S
2018
ANNUAL REPORT SANDYPORT HOMEOWNERS ASSOCIATION LTD.
www.sandyport.management
Dear Owner It has been my pleasure to serve our community since 2012 and to present this 2018 Annual Report. We have been in a position to meet our obligations without increasing the maintenance fees for the 14th consecutive year. We expected a small deficit this year, as we had committed to certain projects after generating a large surplus in 2017.
FROM THE
CHAIRMAN ROBERT SANDS Chairman since 2012 Sandyport Homeowners Association Ltd.
We increased the investment in improvements from $334K in 2017 to $450K, doubling what we had budgeted. This includes a $160K accrual in our 2018 accounts for the installation of a new wireless network with CCTV. This is due for completion by the second quarter of 2019. The improvements expenditure also includes $90K for extending the perimeter wall. Both of these were commitments I made to you in our previous Annual Report. We had no significant security breaches during the year. Nonetheless we make improvements to help protect our community on an ongoing basis. Sandyport has developed a reputation for being a safe, family-friendly environment. We review our policies, procedures and instruments to keep our people and property secure. Controlled access is a fundamental element of our security measures. Getting to know our residents gives our security team an added advantage. We receive requests from time to time to allow vacation rentals. Aside from it being a breach of the Restrictive Covenants, the Directors believe it is not in the best interests of the community to become a vacation retreat. Furthermore, the resources that need to be in place to manage such an operation will increase costs.
CONTENTS
We updated certain policies as we continue to ensure that Sandyport evolves in an orderly manner. We need to adapt to an environment that didn’t exist at the start. We also went digital with our Owner Guide which is now a searchable online Helpdesk. You can email support at any time with a
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FROM THE CHAIRMAN
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OUR BOARD OF DIRECTORS
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MANAGEMENT TEAM
together for this annual event.
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OPERATIONS SUMMARY
I would like to extend thanks to my fellow Directors who
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TREASURER’S REPORT
16
2019 FINANCIAL BUDGET
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AUDITOR’S REPORT
35
PROFESSIONAL ADVISORS
question and our Answerbot will attempt to address your concern. We held our fifth annual social event and attendance was greater than ever. It was good to receive feedback from many of you, which was all positive. The event costs about $32K but this is a small price to pay for bringing our community
have volunteered their time. They provide the guidance that makes our community unique. On behalf of the Board, we thank the committee members who have also contributed their time and expertise for the benefit of the community. On a final note we would like to thank our General Manager, Simon Cooper, for his service since he joined the Association in 2010. He left to pursue other opportunities at the end of 2018 and is assisting with the transition until March 2019. Sandyport has come a long way during his tenure and we are grateful for what he has brought to this community. At the same time, we would like to welcome Kress Ritchie as his successor and look forward to working with him. On behalf of the Board of Directors
“EFFICIENCY TO A QUICK RESPONSE!” RM
Robert Sands Chairman tel. +1 (242) 676-8990 l www.sandyport.management
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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.
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ROBERT SANDS
BRUCE KNOWLES
EDWARD GARDNER
Chairman Re-elected 2017
Treasurer Appointed 2018
Secretary Re-Elected 2017
KOSTA BERDANIS
CAMERON CAREY
MICHELE MOODIE
TANYA CAREY
Director Re-elected 2017
Director Elected 2018
Director Re-elected 2018
Director Elected 2018
MANAGEMENT TEAM KRESS RITCHIE
TERRANCE BODIE
General Manager
Security Services
RONELLA FRANCIS
ORPHEUS INGRAHAM
Assistant Manager
Maintenance
JEPHTER STUBBS
CHARLES COOPER
Accountant
Water / Sewerage
KAYLA LIGHTBOURNE
KOORARAM RAMBURUN
Accounts Clerk
Progress Chaser
tel. +1 (242) 676-8990 l www.sandyport.management
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OPERATIONS SUMMARY SECURITY
SEA WALL
Our former Security Manager, Sarah Barton, retired after over
We commit to carrying out the remedial work necessary
2 decades of service. Terrance Bodie, who was her deputy for
to maintain the integrity of the sea wall throughout the
several years, is her successor. Mr. Bodie is a former police
waterways. The canal inlet was starting to experience sand
officer who has taken over the department and continues to
infiltration and dredging costs were increasing again. To
build on the good work carried out by Mrs. Barton.
abate this, we extended the west inlet wall further north. We have been able to keep the dredging expenses down to about
Sandyport has developed a reputation for being a safe
half of historical levels at $33K for the year.
community to live in yet we will not become complacent. In 2018, we invested $318K in security enhancements. We
We repaired many other sea walls affecting both common
upgraded the vehicle fleet by adding a new golf cart and
and private properties at a cost of $107K.
patrol car, replaced the canal security booth and extended the north perimeter wall and commissioned a new wireless CCTV network. In 2017, certain parts of Sandyport were vandalized and there was insufficient CCTV footage to identify the suspects. The new CCTV network will provide greater saturation of cameras throughout the community and is expected to be completed in the first half of 2019.
“ALWAYS A PLEASURE TO DEAL WITH KAYLA AND EVERYONE ELSE IN SANDYPORT� DT 6
OTHER IMPROVEMENTS To reduce maintenance expenses in the long run, we removed the decking next to the pond along Sandyport Drive and replaced it with landscaping and composite decking at a cost of $33K. We invested $25K in 10 new parking spaces, together with landscaping, around the perimeter of Tambearly school. Parking is not only a practical need as our community expands but is also a safety issue. The wastewater plant has remained in good condition except for a corroded weir which needed replacing at a cost of $42K. Preventative maintenance of the wastewater plant is crucial as even minor repairs can be costly. The tennis courts received new commercial benches to the value of $16K. It is our expectation that we will save in maintenance costs over the long term. We also spent $18K refreshing the poolside furniture inventory. This is often damaged due to misuse and abuse rather than regular wear and tear. We continue to add drainage in low lying areas to reduce flooding during heavy rainfall with the latest installation on Sand Dollar Island. Roundabouts also received a landscaping refresh as required.
CONTRACTED SERVICES Due to a decline in the level of service being received, we changed our pool contractor during the year. We renewed the garbage collection and landscaping service contracts with the same contractors and at the same rate as the prior year. The primary security contract was also renewed with a 3% increase over the prior year.
DEFERRED PROJECTS The roads throughout Sandyport are in various states of repair and should be resurfaced to a commercial standard
“I RECEIVED A PROMPT CALL FROM THE SUPERVISOR MR BAIN AND THE TEAM DID A GOOD JOB REMOVING THE COCONUTS A FEW DAYS LATER” LS 8
in phases over several years. The first estimate to resurface 1,200 linear feet of road from the main entrance heading west along Sandyport Drive was $422K resulting in the need for a long-term plan. We had the seawall surveyed and will continue with remedial work. On average, this costs an estimated $510 per linear foot. With over 17,000 linear feet of sea wall to maintain, we should expect some major expenses over the long term.
Plans are available to put an administrative office in one
TAKE NOTICE THAT Residents (tenants
of several suitable locations at an estimated investment of
and/or visitors) using mooring posts,
$300K, which is worth exploring as an alternative to renting.
POLICY UPDATES
cleats, or any other means of securing vessels to their properties do so at their own risk. Users are responsible for
The issue of relaxing the rules relating to vacation rentals is often raised. The Restrictive Covenants are very clear in this regard and do not permit owners to use their homes for
ensuring the security of their vessels including the equipment used, whether
such purposes. There are arguments for and against and
or not the said equipment forms part
the subject can be somewhat contentious, however, in the
of, or is attached to, common property.
absence of a clear majority, the default position is to abide by
Sandyport Homeowners Association
the Restrictive Covenants. A further discussion of the topic at a community meeting may be warranted.
Limited (the Association) does not warrant the use of any such equipment
Use of the amenity areas, particularly phase V, have been
located
increasing in popularity. With that, came the nuisance of loud
otherwise, with your use of any such
music and entertainment disturbing the neighborhood. As a result, we implemented stricter guidelines barring the use of
on
common
property
or
equipment you agree to indemnify
DJ’s and amplifiers. The booking fee was also increased from
and hold harmless the Association
$50 to $100 + VAT.
for any injury, loss, or damage arising
We implemented the enforcement our infraction policy
therefrom. The Association accepts no
in January 2018. During the year we detected over 500
responsibility, and is not liable, for any
infractions and, to date, there has been a remediation rate
injury, loss, or damage arising directly
of 73%. We would like to thank those that addressed their
or indirectly from poorly secured
infractions and encourage the remaining households to complete the identified work.
vessels. Owners that wish to install equipment to secure their vessels are
As a result of a collision of two boats in the waterways, we
hereby reminded of their obligation to
sought legal advice about liability and have been advised that
seek the requisite approval from the
we aren’t liable, under the circumstances, and to circulate the following notice:
Association.
tel. +1 (242) 676-8990 l www.sandyport.management
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We were also advised to obtain insurance for the slips at Sand Dollar Island marina, resulting in an increase in the fees
RECOMMENDED COLOR PALETTE
to cover the extra cost of insurance. Finally, we made some amendments to the Architectural Guidelines: •
AQUA SKY 56GG 77/156
ARTISTIC ORCHID 50RB 69/097
FRESH SALMON 23YR 45/369
JONQUIL YELLOW 40YY 71/335
BALI HAI 56GG 64/258
CORAL FLOWER 21YR 57/250
LEMON GRASS 86YY 77/295
OCEANTIDE 66BG 68/157
FALLING RAIN 30BG 56/097
PECHE 00YY 57/299
Added: The need to screen of mechanical equipment, conduits etc.
•
Added: A more detailed specification for picket fences.
•
Published: A specification for the determination of grade.
•
Established: A recommended color palette.
•
Revised: The design review fee for hurricane shutters reduced to $50 + VAT (down from $250).
“VERY GOOD. I GOT A RESPONSE AS SOON AS POSSIBLE” TG
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TREASURER’S REPORT We concluded the year with a small anticipated deficit of
provision increased by $92K to a total of $367K. Note that
$57K. Revenue increased by 2.6% to $3.52m. Due to the
this is a provision based on funds we do not expect to collect
change in policy of the subdividing of large lots, Sandyport
soon, not an expectation to write off. Whilst our receivables
grew by 2 units in 2018. The table below shows the change
shows a net of $217K, we have $450K of receivables at various
in homes, lots and those under construction compared to
stages of litigation as detailed below:
the previous year. The revenue base is growing lower than the rate of inflation. We may need to consider increasing assessment fees if we cannot add or increase other revenue streams. We enjoyed a respectable surplus of $285K in 2017 and committed to projects in 2018. Because of the available reserves we were able to spend double the improvements budget. We invested $450K on major projects including sea wall renovations, extending our perimeter wall and
Stage
Value
%
Pre litigation
$7,197
1.6%
New instruction
$56,514
12.5%
Pending litigation
$42,572
9.4%
Litigation in progress
$243,905
54.1%
Judgment received
$100,762
22.3%
Total
$450,950
commissioning a new wireless network with CCTV. Just 6 accounts make up over half of the accounts in litigation: Our cash balance remains healthy with an almost identical $1.04m on hand compared to the previous year. Receivables
Amount
Beach Lane 5
$43,820
a quantity of new problem accounts joining the delinquent
Governor’s Cay 34
$58,128
list.
Governor’s Cay 40
$20,193
Royal Palm 23
$69,254
118 accounts totaling 28% (2017 : 99 / 23.9%) of the assessed
Sandyport Drive 124
$30,115
area paid maintenance fees in full, taking advantage of the
Kingfisher Island 3
$26,842
haven’t changed much in absolute terms. And we haven’t seen
We also enjoyed a record number of prepayments in 2018.
3% discount. The revenue earned from late fees fell from an average of 82 per month to 70. This indicates an improvement
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Address
Total
$248,352
in the delinquency rate. Our bad debt provision in 2017
In summary, we have been fiscally responsible and we
showed a gain of $91K due to major settlements. In 2018 the
completed the 2018 audit without any concerns.
YEAR ON YEAR CHANGE Type
2017
2018
Homes
404
408
4
1.00%
Lots
95
92
(3)
(3.16%)
Construction
5
6
1
20.00%
504
506
2
0.40%
Total Sq Ft
964,556
974,561
Increase / (Decrease)
10,005
Change %
1%
“THANK YOU FOR DEALING WITH THIS, APPRECIATED” SB
2019 FINANCIAL BUDGET REVENUE Maintenance fees
2019 Budget in B$ 2,976,000
Water and meters income
345,000
Other services
150,000
Total revenue
3,471,000
DIRECT EXPENSES Security expenses
807,000
Maintenance of common areas
534,000
Gardening expenses
522,000
Water & meters
345,000
Waste water management
291,000
Improvements
225,000
Painting expenses
222,000
Garbage removal
78,000
Total direct expenses GROSS PROFIT
3,024,000 447,000
OPERATING EXPENSES Salaries, benefits & NI Rent and utilities
39,000
Office & computer
39,000
Professional fees
27,000
Telephone & communications
18,000
Finance charges
15,000
Insurance
12,000
Other expense
3,000
Property & other taxes
3,000
Total operating expenses NET MAINTENANCE FUND (DEFICIT) 16
270,000
426,000 21,000
FINANCIAL STATEMENTS AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 AND INDEPENDENT AUDITORS’ REPORT
have fulfilled our other ethical responsibilities in accordance
OPINION
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
We have audited the accompanying financial statements of
Sandyport
Homeowners
Association
Limited
basis for our opinion.
(“the
Homeowners Association”) which is comprised of the statement of financial position as at December 31, 2018 and the related statements of maintenance fund, changes in equity and cash flows for the year then ended and a summary
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS
of significant accounting policies and other explanatory 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, 2018, 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
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
We conducted our audit in accordance with International
going concern basis of accounting unless management either
Standards on Auditing (“ISAs”). Our responsibilities under
intends to liquidate the Homeowners Association or to cease
those standards are further described in the Auditors’
operations, or has no realistic alternative but to do so. Those
Responsibilities for the audit of the financial statements
charged with governance are responsible for overseeing the
section of our report. We are independent of the
Homeowners Association’s financial reporting process.
Homeowners Association in accordance with the ethical requirements that are relevant to our audit of the financial statements in the Commonwealth of the Bahamas, and we tel. +1 (242) 676-8990 l www.sandyport.management
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AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
•
Conclude on the appropriateness of management’s use
Our objectives are to obtain reasonable assurance about
of the going concern basis of accounting and, based
whether the financial statements as a whole are free from
on the audit evidence obtained, whether a material
material misstatement, whether due to fraud or error, and to
uncertainty exists related to events or conditions
issue an auditors’ report that includes our opinion. Reasonable
that may cast significant doubt on the Homeowners
assurance is a high level of assurance but is not a guarantee
Association’s ability to continue as a going concern. If we
that an audit conducted in accordance with ISAs will always
conclude that a material uncertainty exists, then we are
detect a material misstatement when it exists. Misstatements
required to draw attention in our auditors’ report to the
can arise from fraud or error and are considered material
related disclosure in the financial statements or, if such
if, individually or in the aggregate, they could reasonably be
disclosure is inadequate, to modify our opinion. Our
expected to influence the economic decisions of users taken
conclusions are based on the audit evidence obtained
on the basis of these financial statements.
up to the date of our auditors’ report. However, future events or conditions may cause the Homeowners
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:
Association to cease to continue as a going concern; and •
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the
•
Identify and assess the risks of material misstatement
underlying transactions and events in a manner that
of the financial statements, whether due to fraud or
achieves fair presentation.
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
We communicated with those charged with governance
and appropriate to provide a basis for our opinion. The
regarding, among other matters, the planned scope and
risk of not detecting a material misstatement resulting
timing of the audit and significant audit findings, including
from fraud is higher than for one resulting from error,
any significant deficiencies in internal control that we identify
as fraud may involve collusion, forgery, intentional
during our audit.
omission, misrepresentation or the override of internal control; Obtain an understanding of internal control relevant to the audit 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 Homeowners Association’s internal control;
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HLB Galanis & Co. February 15, 2019 Nassau, Bahamas
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2018 (Expressed in Bahamian dollars) ASSETS Current Assets
2018
Cash and cash equivalents
$
Accounts receivable (Note 4) Prepayments and deposits Total current assets Fixed assets, net (Note 5) TOTAL ASSETS
$
1,039,696
2017 $
1,044,645
217,187
184,304
90,569
87,932
1,347,452
1,316,881
49,404
57,421
1,396,856
$
1,374,302
497,375
$
529,018
LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Prepaid maintenance fees and deposits (Note 6)
$
Accounts payable and accrued expenses Total current liabilities
250,253
138,279
747,628
667,297
SHAREHOLDERS’ EQUITY Share capital: 5,000 ordinary shares authorized at $1.00 par value, 437 (2017: 429) shares issued and outstanding
437
429
General reserve fund (Note 7)
706,568
421,554
Maintenance fund (deficit)
(57,777)
285,022
649,228
707,005
Total shareholders’ equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
1,396,856
$
1,374,302
The accompanying notes form an integral part of these audited financial statements. These financial statements were approved by the Board of Directors on March 11, 2019 and are signed on its behalf by:
Director
Director
tel. +1 (242) 676-8990 l www.sandyport.management
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF MAINTENANCE FUND FOR THE YEAR ENDED DECEMBER 31, 2018 (Expressed in Bahamian dollars) REVENUE Maintenance fees
2018 $
2,944,464
2017 $
2,894,775
Water and meters income
415,297
381,749
Other services
134,873
126,129
33,415
36,584
3,528,049
3,439,237
Security expenses (Note 8)
802,476
778,534
Gardening expenses (Note 9)
490,329
498,178
Improvements (Note 10)
450,488
334,347
Water and meters (Note 11)
412,623
411,207
Maintenance of common areas (Note 12)
411,399
375,373
Waste water management (Note 13)
257,763
172,027
Painting expenses (Note 14)
190,217
222,561
71,400
68,400
3,086,695
2,860,627
441,354
578,610
Miscellaneous income Total revenue DIRECT EXPENSES
Garbage removal
Total direct expenses GROSS PROFIT OPERATING EXPENSES
276,444
257,764
Rent and utilities (Note 15)
39,000
38,200
Office and computer supplies
29,063
28,238
Professional fees
23,965
22,955
Telephone and communications
13,162
11,654
Finance charges
12,853
13,223
Insurance
Salaries, benefits and national insurance
10,703
9,777
Property and other taxes
1,000
2,188
Depreciation (Note 5)
1,559
1,611
91,382
(92,022)
499,131
293,588
Provision (recovery) for doubtful accounts (Note 4) Total operating expenses NET MAINTENANCE FUND The accompanying notes form an integral part of these audited financial statements. 20
$
(57,777)
$
285,022
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2018 (Expressed in Bahamian dollars)
(ACCUMULATED
Balance as at December 31, 2016
$
GENERAL
DEFICIT) /
SHARE
RESERVE
MAINTENANCE
CAPITAL
FUND
FUND
416
$
404,251
$
17,316
TOTAL $
421,983
13
(13)
-
Maintenance fund distribution
-
17,316
(17,316)
-
Net maintenance fund for the year
-
-
285,022
285,022
Shares issued during the year
Balance as at December 31, 2017
-
429
421,554
285,022
707,005
Shares issued during the year
8
(8)
-
-
Maintenance fund distribution
-
285,022
(285,022)
-
Net maintenance (deficit) for the year
-
-
(57,777)
(57,777)
Balance at December 31, 2018
$
437
$
706,568
$
(57,777)
$
649,228
The accompanying notes form an integral part of these audited financial statements. tel. +1 (242) 676-8990 l www.sandyport.management
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED DECEMBER 31, 2018 (Expressed in Bahamian dollars)
CASH FLOWS FROM OPERATING ACTIVITIES Net maintenance fund
2018 $
(57,777)
2017 $
285,022
Add non-cash transactions: Depreciation (Note 5)
47,676
52,931
Provision (recovery) for doubtful accounts
91,382
(92,022)
Operating income before working capital changes
81,281
245,931
(124,265)
120,598
(Increase) decrease in accounts receivable (Increase) decrease in prepayments and deposits Increase (decrease)in accounts payable and accrued expenses (Decrease) increase in prepaid maintenance fees and deposits Net cash provided by operating activities
(2,637)
69,138
111,974
(157,701)
(31,643)
5,575
34,710
283,541
CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (Note 5)
(39,659)
(20,410)
Net cash used in investing activities
(39,659)
(20,410)
(4,949)
263,131
Cash and cash equivalents at beginning of year
1,044,645
781,514
Cash and cash equivalents at end of year
1,039,696
1,044,645
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
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, 2018 (Expressed in Bahamian dollars)
1. GENERAL INFORMATION Sandyport Management Association Limited was incorporated under the laws of The Commonwealth of the Bahamas on May 25, 1990 as a wholly-owned subsidiary of Sandyport Development Association Limited (“Devco”). On September 14, 1998, the name of the Association was changed to Sandyport Homeowners Association Limited (“the Homeowners Association”). On May 21, 2008, ownership of the common areas and common infrastructure of the Sandyport residential community was transferred from Devco to the Homeowners Association. The principal activity of the Homeowners Association is to manage the Sandyport residential community in accordance with the terms of the authority granted to Devco by licenses issued to each property owner defining their rights and obligations in regard to the common areas. Devco assigned the said authority under these licenses to the Homeowners Association on November 3, 2009. On January 2, 2010, Devco transferred the ownership of the Homeowners Association to the property owners of the Sandyport residential community. As at December 31, 2018 the Homeowners Association had 28 employees (2017: 28).
2. BASIS OF PREPARATION AND ADOPTION OF IFRS Statement of compliance – These financial statements include the accounts of Sandyport Homeowners Association Limited and have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) for Small and Medium-sized Entities, issued by the International Accounting Standards Board (IASB). These accounting policies are disclosed in Note 3 of the financial statements. Basis of measurement – These financial statements have been prepared under the historical cost convention.
tel. +1 (242) 676-8990 l www.sandyport.management
23
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED) (Expressed in Bahamian dollars)
2. BASIS OF PREPARATION AND ADOPTION OF IFRS (CONTINUED) Functional and presentation currency - The Bahamian dollar is the Homeowners Association’s measurement and reporting currency because its capital and a majority of its transactions are denominated in that currency. Use of estimates and judgments - The preparation of financial statements in conformity with IFRS for Small and Mediumsized Entities requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Foreign currency - Translations in foreign currencies have been converted into Bahamian dollars at the rate of exchange prevailing at the date of each transaction. At the balance sheet date, foreign currency assets and liabilities are translated into Bahamian dollars using year-end rates of exchange; differences arising are included in the statement of maintenance fund for the year. b. Revenue recognition - Revenue is measured at the fair value of the consideration received or receivable and represents the monthly maintenance fee charged to the homeowners. This fee is based on square footage of the house on each property and owners of empty lots are charged a flat fee. c. Cash and cash equivalents - Cash and cash equivalents include cash on hand and at bank and short-term deposits which have a maturity period of less than three months. d. Trade and other receivables - Accounts receivable is stated at cost less provision for doubtful accounts and any impairment losses. Management records provisions when in their opinion, amounts are irrecoverable based on historical performance and solvency of the customer. The provision for doubtful accounts policy is based on accounts that are 360 days old and remains unpaid.
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED) (Expressed in Bahamian dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) e. Fixed assets - Fixed assets are stated at cost less accumulated depreciation and any impairment losses. Depreciation is calculated on the straight-line basis to write-off assets over their estimated useful lives as follows: Waste water system
-
3 - 5 years
Maintenance equipment
-
3 years
Computer and office equipment
-
3 years
Security equipment
-
3 years
f. Income and expense recognition - Income and expenses are recorded on an accrual basis of accounting. g. Improvements - These are various projects that are undertaken for the improvement of common areas. These projects are additions and modifications to existing infrastructure within the community. The costs associated with these projects are expensed in the period incurred but is accounted for on the accrual basis for projects not completed within the fiscal year. Improvements are itemized separately and by project for clarity. h. Impairment of assets - An assessment is made at each financial position date to determine whether there is any indication of impairment of any assets, or whether there is any indication that an impairment loss previously recognized on an asset in prior years may no longer exists; the asset’s recoverable amount is estimated. An asset’s recoverable amount is computed as the higher of the asset’s value in use or its net selling price. An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to operations in the period in which it arises unless the asset is carried at a revalued amount in which case the impairment is charged to revaluation. A previously recognized impairment is reversed only if there has been a change in the estimates used to determine the recoverable amount of the asset, however, not to an amount higher than the carrying amount that would have been determined (net of any depreciation), had no impairment loss been recognized for the asset in prior years. i. Related party transactions - Related parties include members of the board who are also homeowners. tel. +1 (242) 676-8990 l www.sandyport.management
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SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED) (Expressed in Bahamian dollars)
4. ACCOUNTS RECEIVABLE Accounts receivable is comprised of the following balances: 2018 Accounts receivable
$
Less: provision for doubtful accounts Accounts receivable, net
584,949
2017 $
(367,762)
460,684 (276,380)
$
217,187
$
$
276,380
$
184,304
The movement in the provision for doubtful accounts is as follows: Balance, beginning of year Add: provision (recovery) made during the year Less: amounts written off during the year Balance, end of year
524,445
91,382
(92,022)
-
(156,043)
$
367,762
$
33,092
$
276,380
The aging of receivables are comprised of the following balances: Current
43,223
31 to 90 days
29,832
91 to 360 days
154,263
58,301
Over 360 days
367,762
276,380
Balance, end of year
26
$
$
584,949
82,780
$
460,684
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED) (Expressed in Bahamian dollars)
5. FIXED ASSETS, NET The movement of fixed assets during the year is as follows: Waste COST Balance as at December 31, 2016
Computer
Water
Maintenance
and Office
Security
System
Equipment
Equipment
Equipment
Total
$ 226,219
$ 30,955
$ 66,598
$ 106,457
$ 430,229
305
-
2,270
17,835
20,410
Additions Disposals
-
-
(1,284)
-
(1,284)
226,524
30,955
67,584
124,292
449,355
Additions
-
536
2,243
36,880
39,659
Disposals
-
-
(2,472)
(9,300)
(11,772)
226,524
31,491
67,355
151,872
477,242
206,124
10,370
65,148
58,645
340,287
13,730
7,007
1,611
30,583
52,931
Balance as at December 31, 2017
Balance at December 31, 2018
ACCUMULATED DEPRECIATION Balance as December 31, 2016 Depreciation Disposals Balance at December 31, 2017 Depreciation Disposals Balance as at December 31, 2018
$
-
-
(1,284)
-
(1,284)
219,854
17,377
65,475
89,228
391,934
6,501
6,936
1,559
32,680
47,676
-
-
(2,472)
(9,300)
(11,772)
226,355
$
24,313
$
64,562
$
112,608
$
427,838
CARRYING VALUE Balance as at December 31, 2018
$
169
Balance as at December 31, 2017
$ 6,670
$
7,178
$
2,793
$ 39,264
$ 49,404
$ 13,578
$
2,109
$ 35,064
$ 57,421
tel. +1 (242) 676-8990 l www.sandyport.management
27
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED) (Expressed in Bahamian dollars)
5. FIXED ASSETS (CONTINUED) Depreciation expense by functional categories are comprised of the following balances: 2018 Security equipment (Note 8)
$
32,680
2017 $
30,583
Maintenance equipment (Note 12)
6,936
7,007
Waste water management (Note 13)
6,501
13,730
Computer and office equipment
1,559
1,611
Total
$
47,676
$
52,931
6. PREPAID MAINTENANCE FEES AND DEPOSITS Prepaid maintenance fees and deposits are comprised of the following balances: 2018 Advance payments
$
Water deposits Total
7. GENERAL RESERVE FUND This amount represents a reserve established to provide for future contingencies.
28
392,875
2017 $
104,500 $
497,375
426,768 102,250
$
529,018
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED) (Expressed in Bahamian dollars)
8. SECURITY EXPENSES Security expenses are comprised of the following balances: 2018 Wages
$
Service contract
489,539
2017 $
435,006
220,867
246,657
Depreciation (Note 5)
32,680
30,583
Security maintenance
32,407
30,433
Supplies
24,999
35,152
Uniforms
1,984
703
Total security expenses
$
802,476
$
778,534
9. GARDENING EXPENSES Gardening expenses are comprised of the following balances: 2018 Contract services
$
395,523
2017 $
378,521
Extermination
59,776
53,865
Garden supplies
25,487
46,786
9,543
19,006
Miscellaneous Total gardening expenses
$
490,329
$
498,178
tel. +1 (242) 676-8990 l www.sandyport.management
29
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED) (Expressed in Bahamian dollars)
10. IMPROVEMENTS During the fiscal year, there were key projects undertaken which included a CCTV Network installation and seawall and canal. Overall improvement expenses are comprised of following balances: 2018 CCTV Network
$
Seawall and canal
158,546
2017 $
-
107,279
92,727
Northern perimter wall
90,145
-
Amenity areas
52,169
-
Canal security booth
30,462
-
Other
11,887
23,320
Clipper Island
-
129,763
Beach Lane common area
-
67,872
Eastern perimeter wall
-
20,665
Total improvements
$
450,488
$
334,347
11. WATER & METERS Water and meters expenses are comprised of the following balances: 2018 Water
$
Water meters Total
30
410,413
2017 $
2,210 $
412,623
409,817 1,390
$
411,207
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED) (Expressed in Bahamian dollars)
12. MAINTENANCE OF COMMON AREAS The expenses associated with the maintenance of common areas are comprised of the following balances: 2018 Supplies and tools
\
$
112,790
2017 $
123,803
Utilities
91,454
83,179
Wages
91,053
87,384
Dredging
52,743
9,880
Swimming pool
26,927
21,346
Roads and lights
20,455
23,344
Tennis courts
8,620
6,925
Depreciation (Note 5)
6,936
7,007
421
5,619
-
6,886
Contract service Hurricane expenses Total maintenance of common areas
$
411,399
$
375,373
13. WASTE WATER MANAGEMENT Waste water management expenses are comprised of the following balances: 2018
2017
118,568
$ 16,658
Wages
67,151
63,563
Services
38,648
39,886
Materials
26,895
38,190
6,501
13,730
Repairs and maintenance
$
Depreciation (Note 5) Total waste water management
$
257,763
$
172,027
tel. +1 (242) 676-8990 l www.sandyport.management
31
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED) (Expressed in Bahamian dollars)
14. PAINTING EXPENSES Painting expenses are comprised of the following balances: 2018 Painting contractors
$
Paint and supplies Total
121,109
2017 $
69,108 $
190,217
135,159 87,402
$
222,561
15. RENT The Homeowners Association rents office space from Artech Bahamas Ltd. at $39,000 per annum, inclusive of electricity and water. The lease will expire on August 31, 2019.
16. CONTINGENT LIABILITIES Waste water - Following an evaluation of the waste water treatment system in 2012, Harris Civil Engineers recommended a series of improvements and repairs. Certain of the work was completed by the end of 2014 and it is estimated that completion of the remaining work will require an expenditure of $430,000. The Board believes that the recommended work can be completed out of budgeted income streams but will consider the need for a special assessment should this become necessary. In addition, the waste water system is almost at its operational capacity: the preliminary budget to expand the capacity to meet anticipated future requirements is $1 million. Under the terms of an Agreement dated November 3, 2009, the cost of such expansion will be borne by the developer, Sandyport Development Association Limited (Devco). The Board continues to explore alternative cost effective and productive solutions to this issue.
32
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONTINUED) (Expressed in Bahamian dollars)
16. CONTINGENT LIABILITIES (CONTINUED) Seawall - With the exception of a few unstable and incomplete sections of wall noted in an engineer’s report commissioned by the Association, the seawall is in fair condition with primarily corrosion damage to the coping beam. Engineers have advised that the durability and appearance of the wall can be improved significantly by completing the noted repairs and coating the concrete surface. The overall cost of the repairs has not been fully quantified.
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.
tel. +1 (242) 676-8990 l www.sandyport.management
33
SANDYPORT HOMEOWNERS ASSOCIATION LIMITED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (CONCLUDED) (Expressed in Bahamian dollars)
17. FINANCIAL RISK MANAGEMENT (CONTINUED) The Homeowners Association has no significant concentration of credit risks with any single counterparty or group counterparties. Interest rate risk – Cash flow interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interest rate. Demand deposits and term deposits are the only significant interest-bearing assets and liabilities. Accordingly, the Homeowners Association’s income and operating cash flow are substantially independent of changes in market interest rates. Capital risk management – The Homeowners Association manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to homeowners through the optimization of the debt and equity balance. The Homeowners Association’s overall strategy remains unchanged from 2010. The capital structure of the Homeowners Association consists of debt, cash and equity attributable to equity holders comprising of share capital, general reserve fund and maintenance fund. ********************
34
PROFESSIONAL ADVISORS Auditors:
Bankers:
HLB Galanis & Co.
CIBC First Caribbean
202 Church Street
Sandyport Branch
Sandyport
P.O. Box N-8350 / N-7125
P. O. Box N-3205
Nassau, The Bahamas
Nassau, The Bahamas
Tel: (242) 327-8364 / 327-4957
Tel: (242) 327-0689
Fax: (242) 327-4955
Fax: (242) 327-0696
Account: 200-167527
Web: www.hlbgalanis.com
Web: www.cibcfirstcaribbeanbank.com Scotiabank
Legal Advisors:
Cable Beach
Kahlil D. Parker
P.O Box N-7518
Cedric L. Parker & Co.
Nassau, The Bahamas
Chambers
Tel: (242) 702-8100
No.9 Rusty Bethel Drive
Fax: (242) 327-5728
P.O. Box N-1953
Account: 70045-72613
Nassau, The Bahamas
Web: www.bahamas.scotiabank.com
Tel: (242) 322-4954/5 Fax: (242) 328-3706
Insurance Agents:
Email: kdp@parkerslaw.net
Tavares & Higgs Blake Road
Consulting Architects:
P. O. Box SP-64003
Alberto G. Suighi
Nassau, The Bahamas
Artech Bahamas Ltd.
Tel: (242) 327-8606
Lagoon Court
Fax: (242) 327-8607
Nassau, The Bahamas
Email: stavares@tavareshiggs.com
Tel: (242) 327-2335 Fax: (242) 327-2337 Web: www.artechbahamas.com
tel. +1 (242) 676-8990 l www.sandyport.management
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