smiths falls golf and country club limited …...basis of presentation these consolidated financial...

SMITHS FALLS GOLF ANDCOUNTRY CLUB LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

Independent Auditor's Report

Consolidated Statement of Financial Position

Consolidated Statement of Operations

Consolidated Statement of Changes in Net Assets

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Schedule A - Schedule of Committee Expenses

Schedule B - Schedule of General Expenses

INDEPENDENT AUDITOR'S REPORT

To the Directors of Smiths Falls Golf and Country Club Limited

We have audited the accompanying consolidated financial statements of Smiths Falls Golf andCountry Club Limited, which comprise the consolidated statement of financial position as atSeptember 30, 2015, and consolidated statements of operation and change in net assets and cashflows for the year then ended, and a summary of significant accounting policies and otherexplanatory information.

Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidatedfinancial statements in accordance with Canadian accounting standards for not-for-profitorganizations, and for such internal control as Management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement,whether due to fraud or error.

Auditor's ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based onour audit. We conducted our audit in accordance with Canadian generally accepted auditingstandards. Those standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the consolidated financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the consolidated financial statements. The procedures selected depend on theAuditor's judgement, including the assessment of the risks of material misstatement of theconsolidated financial statements, whether due to fraud or error. In making those riskassessments, the Auditor considers internal control relevant to the entity's preparation and fairpresentation of the consolidated financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity's internal control. An audit also includes evaluating the appropriatenessof accounting policies used and the reasonableness of accounting estimates made byManagement, as well as evaluating the overall presentation of the consolidated financialstatements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, thefinancial position of Smiths Falls Golf and Country Club Limited as at September 30, 2015, andits operations and its cash flows for the year then ended in accordance with Canadian accountingstandards for not-for-profit organizations.

Perth, Ontario Authorized to practise public accounting byJanuary 07, 2016 The Institute of Chartered Professional Accountants of Ontario

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SMITHS FALLS GOLF AND COUNTRY CLUB LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at September 30, 2015

2015 2014

ASSETSCURRENT ASSETS

Cash $ 55,528 $ 48,022Marketable securities - 45,000Accounts receivable 23,111 20,259Inventory 19,955 7,957Prepaid expenses 44,799 41,672

143,393 162,910

CAPITAL ASSETS (note 3) 1,188,089 1,230,256

ORGANIZATION COST 917 917

$ 1,332,399 $ 1,394,083

LIABILITIESCURRENT LIABILITIES

Accounts payable and accrued liabilities $ 58,826 $ 59,627Government payables 38,887 34,969Deferred revenue 11,204 18,598Current portion of capital lease obligations 15,098 15,098Current portion of long-term debt 32,500 32,500

156,515 160,792

CAPITAL LEASE OBLIGATIONS (note 4) 24,481 37,155

DEFERRED CONTRIBUTIONS (note 5) 52,393 65,060

LONG-TERM DEBT (note 6) 70,000 102,500

303,389 365,507NET ASSETS

Unrestricted (17,000) (14,427)Invested in capital assets (note 8a) 1,046,010 1,043,003

1,029,010 1,028,576

$ 1,332,399 $ 1,394,083

APPROVED ON BEHALF OF THE BOARD:

_____________________________________ _____________________________________

The accompanying notes are an integral part of these financial statements.4


CONSOLIDATED STATEMENT OF OPERATIONS

For the year ended September 30, 2015

2015 2014

REVENUEFees - memberships $ 288,691 $ 251,673

- guests 152,136 145,070- lockers 340 420- power carts 114,477 124,016

Bar 198,576 191,790Kitchen 18,584 18,584Pro shop 100,476 2,003Other 17,850 10,647Contribution revenue 12,667 10,643Gain on disposal of capital assets - 1,648

903,797 756,494

COST OF SALES Power carts 17,413 21,553Bar 81,496 78,078Pro shop 56,107 -

155,016 99,631

GROSS MARGIN 748,781 656,863

COMMITTEE EXPENSES (schedule A) 561,841 550,919GENERAL EXPENSES (schedule B) 113,423 112,117

EXCESS OF REVENUE OVER EXPENSES FROM OPERATIONS 73,517 (6,173)Amortization (73,208) (77,296)

EXCESS (DEFICIENCY) OF REVENUE OVER EXPENSES $ 309 $ (83,469)



CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS


Unrestricted

ShareCapital (note 7) Deficit Total

Invested inCapitalAssets

(note 8) 2015 2014

Balance beginningof year $ 117,075 $ (131,502) $ (14,427) $ 1,043,003 $ 1,028,576 $1,111,170

Excess (deficiency)of revenue overexpenses - 73,517 73,517 (73,208) 309 (83,469)

Issuance of sharesand other capital 125 - 125 - 125 875

Transfers (note 8b) - (76,215) (76,215) 76,215 - -

Balance end of year $ 117,200 $ (134,200) $ (17,000) $ 1,046,010 $ 1,029,010 $1,028,576



CONSOLIDATED STATEMENT OF CASH FLOWS


2015 2014

CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIESExcess (deficiency) of revenue over expenses $ 309 $ (83,469)Items not affecting cash:

Amortization 73,208 77,296Amortization of deferred contributions (12,667) (10,643)Gain on disposal of capital assets - (1,648)

Net change in non-cash working capital items:Accounts receivable (2,852) (14,705)Inventory (11,998) (21)Prepaid expenses (3,127) 6,072Accounts payable and accrued liabilities (801) 20,327Government payables 3,918 6,856Deferred revenue (7,394) 14,851

38,596 14,916

INVESTING ACTIVITIESRedemption (purchase) of marketable securities 45,000 (29,014)Purchase of capital assets (31,041) (28,796)Proceeds on disposal of capital assets - 2,750

13,959 (55,060)

FINANCING ACTIVITIESRepayment of long-term debt (32,500) (32,500)Increase in deferred contributions - 15,045(Repayment of) advances on capital lease obligations (12,674) 10,933Issuance of share capital 125 875

(45,049) (5,647)

NET CHANGE IN CASH 7,506 (45,791)

CASH - BEGINNING OF YEAR 48,022 93,813

CASH - END OF YEAR $ 55,528 $ 48,022

SUPPLEMENTAL INFORMATIONEquipment purchased under capital lease $ - $ 25,191



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

1. NATURE OF OPERATIONS

The Club is incorporated under the laws of Ontario and operates a non-profit golf andcountry club. The Club, being a recreational organization, is exempt from income taxesunder Section 149(1)(l) of the Income Tax Act.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These consolidated financial statements have been prepared in accordance with Canadianaccounting standards for not-for-profit organizations. The principal accounting policies ofthe Club are summarized as follows:

Basis of Consolidation

These financial statements have been prepared on a consolidated basis and include theassets, liabilities, and operations of SFGCC Holdings Inc. All significant intercompanytransactions and balances have been eliminated on consolidation.

Revenue Recognition

The Club follows the deferral method of accounting for revenues. The Club recognizesrevenue when the product has been delivered and collectibility can be reasonably assured.Membership fees are recognized as revenue in the year that membership to the Club isprovided.

Cash and Cash Equivalents

The Club considers cash and cash equivalents to be highly liquid investments with originalmaturities of three months or less.

Marketable Securities

Marketable securities consist of guaranteed investment certificates which are recorded atfair value.

Inventory

The Club values its bar inventory at the lessor of cost and net realizable value.

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SEPTEMBER 30, 2015

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Capital Assets

Capital assets are stated at cost. Amortization is provided on current purchases at half-rate.When capital assets are disposed of, the related profit or loss is included in currentoperations. Amortization is calculated using the declining balance method at the followingannual rates:

Club house - 5%Pro shop - 4%Maintenance building - 5%Dam and bridges - 8%Parking lot - 8%Watering system - 6%Storage shed - 10%Fence - 10%Fixtures and equipment - 30%Rolling stock - 20%Power carts - 15%Computer - 55%Leased equipment - 30%

Leases

Leases are classified as capital or operating leases. A lease that transfers substantially all ofthe benefits and risks incidental to the ownership of property is classified as a capital lease.At the inception of a capital lease, an asset and an obligation are recorded at an amountequal to the lesser of the present value of the minimum lease payments and the property’sfair value at the beginning of the lease. Assets recorded under capital leases are amortizedon a straight-line basis over the term of the lease that is the estimated useful lives of theassets. All other leases are accounted for as operating leases wherein rental payments areexpensed as incurred.

Accounting Estimates

The preparation of financial statements in conformity with Canadian generally acceptedaccounting principles requires Management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the dates of the financial statements and the reported amounts of revenue andexpenses during the reporting period. Actual results could differ from these estimates.

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SEPTEMBER 30, 2015

3. CAPITAL ASSETS2015 2014

Accumulated Net Book Net BookCost Amortization Value Value

Land and development costs $ 468,816 $ - $ 468,816 $ 468,816Club house and pro shop 909,830 587,741 322,089 338,710Maintenance building 296,717 82,965 213,752 225,002Dam and bridges 11,910 9,956 1,954 2,124Parking lot 47,826 39,323 8,503 9,243Watering system 155,502 131,284 24,218 25,341Storage shed 16,115 15,397 718 798Fence 4,705 3,289 1,416 1,573Fixtures and equipment 510,140 436,239 73,901 72,353Rolling stock 507,651 485,937 21,714 27,142Power carts 111,442 71,406 40,036 47,101Computer 3,496 961 2,535 -Leased equipment 120,017 111,580 8,437 12,053

$ 3,164,167 $ 1,976,078 $ 1,188,089 $ 1,230,256

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SEPTEMBER 30, 2015

4. CAPITAL LEASE OBLIGATIONS2015 2014

Various greens equipment under capital lease at5.5% with TD Equipment Finance Canada Inc.Due September 30, 2018 with blended monthlypayments of $804 (plus taxes). $ 25,907 $ 33,861

Greens equipment under capital lease at 4.59%with TD Equipment Finance Canada Inc. Due May1, 2018 with blended monthly payments of $454(plus taxes). 13,672 18,392

39,579 52,253Less: current portion 15,098 15,098

$ 24,481 $ 37,155

Future minimum lease payments are as follows:

2016 $ 15,0982017 15,0982018 12,478

Total minimum lease payments 42,674Less: imputed interest (3,095)

39,579Less: current portion 15,098

$ 24,481

5. DEFERRED CONTRIBUTIONS2015 2014

Balance - beginning of year $ 65,060 $ 60,658Add: contributions received during the year - 14,550Add: interest - 495Less: amounts amortized to revenue (12,667) (10,643)

$ 52,393 $ 65,060

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SEPTEMBER 30, 2015

6. LONG-TERM DEBT2015 2014

Term loan payable to TD Bank, repayable $2,500monthly plus interest at prime plus .80%, dueSeptember 2018. $ 90,000 $ 120,000

Equipment loan, non-interest bearing, annualpayment of $2,500 due June 15, 2011 to June 15,2020. 12,500 15,000

102,500 135,000Less: current portion 32,500 32,500

$ 70,000 $ 102,500

The term loan and an operating line of credit of $100,000 is secured by a general securityagreement, a continuing $600,000 collateral mortgage on the Club's real estate and fireinsurance coverage requirements.

The Club is committed to the principal repayment on long-term debt over the next four yearsapproximately as follows:

2016 - $ 32,5002017 - 32,5002018 - 32,5002019 - 2,500

7. SHARE CAPITAL2015 2014

Authorized1,500 common shares, one vote per share

Issued and fully paid1,159 common shares (2014 - 1,158 common shares)

$ 117,200 $ 117,075

During the year, 1 common share was issued for cash consideration of $125 (2014 - 7 for$875).

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SEPTEMBER 30, 2015

8. INVESTED IN CAPITAL ASSETS

(a) Net assets invested in capital assets2015 2014

Capital assets $ 1,188,089 $ 1,230,256Less: Capital lease obligations (39,579) (52,253)

Long-term debt (102,500) (135,000)

$ 1,046,010 $ 1,043,003

(b) Transfer to invested in capital assets2015 2014

Purchase of capital assets $ 31,041 $ 53,987Proceeds on disposal of capital assets - (2,750)Advance on capital lease obligations - (19,538)Repayment of capital lease obligations 12,674 8,605Repayment of long-term debt 32,500 32,500

$ 76,215 $ 72,804

9. FINANCIAL INSTRUMENTS

The Club's financial instruments consist of cash, accounts receivable, accounts payable andaccrued liabilities, capital lease obligations and long-term debt. It is Management's opinionthat the fair value of these instruments is not materially different than their cost and that theClub is not exposed to significant interest rate, currency or credit risk.

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SCHEDULE A


SCHEDULE OF COMMITTEE EXPENSES


2015 2014

GREENS COMMITTEEGas and oil $ 19,294 $ 23,733Insurance 2,102 2,076Contract - greens 65,712 65,729Repairs and rental - equipment 28,595 40,182Repairs - course, seed, fertilizer and improvements 66,067 83,007Hydro and heat 15,796 9,904Wages 127,402 121,254

324,968 345,885

HOUSE COMMITTEECleaning 8,937 13,971Fuel 12,199 14,375Hydro 29,629 26,499Repairs 28,401 20,501Insurance 9,768 9,572Wages 8,573 8,081

97,507 92,999

BAR COMMITTEESupplies and services 4,990 2,672Wages 44,510 54,740

49,500 57,412

PRO-SHOP COMMITTEEContract - Pro 1,413 42,858Hydro 3,591 3,297Insurance 1,751 1,687Supplies 4,297 2,985Wages 72,552 -

83,604 50,827

KITCHEN COMMITTEESupplies and services 6,262 3,796

COMMITTEE EXPENSES $ 561,841 $ 550,919

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SCHEDULE B


SCHEDULE OF GENERAL EXPENSES


2015 2014

Advertising and promotion $ 13,401 $ 10,142Audit and legal fees 8,669 10,125Bad debt - 175Bank charges and interest 8,705 13,485Long-term interest 8,538 10,250Office expenses 17,911 13,421Taxes - municipal 17,013 16,738Telephone 5,382 5,216Wages - office 33,804 32,565

GENERAL EXPENSES $ 113,423 $ 112,117

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