Office of the Auditor General Hemisphere House 9 Church Street Hamilton HM 11, Bermuda Tel: Fax: (441)296-3148 (441)295-3849 Email: auditbda@gov.bm Website: www.oagbenriuda.gov.bm AUDITOR'S REPORT To the Minister of Works and Engineering I have audited the balance sheet of the Board of Trustees of the Golf Courses as at March 31, 1999 and the statement of operations for the year then ended. These financial statements are the responsibility of the Board's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in Bermuda and Canada. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In my opinion, these financial statements present fairly, in all material respects, the financial position of the Board of Trustees of the Golf Courses as at March 31,1999 and the results of its operations for the year then ended in accordance with accounting principles generally accepted in Bermuda and Canada. Hamilton, Bermuda November 3, 2000 Larry T. Dennis, C.A. Auditor General 189 BOARD OF TRUSTEES OF THE GOLF COURSES Balance Sheet March 31, 1999 (Expressed in Bermuda Dollars) 1999 1998 (Note 9) Assets Current assets Cash Accounts receivable Inventories Prepaid expenses $ Total current assets 4,150 134,713 525,867 24,390 $ 4,150 86,090 456,445 14,860 689,120 11,889 Apprentice Training Fund (Note 4) Total assets 561,545 11,111 $ 701,009 $ 572,656 $ 190,621 110,789 209,163 178,547 $ 56,584 172,772 178,780 153,409 Liabilities Current liabilities Due to Government of Bermuda (Note 3) Accounts payable and accrued liabilities Deferred revenues Accrued vacation pay Total current liabilities 689,120 11,889 Apprentice Training Fund (Note 4) Total liabilities $ See accompanying notes to financial statements 190 561,545 11.111 701,009 $ 572,656 BOARD OF TRUSTEES OF THE GOLF COURSES Statement of Operations Year Ended March 31, 1999 (Expressed in Bermuda Dollars) 1999 1998 (Note 9) Revenues Green fees and memberships Golf cart hire Rent Miscellaneous 4,161,549 1,582,858 186,425 43,040 $ 3,988,870 1,524,147 232,649 41,686 5,973,872 2,613,647 450,120 283,624 231,945 220,884 213,215 86,973 12,986 — Distribution of net income to Government of Bermuda (Note 9) 4,369,237 1,860,478 Net income from operations 2,634,293 652,299 187,488 206,058 315,319 212,305 84,507 50,690 22,098 4,180 4,113,394 Expenses Salaries and wages Operational materials and supplies Repairs and maintenance Professional services (Notes 6 and 7) General and administrative (Note 5) Electricity and fuel Credit card charges Rentals Bad debts Other 5,787,352 1,418,115 (1,860,478) (1,418,115) Net income retained by Board Retained earnings, beginning of year - 486,370 Transfer to Government of Bermuda (Note 9) _ (486,370) Retained earnings, end of year, as restated $ See accompanying notes to financial statements 191 BOARD OF TRUSTEES OF THE GOLF COURSES Notes to Financial Statements March 31, 1999 1. General The Board of Trustees of the Golf Courses ("the Board") was established on April 3, 1998 under The Golf Courses (Consolidation) Act 1998, ("the Act"), which took effect that same day. Under section 5 of the Act, the functions of the Board are to have general control, management and administration over the Port Royal, Ocean View, and St. George's Golf Courses ("the Golf Courses"); and to maintain the Golf Courses in good and proper condition. For the year ended March 31, 1999 and 1998 the financial statements of the Golf Courses under the Board's administration have been consolidated accordingly to reflect the spirit of the Act. The comparatives have been restated as a result of this being the first time consolidated statements have been provided. In accordance with section 8 of the Act, the Board shall administer the Golf Courses and shall levy such fees and other charges as will result in the revenue of the Board being sufficient, taking one year with another, to meet the expenses of the trustees including depreciation and amortization charges; and the earned surplus of the Board not falling into a deficit position. All sums received by the Board as a result of fees or other charges are paid into the Consolidated Fund of the Government of Bermuda. Likewise, all disbursements approved by the Board are paid out of the same fund. 2. Accounting policies The financial statements have been prepared in conformity with accounting principles generally accepted in Bermuda and Canada and include the following significant accounting policies: a) Inventories Inventories are valued at the lower of cost and net realizable value. b) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 period. Actual results could differ from those estimates. c) Capital Assets The Act vests the land, buildings and equipment of the Golf Courses with the Government of Bermuda. Since the Government of Bermuda retains legal ownership as well as all cash proceeds (net of cash disbursements) of the Golf Courses, capital assets are not recorded in the financial statements of the Board. Capital assets are considered economic resources whereby all future benefits are ultimately owned and controlled by the Government of Bermuda. All capital assets are expensed as capital acquisition or capital development expenditure in the Consolidated Fund of the Government of Bermuda. Government intends to begin capitalization and amortization of land, land improvements, land development and buildings in 2001. 192 BOARD OF TRUSTEES OF THE GOLF COURSES Notes to Financial Statements March 31, 1999 3. Due to Government of Bermuda The amount due to Government of Bermuda represents the net asset position of the Board, payable to the Consolidated Fund since all revenue is received and all expenses are paid by the Consolidated Fund on behalf of the Board. No interest is accrued on the outstanding amount. Apprentice training fund The apprentice training fund was established to receive contributions from various donors to assist persons studying turf management. The movement during the year was as follows: 1999 1998 Balance, beginning of year Interest 11,111 778 $ 10,384 727 Balance, end of year 5. $ $ 11,889 $ 11,111 General and administrative 1999 68,888 60,291 34,781 20,000 16,291 8,550 6,987 5,096 6. $ 100,146 52,951 59,719 37,500 10,383 41,824 2,646 10,150 220,884 Printing, stationery and advertising Telephone and postage Insurance Audit and accounting Clothing and uniform Cleaning Travel Miscellaneous 1998 $ 315,319 Professional services Professional services represents commissions paid on golf cart hire, the Golf range, tee time reservations systems and fees paid to the Ministry of Works and Engineering for management services. 7. Related party transaction The Government of Bermuda provides accounting and administrative services to the Trustees. This includes processing and payment of general and payroll expenditure, revenue processing, maintenance of accounting records and the production of management accounts. A management fee of $25,000 (1998 - $25,000) has been included as part of professional services expense. 193 BOARD OF TRUSTEES OF THE GOLF COURSES Notes to Financial Statements March 31, 1999 8. Statement of cash flows A statement of cash flows has not been prepared as it would not provide any additional useful information. 9. Restatement of comparatives The comparatives presented for the year ended March 31, 1998 have been restated to reflect the distribution of all net income to date to the Consolidated Fund of the Government of Bermuda and to reflect the removal of capital assets and accumulated amortization as discussed in Note 2c. The Consolidated Fund financial statements reflect the Board's net income as revenue. 10. Capital assets As explained in Note 2c, the Board does not record capital assets in the financial statements. The following capital asset information is provided as additional information for financial statement users. Capital assets schedule Cost Land Buildings Equipment Land development Land improvements Fixtures and fittings 1999 Accumulated amortization Net book value 1998 Net book value $11,063,633 6,803,915 2,957,321 4,611,995 1,396,857 936.532 $ 1,924,438 2,269,109 2,180,547 888,966 657.734 $11,063,633 4,879,477 688,212 2,431,448 507,891 278,798 $11,063,633 5,049,300 765,275 2,546,748 533,692 191,230 $ 27,770,253 $ 7,920,794 $19,849,459 $20,149,878 Initial costs for land were recorded at market value. All subsequent capital asset purchases are recorded at cost. Capital assets are amortized on a straight-line basis at the following rates: Buildings Equipment Land development Land improvements Fixtures and fittings 2.5% 25% 2.5% 10% 10% Total amortization for the year is calculated as $916,816 (1998 - $870,485). 194 BOARD OF TRUSTEES OF THE GOLF COURSES Notes to Financial Statements March 31, 1999 11. Pensions Employees of the Board of Trustees of the Golf Courses are covered by the Public Service Superannuation Fund, which is a defined benefit plan administered by the Government of Bermuda. Contributions to the Fund are required from both the employee and the Board. These contributions represent the total liability of the Board and are recognized in the accounts on a current basis. The Board is not required under present legislation to make contributions with respect to the actuarial deficiencies of the Public Service Superannuation Fund. 195 BOARD OF TRUSTEES OF THE GOLF COURSES Schedule 1 Individual Course Statement of Operations March 31, 1999 1999 1998 (Note 9) 564,132 272,974 25,200 4,939 550,528 260,356 42,022 5,079 867,245 857,985 803,035 156,028 79,882 63,648 62,389 60,335 10,942 3,265 — 581,990 163,807 67,490 58,905 58,142 109,178 10,004 20,037 2,616 1,239,524 1,072,169 Ocean View Golf Course Revenue Green fees and membership Golf cart hire Rent Miscellaneous Expenses Salaries and wages Operational materials and supplies Repairs and maintenance Electricity and fuel Professional services General and administrative Credit card charges Rentals Other Net loss $ 196 (372,279) $ (214,184) BOARD OF TRUSTEES OF THE GOLF COURSES Schedule 2 Individual Course Statement of Operations March 31, 1999 1999 1998 (Note 9) $ 2,695,939 812,262 118,455 32,007 2,557,270 801,490 145,607 25,435 3,658,663 3,529,802 1,173,002 168,336 154,077 128,897 99,703 95,103 52,607 1,289 - 1,257,504 91,856 293,570 109,094 121,063 104,327 51,891 19,859 1,564 1,873,014 2,050,728 Port Royal Golf Course Revenue Green fees and membership Golf cart hire Rent Miscellaneous Expenses Salaries and wages Repairs and maintenance Operational materials and supplies Professional services General and administrative Electricity and fuel Credit card charges Rentals Other $ 1,785,649 Net income 197 $ 1,479,074 BOARD OF TRUSTEES OF THE GOLF COURSES Schedule 3 Individual Course Statement of Operations March 31, 1999 1998 (Note 9) 1999 St. Georges Golf Course Revenue Green fees and membership Golf cart hire Rent Miscellaneous $ 901,478 497,622 42,770 6,094 $ 881,072 462,301 45,020 11,172 1,447,964 $ $ Net income 198 637,610 140,015 60,846 54,464 40,659 35,406 23,424 8,432 — 794,799 194,922 85,078 49,073 38,822 28,142 22,612 10,794 22,098 1,000,856 Expenses Salaries and wages Operational materials and supplies General and administrative Electricity and fuel Professional services Repairs and maintenance Credit card charges Rentals Bad debts 1,399,565 1,246,340 447,108 $ 153,225