BC Golf Club Limited and The Vancouver Golf Club Combined Financial Statements For the year ended September 30, 2016

Transcription

1 BC Golf Club Limited and The Vancouver Golf Club Combined Financial Statements For the year ended

2 BC Golf Club Limited and The Vancouver Golf Club Combined Financial Statements For the year ended Contents Independent Auditor's Report 2 Combined Financial Statements Statements of Financial Position 3 Statements of Revenue and Expenses 4 Statements of Cash Flows 5 Notes to Financial Statements 6-14 Supplementary Combined Financial Information Schedule 1 - Power Cart Rentals and Food and Beverage Operations 15 Schedule 2 - Operating Expenses 16 Schedule CP Women's Open 17

3 Independent Auditor's Report To the Members of BC Golf Club Limited and The Vancouver Golf Club We have audited the Combined Statement of Financial Position of the BC Golf Club Limited and The Vancouver Golf Club as at, the Combined Statements of Revenue and Expenses and Cash Flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion. Basis for Qualified Opinion As explained in Note 1(h) to the financial statements, the organization does not follow accrual accounting for certain entrance fees. Had accrual accounting been adhered to, entrance fee revenue and the excess of revenues over expenses - club facilities would have increased by $376,194 ( increased by $65,789), members' equity invested in other assets would have increased by $3,669,650 ( $3,448,562), current entrance fees receivable would have increased by $589,400 ( $580,021) and long term entrance fees receivable would have increased by $3,080,250 ( $2,868,541). Qualified Opinion In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the combined financial position of BC Golf Club Limited and The Vancouver Golf Club as at, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Report on Other Legal and Regulatory Requirements As required by the Society Act (British Columbia), we report that, in our opinion, these accounting principles have been applied on a basis consistent with that of the preceding year. Chartered Professional Accountants Vancouver, British Columbia October 25,

4 Combined Statements of Financial Position September Assets Current Cash (Note 2) $ 885,514 $ 679,593 Receivables (Note 3) 419, ,096 Inventories 96,142 98,997 Prepaid expenses and deposits 119,561 88,686 1,520,547 1,486,372 Property and equipment (Note 4) 4,785,430 5,092,174 $ 6,305,977 $ 6,578,546 Liabilities and Net Assets Liabilities Current Accounts payable and accrued liabilities (Note 7) $ 746,503 $ 851,566 Government remittances payable 50,999 48,911 Deferred revenue (Note 3) 52,796 39,478 Current portion of obligations under capital lease (Note 5) 306, ,132 1,157,004 1,132,087 Obligations under capital lease (Note 5) 484, ,325 1,641,119 1,768,412 Net Assets Share capital (Note 6) Authorized: 1,200 common shares with a par value of $100 each Issued: 1,012 common shares ( ) 101,200 98,600 Net assets Invested in property and equipment (Note 6) 3,994,610 4,254,360 Invested in other net assets (Note 6) 569, ,174 4,664,858 4,810,134 $ 6,305,977 $ 6,578,546 On behalf of the Board: "John Chesman" Director "Paul Beauchamp" Director The accompanying notes are an integral part of these financial statements. 3

5 Combined Statements of Revenue and Expenses For the year ended September Club Operations Operating revenue Membership dues $ 3,182,393 $ 3,125,014 Food and beverage (Schedule 1) 3,098,161 2,906,383 Green fees 391, ,831 Power cart rentals (Schedule 1) 148, ,491 Locker rentals 166, ,298 Finance charges 11,054 9,915 Interest and sundry 16,077 28,660 CP Women's Open, net (Note 3 and Schedule 3) - 234,609 7,014,091 7,000,201 Operating expenses Food and beverage (Schedule 1) 3,094,029 2,869,883 Golf course maintenance (Schedule 2) 1,936,046 1,838,076 General and administrative (Schedule 2) 1,324,774 1,320,581 Clubhouse (Schedule 2) 324, ,544 Locker room (Schedule 2) 186, ,409 Golf shop operations (Schedule 2) 141, ,666 Power cart rentals (Schedule 1) 37,016 40,826 7,044,957 6,714,985 Revenue (under) over expenses - Operations (30,866) 285,216 Club Facilities Facilities revenue Entrance fees 1,004,243 1,035,203 (Loss) gain on disposal of property and equipment (9,847) 50, ,396 1,085,790 Facilities expenses Amortization 932, ,161 Interest on bank loans and obligations under capital lease 40,677 58,088 Salaries and administration 138, ,081 1,111,406 1,149,330 Revenue under expenses - Facilities (117,010) (63,540) Total revenue (under) over expenses $ (147,876) $ 221,676 The accompanying notes are an integral part of these financial statements. 4

6 Combined Statements of Cash Flows For the year ended September Cash provided by (used in) Operating activities Cash receipts from operations $ 8,216,636 $ 8,180,178 Cash paid to suppliers and employees (7,294,670) (6,680,233) Interest received 4,935 5,941 Interest paid (40,677) (58,088) 886,224 1,447,798 Investing activity Investment in property and equipment (475,879) (445,710) Financing activities Repayment of bank loans - (765,307) Repayment of capital lease obligations (207,024) (250,152) Net proceeds from issuance of shares 2, (204,424) (1,014,759) Increase (decrease) in cash during the year 205,921 (12,671) Cash, beginning of year 679, ,264 Cash, end of year $ 885,514 $ 679,593 Non-cash supplemental information Investment in property and equipment financing through capital lease $ 166,125 $ 351,243 The accompanying notes are an integral part of these financial statements. 5

7 Combined Notes to Financial Statements 1. Nature of Operations and Summary of Significant Accounting Policies a) Purpose of the Organization These financial statements combine the accounts of British Columbia Golf Club Limited, a company incorporated under the laws of the Province of British Columbia, and The Vancouver Golf Club, a society registered under the laws of the Province of British Columbia. Both are not-for-profit organizations under the Income Tax Act and, as such, are exempt from income tax except with respect to investment income. British Columbia Golf Club Limited provides the facilities for the operation of The Vancouver Golf Club. The combined operation's, the "Club", purpose is to provide golf and hospitality facilities for its members. b) Basis of Accounting These financial statements have been prepared using the Canadian accounting standards for not-for-profit organizations ("ASNPO"). c) Accrual Accounting All revenue and expenses are accounted for on the accrual basis of accounting with the exception of entrance fees which is accounted for on the cash basis as noted below in Note 1 h). d) Financial Instruments Financial instruments are recorded at fair value when acquired or issued. In subsequent periods, equities traded in an active market and derivatives are reported at fair value, with any unrealized gains and losses reported in operations. All other financial instruments are reported at cost or amortized cost less impairment, if applicable. Financial assets are tested for impairment when changes in circumstances indicate the asset could be impaired. Transaction costs on the acquisition, sale or issue of financial instruments are expensed for those items remeasured at fair value at each statement of financial position date and charged to the financial instrument for those measured at amortized cost. e) Inventories Inventories consist of food, beverage and liquor which are stated at lower of cost and net realizable value. Cost is generally determined on the first-in first-out basis. 6

8 Combined Notes to Financial Statements 1. Nature of Operations and Summary of Significant Accounting Policies - Continued f) Property and Equipment Property and equipment are recorded at cost less accumulated amortization. Amortization is calculated using the straight-line method based on the assets' estimated useful life. Buildings - 20 years straight-line Building improvements - 10 years straight-line Computers - 3 years straight-line Course development - 12 years straight-line Equipment under capital lease - 5 years straight-line Furniture and fixtures - 5 years straight-line Machinery and equipment - 5 years straight-line Power carts under capital lease - 5 years straight-line Additions during the year are depreciated on a prorata basis of the annual rate from the date that the item is available for use. The cost of repairs and replacement of routine nature items are charged to income while those expenditures which improve or extend the useful lives of the assets are capitalized. When the property and equipment no longer contributes to the Club's ability to provide services, its carrying amount is written down to its residual value. g) Revenue Recognition The Club records monthly dues as earned once the collection of the dues is reasonably assured. Amounts received in the current year that relate to future years are deferred and will be recognized in the year that services are provided. Food and beverage, green fees, power cart rentals, locker rentals and other income are recognized when earned and collection is reasonably assured. Entrance fees are recognized when cash is received as indicated in Note 1 h). 7

9 Combined Notes to Financial Statements 1. Nature of Operations and Summary of Significant Accounting Policies - Continued h) Entrance Fee Installment Plan The Club has an installment plan for payment of entrance fees and applicants are granted membership status immediately. The Club recognizes revenue from entrance fees upon receipt of cash or when billed under the terms of the installment plan. The Club considers this method of recognizing revenue as conservative as it reflects the actual economic position. Under Canadian accounting standards for not-for-profit organizations, however, accrual accounting requires the recognition of such revenue at the date membership status is granted. Had the Club followed accrual accounting, the entrance fees receivable would have been as follows: September 30, September 30, Undiscounted Discounted Undiscounted Discounted Current entrance fees receivable $ 708,267 $ 589,400 $ 665,709 $ 580,021 Long term entrance fees receivable 5,164,055 3,080,250 3,986,044 2,868,541 $ 5,872,322 $ 3,669,650 $ 4,651,753 $3,448,562 i) Use of Estimates The preparation of financial statements in accordance with Canadian accounting standards for not-for-profit organizations requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reporting period. Actual results could differ from management's best estimates as additional information becomes available in the future. The financial statements have, in management's opinion, been properly prepared using careful judgment within the framework of the accounting policies summarized. Significant estimates included in these financial statements are the collectibility of accounts receivable, the valuation of inventory, useful lives of property and equipment, and the completeness of accounts payable and accrued liabilities and deferred revenue. Actual results could materially differ from estimates. j) Donated Services The Club benefits from the donated services of many members. Since these services are not normally purchased by the Club and because of the difficulty in determining their fair value, donated services are not recognized in these financial statements. 8

10 Combined Notes to Financial Statements 2. Cash The Club's bank accounts are held at one chartered bank. The bank accounts earn interest at prevailing market rates and interest is paid monthly. The Board of Directors of the Club has designated certain cash balances for repayment of bank loans, obligations under capital lease and the addition of property and equipment. During the year, the Board of Directors determined that $115,934 ( $190,746) of designated cash had been used to fund obligations under capital lease and property and equipment acquisitions. 3. CP Women's Open During August 2015, the Club was closed for a ten day period to play host to the CP Women's Open Championship ("the Tournament"). Under the agreement, the Club received a rental fee, commissions from the sale of merchandise by the Golf Shop, commissions from the sale of corporate and ticket packages and revenues from food and beverage activity which occurred inside the Clubhouse. Expenses were allocated to the Tournament based on actual wages incurred and other actual expenses incurred. No allocation of management salaries or overhead expenses such as property taxes, interest or insurance were made to the Tournament. Included in deferred revenue and Tournament expenses was a provision of $5,738 at September 30, 2015 for green fee guest passes. Green fee guest passes were issued to the purchasers of 5 or more club house badges or Hospitality packages. The green fees guest passes were valued at the estimated face value of the passes less provision for non-usage. The green fees guest passes were initially to expire June 30, 2016 and have since been extended to December 31, As at September 30, 2015, the Royal Canadian Golf Association owed $143,637 to the Club. No amounts remain outstanding as at. 9

11 Combined Notes to Financial Statements 4. Property and Equipment Accumulated Net Book Cost Amortization Value Land $ 15,900 $ - $ 15,900 Buildings 7,109,185 5,050,192 2,058,993 Building improvements 74, ,176 Computers 119, ,370 14,509 Course development 8,137,589 6,481,771 1,655,818 Furniture and fixtures 1,077,392 1,046,055 31,337 Machinery and equipment 2,018,819 1,794, ,557 Power carts under capital lease 193,664 96,994 96,670 Equipment under capital lease 1,054, , ,470 $19,800,697 $15,015,267 $ 4,785,430 September 30, 2015 Accumulated Net Book Cost Amortization Value Land $ 15,900 $ - $ 15,900 Buildings 7,123,309 4,709,842 2,413,467 Computers 119,879 93,147 26,732 Course development 7,906,874 6,242,559 1,664,315 Furniture and fixtures 1,072,272 1,034,340 37,932 Machinery and equipment 1,916,034 1,758, ,301 Power carts under capital lease 193,664 58, ,467 Equipment under capital lease 887, , ,060 $ 19,235,931 $ 14,143,757 $ 5,092,174 10

12 Combined Notes to Financial Statements 5. Obligations Under Capital Lease National Leasing Group Inc. Agreement bearing interest at 5.051% per annum, requiring monthly payments of $4,925 to May $ 119,008 $ 174,526 Agreement bearing interest at 5.169% per annum, requiring monthly payments of $1,200 to May ,326 40,864 Agreement bearing interest at 4.870% per annum, requiring monthly payments of $5,355 to April , ,127 Agreement bearing interest at 4.875% per annum, requiring monthly payments of $1,200 to March ,261 52,325 Agreement bearing interest at 4.990% per annum, requiring monthly payments of $4,833 to April , ,413 Agreement bearing interest at 4.989% per annum, requiring monthly payments of $956 to May ,243 53,202 Agreements bearing interest at 4.500% per annum, requiring monthly payments of $2,755 to April , , ,457 Less: current portion 306, ,132 $ 484,115 $ 636,325 All capital leases are collateralized by specific equipment, being the equipment and power carts under capital lease as noted in Note 10. Total interest paid on capital lease obligations during the year was $40,676 ( $40,276). 11

13 Combined Notes to Financial Statements 5. Obligations Under Capital Lease - Continued The future minimum lease payments under these capital lease obligations are as follows: Amount 2017 $ 338, , , ,113 Total minimum lease payments 850,257 Less imputed interest 59,436 Balance of obligations $ 790, Changes in Net Assets Invested in Invested Share Property and in Other September 30 September 30 Capital Equipment Net Assets Balance, beginning of year $ 98,600 $ 4,254,360 $ 457,174 $ 4,810,134 $ 4,587,758 Total (deficiency) excess of revenues over expenses - - (147,876) (147,876) 221,676 Amortization - (932,322) 932, Net property and equipment additions - 642,125 (642,125) - - Issuance of common shares 2, , Net obligation under capital lease - 30,447 (30,447) - - Balance, end of year $ 101,200 $ 3,994,610 $ 569,048 $ 4,664,858 $ 4,810, Transactions With Members a) During the year, the Club was charged $33,484 ( $36,473) for services by companies affiliated with club members. b) The Board of Directors approved honorariums to two members who acted in the capacity of Tournament Chairs of the CP Women's Open in the amount of $8,000. These amounts were included in accounts payable and accrued liabilities as at September 30, As at, these amounts have been paid out. 12

14 Combined Notes to Financial Statements 8. Contingencies and Commitments a) The Club currently has outstanding performance letters of guarantee totaling $30,000 ( $30,000) in favour of the Liquor Distribution Branch. The total available letters of guarantee are $100,000. b) The Club entered into an agreement until December 2017 for Golf Shop services. The agreement may only be terminated upon a material breach of the agreement, or upon payment of 12 months of the annual retainer fee upon the provision of 90 days' notice. Under the terms of the agreement, the company providing Golf Shop services is entitled to certain service fees and an annual retainer fee. The Club acts as an agent for the company for the collection of range ball fees and golf shop services fees and accordingly these fees are not included in these financial statements. 9. Financial Instrument Risks The Club through its financial assets and liabilities, is exposed to various risks. The following analysis provides a measurement of those risks at. There have been no changes in these risks from the prior year. a) Credit Risk Credit risk is the risk that the Club will incur a loss due to the failure by its debtors to meet their contractual obligations. Financial instruments that potentially subject the Club to significant concentrations of credit risk consist primarily of cash, designated cash and receivables. The Club limits its exposure to credit risk by placing its cash with a high credit quality financial institution and by enforcing credit policies on receivables. The maximum exposure of the credit risk is equal to its carrying value. b) Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The interest rates and terms of cash and obligations under capital lease are as disclosed in Notes 2 and 5. c) Liquidity Risk Liquidity risk is the risk that the Club will not be able to meet its obligations as they fall due. The Club maintains adequate levels of working capital to ensure all its obligations can be met when they fall due. The Club also has access to a line of credit of $100,000 of which $Nil has been used as of ( $Nil). 13

15 Combined Notes to Financial Statements 10. Comparative Amounts Certain comparative amounts have been reclassified to reflect disclosure that is consistent with that of the current year. 14

16 Combined Schedule 1 - Power Cart Rentals and Food and Beverage Operations For the year ended September Power Cart Rentals Rental revenue $ 148,065 $ 138,491 Expenses Maintenance 7,323 7,627 Commissions 29,693 33,199 37,016 40,826 Excess of revenue over expenses $ 111,049 $ 97,665 Food and Beverage Operations Sales $ 2,924,000 $ 2,739,521 Cost of sales 1,137,559 1,017,375 Gross margin 1,786,441 1,722,146 Gross margin 61.1 % 62.9 % Other revenue Minimum food assessment 92,828 95,795 Room rentals 69,205 62,004 Sundry 9,227 5,710 Corkage on bottle sales 2,901 3, , ,862 Direct expenses Wages and employee benefits 1,678,086 1,567,364 Entertainment 6,350 4,852 General 122, ,569 Laundry and uniforms 68,057 80,870 Repairs 13,173 8,227 Smallware/china 12,793 13,547 Supplies 55,399 48,079 1,956,470 1,852,508 Excess of revenue over expenses $ 4,132 $ 36,500 15

17 Combined Schedule 2 - Operating Expenses For the year ended September Golf course maintenance Gas and oil $ 42,749 $ 47,834 General 25,442 25,894 Repairs 117, ,832 Supplies 521, ,398 Utilities 34,035 30,335 Wages and employee benefits 1,195,026 1,173,783 1,936,046 1,838,076 General and administrative Bank charges 10,130 8,820 Committee expenses 18,613 18,655 Computer costs 29,372 33,928 Insurance 60,031 56,247 Postage 14,962 19,186 Printing, stationery and supplies 40,300 42,443 Professional fees 107,080 94,258 Promotion and other 41,007 44,243 Property taxes 199, ,878 Security 21,667 19,639 Telephone 10,397 12,058 Utilities 143, ,535 Wages and employee benefits 628, ,691 1,324,774 1,320,581 Clubhouse General 26,072 48,884 Repairs 47,687 47,960 Supplies and laundry 88,663 80,000 Wages and employee benefits 162, , , ,544 Locker room Supplies and laundry 12,385 11,098 Wages and employee benefits 174, , , ,409 Golf shop operations Contract payments 102, ,300 Supplies 37,864 34,200 Telephone 1,650 2, , ,666 $ 3,913,912 $ 3,804,276 16

18 Combined Schedule CP Women's Open For the year ended September Revenue Food and beverage (net of cost of sales - $88,821) $ - $ 341,213 Merchandising commissions - 7,500 Promotions - 10,000 Rental fee - 30,000 Sales commissions - 56, ,161 Expenses General and administration - 21,227 Management and chair honorariums (Note 7) - 44,500 Supplies and others - 25,551 Wages and employee benefits - 119, ,552 Excess of revenue over expenses $ - $ 234,609 17