BERMUDA %ce oJf&w S^Uwlt/ Hamilton, Bermuda August 14, 1997 Larry T. Dennis, C.A. Auditor Address all correspondence P.O. Box HM 2891, Hamilton HM LX, Bermuda to the Auditor: o Telephone (441) 297-7961 Fax (441) 295-3849 o-- BERMUDA COLLEGE CONSOLIDATED BALANCE SHEET MARCH 31, 1997 1997 1996 $ $ ASSETS CLhRRENT ASSETS Cash and deposits (note 4) Accounts receivable Prepaid expenses Inventories (note 5) Due from the Government of Bermuda 2,879,936 100,372 100,372 39,753,742 38,455,054 44,085,232 CAPITAL ASSETS (note 6) 2,151,272 237,335 122,880 335,116 33,333 4,231,118 INVESTMENTS 3,589,221 266,116 24,825 309,603 41,353 41,435,362 LIABILITIES AND FUND BALANCES CUuRRENT LIABILITIES Accounts payable and accrued liabilities Deferred scholarship grants and endowments (note 7) Deferred revenues Due to the Government of Bermuda (note 8) 996,166 728,924 214,660 52,629 835,266 533,492 259,537 52,629 1,992,379 1,680,924 1,264,703 40,761,505 66,645 1,103,465 38,578,264 72,709 42,092,853 39,754,438 44,085,232 41,435,362 FUND BALANCES Current operating fund (note 9) Capital fund (note 9) Restricted fund (note 9) The accompanying notes are an integral part of these financial statements. BERMUDA COLLEGE CONSOLIDATED STATEMENT OF REVENUES AND EXPENSES AND FUND BALANCES FOR THE YEAR ENDED MARCH 31 , 1997 1997 1996 $ $ REVENUES Government grants Sales, services and sundry Student fees (note 10) Interest 9,221,976 6,022,614 1,585,448 104,415 8,547,396 5,629,795 1,526,190 106,501 16,934,453 15,809,882 4,899,950 3,991,053 2,380,469 2,262,268 2,047,980 1,821,609 341,046 269,007 143,000 4,577,410 3,810,878 2,272,222 2,204,210 1,526,476 1,575,930 456,349 187,358 143,000 18,156,382 16,753,833 EXCESS OF EXPENSES OVER REVENUES 1,221,929 943,951 Contribution from the Government of Bermuda for capital projects 3,560,344 5,604,243 INCREASE IN FUND BALANCES 2,338,415 4,660,292 39,754,438 39,618,345 EXPENSES Academic studies Cost of sales and services Academic services Physical plant and maintenance Amortization Administration Other expenses Public relations Adult Education School grant (note 11) FUND BALANCES, BEGINNING OF YEAR AS PREVIOUSLY REPORTED Adjustment to reflect change in accounting policy (note 3) (4,524,199) FUND BALANCES, BEGINNING OF YEAR AS RESTATED 39,754,438 35,094,146 FUND BALANCES, END OF YEAR 42,092,853 39,754,438 The accompanying notes are an integral part of these financial statements. BERMUDA COLLEGE CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION FOR THE YEAR ENDED MARCH 31, 1997 1997 1996 $ $ CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Excess of expenses over revenues (1,221,929) (943,951) Add non-cash items: Amortization Loss on disposal of capital assets 2,047,980 3,961 1,526,476 830,012 582,525 (28,781) 98,055 25,513 (8,020) (48,335) 3,613 65,040 (20,051) 160,900 195,432 (44,877) (40,589) 218,244 33,094 Changes in working capital: Increase in accounts receivable Decrease in prepaid expenses Decrease in inventories Increase in due from the Government of Bermuda Increase (decrease) in accounts payable and accrued liabilities Increase in deferred scholarship grants and endowments (Decrease) increase in deferred revenues 1,228,234 793,541 (3,350,629) (7,175,751) (3,172) (3,350,629) (7,178,923) Contribution from the Government of Bermuda for capital projects 3,560,629 5,604,243 INCREASE (DECREASE) IN CASH AND DEPOSITS 1,437,949 CASH AND DEPOSITS, BEGINNING OF YEAR 2,151,272 2,932,411 CASH AND DEPOSITS, END OF YEAR 3,589,221 2,151,272 CASH USED IN INVESTING ACTIVITIES Purchase of capital assets Increase in investments CASH PROVIDED BY FINANCING ACTIVITIES The accompanying notes are an integral part of these financial statements. (781,139) BERMUDA COLLEGE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 1. AUTHORITY Bermuda College ("the College") was established under the Bermuda College Act 1974, to provide full and part-time education and training for persons over the compulsory school age. The College is managed and controlled by a Board of Governors under the provisions of the Act, and amendments thereto. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of consolidation The financial statements of the College for the year ended March 31, 1997 have been consolidated with the financial statements of its wholly-owned subsidiary, the Stonington Beach Hotel Ltd. ("the Hotel") for the year ended September 30, 1996. (b) Inventories Inventories are valued at the lower of cost and net realizable value. Circulating inventory at the Hotel is valued at cost and is expensed over a period of two years. (c) Capital assets Capital assets are recorded at cost except for donated assets which are recorded at fair value at the date of receipt. Capital assets are amortized as follows: Buildings & car parks Furniture & fixtures Equipment (d) - straight-line basis over 40 years and 25 years, respectively - straight-line basis over 10 years - double declining balance basis over 4 years for computers and over 5 years for other equipment Investments Investments are stated at the lower of cost or net realizable value. 3 CHANGE IN ACCOUNTING POLICY During the year ended March 31, 1996, the College adopted new methods of amortization of its Property, Plant and Equipment to conform with the newly issued accounting recommendations for not-for-profit organizations. The change was applied retroactively and prior periods were restated to reflect this change. The effect of the change in the year ended March 31, 1996 increased the amortization charge by $987,588. Prior to this change, amortization was charged on the Hotel buildings at an amount equal to the rent recharged. 32 BERMUDA COLLEGE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 4. RESTRICTED CASH AND DEPOSITS Endowed funds in the amount of $728,924 (1996 - $533,492) are subject to external restrictions. Total restricted cash and deposits are comprised of the deferred scholarship grants and endowments described in note 7. 5. INVENTORIES 1997 $ $ 183,378 126,225 219,443 115,673 309,603 Inventory Circulating inventory 1996 335,116 Inventory consists of books and food. Circulating inventory consists of hotel supplies such as linen and china. 6. CAPITAL ASSETS 1997 1996 Cost Net Book Value Net Book Value $ Buildings & car parks Land Furniture & fixtures Equipment Buildings in progress Accumulated Amortization $ $ $ 34,496,230 2,686,240 1,840,636 730,636 - 27,120,587 2,686,240 1,813,754 331,480 6,502,993 39,753,742 38,455,054 41,805,548 2,686,240 4,004,436 2,350,813 7,309,318 2,163,800 1,620,177 50,847,037 11,093,295 The construction of the North Hall was completed during the year and all costs are now included with buildings and car parks. 33 BERMIJDA COLLEGE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 DEFERRED SCHOLARSHIP GRANTS AND ENDOWMENTS 5 1997 $ $ 607,250 121,674 410,771 122,721 728,924 Corange Limited Other deferred scholarship grants 1996 533,492 During the year ended March 31, 1994, a pledge of $1,000,000 over five years was received from Corange Limited. At year end $400,000 (1996 - $600,000) is still to be received. The Board of Governors, in conjunction with Corange Limited, has designated the use of the funds as follows: $400,000 for the enrichment of the Corange Science Centre; an endowment of $300,000 to establish and support the Corange Science Teaching Chair; and an endowment of $300,000 to establish the Corange Merit Scholarships. During the year, the College received $200,000 (1996 - $200,000) from Corange Limited and accrued interest of $18,550 (1996 - $10,771). Other deferred scholarship grants and endowments have been received from various private sources to be used for the advancement of students' education. 8 DUE TO THE GOVERNMENT OF BERMIJDA The amount of $52,629 (1996 - $52,629) is an interest-free advance from the Government of Bermuda repayable on demand. 9. FUTND BALANCES The Current Operating Fund accounts for academic, administrative and other operating expenses of the College financed by fees, grants and other general revenues. The Capital Fund accounts for amounts expended and funds available to be spent on the building programme and includes funds for construction provided by the College and the Government of Bermuda. The Restricted Fund accounts for funds received for special purposes other than building and operating programmes. 10. STUDENT FEES In accordance with the College's policy of providing a number of free places for needy students for whom the tuition fees are a deterrent to enrolment, full time fees in the amount of $83,034 (1996 -$98,800) have been waived. 34 BERMUDA COLLEGE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 11. ADULT EDUCATION SCHOOL GRANT Included in Government grant is $143,000 (1996 - $143,000) which the College has been instaicted by the Minister of Education and Human Affairs to pay to the Adult Education School. The College remits a quarterly distribution directly to the Adult Education School. 12. ECONOMIC DEPENDENCE The College is economically dependent upon the Government of Bermuda for its daily operations, cash flow and capital development. 13. COMPARATIVE FIGURES Certain of the 1996 figures have been restated to conform to the 1997 financial statement presentation. 35