@tavareshiggs.com
tel. +1 (242) 676-8990 l www.sandyport.management
35
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