WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 PROJECT FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Contents Page Project information 3 Statement of management's responsibility 4 Report of the independent auditor 5-6 Statement of project funds 7 Statement of income and expenditure 8 Statement of changes in funds 9 Statement of cash flows 10 Summary of statement of expenditure's (SOE's) submitted 11-12 Notes to the financial statements 13 Summary of expenditure by component 14 2 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (400000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 World Wide Fund for Nature (WWF) is a nonprofit making Swiss foundation operating under the auspices of a Memorandum of Understanding signed with The Government of the Republic of Zimbabwe on 15 May 2003. NATURE OF PROJECT ACTIVITIES The Government of Zimbabwe has prepared a proposal to the Global Environment Facility (GEF) for a Hwange-Sanyati Biological Corridor (HSBC) project, now under implementation with the World Bank as GEF implementing agency and WWF as Project Implementing Entity. The Project's objective is to develop the technical and institutional tools for the sustainable management of HSBC. The project will support the following: (i) improved management of Hwange National Park as the lynchpin of the Zimbabwean protected areas system and a vital connector between the HSBC and the broader Kavango Zambezi (KAZA) trans-boundary conservation area; (ii) sustainable forestry and community resource management in the selected areas connected to Hwange and (iii) combating land degradation and landscape-level planning within the HSBC to provide for a sustainable, productive and climate resilient corridor area. For the purpose of executing the project, the World Bank granted to WWF a project grant, TF017713, which became effective on 22 January 2015 and ends on 30 June 2019. COUNTRY DIRECTOR Dr. Enos Shumba ADDRESS WWF Zimbabwe Country Office 10 Lanark Road, Belgravia, Harare P.O. CY 1409 Causeway Zimbabwe AUDITORS Deloitte & Touche Zimbabwe West Block, Borrowdale Office Park, Borrowdale Road Borrowdale P.O. Box 267 Harare Zimbabwe LAWYERS Chakanyuka and associates 11 Churchill Avenue Alexandra Park Harare BANKERS Standard Chartered 68 Nelson Mandela Avenue PO Box 373 Harare 3 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 STATEMENT OF MANAGEMENT'S RESPONSIBILITY Management is responsible for the maintenance of adequate accounting records and the preparation and integrity of the annual financial statements and related information. The auditors are responsible for reporting on the fair presentation of the annual financial statements and their report appears on pages 5- 6. Management is also responsible for the entity's systems of internal control. These are designed to provide reasonable, but not absolute assurance as to the reliability of the financial statements, and to adequately safeguard, verify and maintain accountability for the entity's assets, and to prevent and detect misstatement and loss. Nothing has come to the attention of management to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the period under review. These financial statements have been prepared in accordance with WWF International accounting policies and procedures and World Bank Guidelines. The financial statements for the period ended 30 June 2018 set out on pages 7 to 14 were approved by management on 14 December 2018 and signed on its behalf by: - Country Director Dr. E. Shumba Finance Manager Mr. G. Mubaiwa 4 PO Box 267 Deloitte & Touche Harare Registered Auditors D Zimbabwe West Block Borrowdale Office Park Borrowdale Road Borrowdale Harare Zimbabwe Tel: +263 (0) 8677 000261 +263 (0) 8644 041005 Fax: +263 (0) 4 852130 www.deloitte.com REPORT OF THE INDEPENDENT AUDITORS TO THE DIRECTOR GENERAL OF WORLD WIDE FUND FOR NATURE (WWF) INTERNATIONAL HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 Report on the Audit of the Financial Statements Opinion We have audited the accompanying financial statements of the Hwange Sanyati Biological Corridor Project as set out on pages 7 to 14, which comprise the statement of project funds as at 30 June 2018, the statement of income and expenditure, the statement of changes in funds, the statement of cash flows, statement of expenditures and a summary of significant accounting policies and other explanatory notes. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Hwange Sanyati Biological Corridor Project as at 30 June 2018, and its financial performance and its cash flows for the year then ended in accordance with its accounting policies and the World Bank Reporting Guidelines. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the entity in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of financial statements in Zimbabwe. We have fulfilled our ethical responsibilities in accordance with these requirements and the IESBA code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter - Basis of accounting and restriction on distribution and use We draw attention to Note 1 to the financial statements, which describes the basis of accounting. The financial statements are prepared by World Wide Fund for Nature for the purpose of fulfilling its responsibilities in terms of the project agreement with the World Bank. As a result, the financial statements may not be suitable for any other purpose. Our report is solely for World Wide Fund for Nature and the World Bank and should not be distributed to or used by any other parties. Our opinion is not modified in respect of this matter. Other information Management is responsible for the other information. The other information comprises the statement of management's responsibility. The other information does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. A full list of partners and directors is available on request Associate of Deloitte Africa, a Member of Deloitte Touche Tohmatsu Limited 5 REPORT OF THE INDEPENDENT AUDITORS (CONTINUED) Responsibilities of management for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with its accounting policies and the World Bank Reporting Regulations guidelines per page 5 and for such internal control as the Management determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the project's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the project or to cease operations, or has no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISA, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, 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 Project's internal control. * Evaluate the appropriateness of accounting policies. * Conclude on the appropriateness of the directors' use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Organisation and the Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Organisation and the Project to cease to continue as a going concern * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on other legal and regulatory requirements In our opinion, the financial statements have been prepared in accordance with the disclosure requirements of Private Voluntary Organisations Act (Chapter 17:05) and World Bank Reporting Guidelines.. Deloitte & Touche Registered Auditor Per: Stelios Michael Partner PAAB Practice Certificate Number 0443 Date: Of, ~-Q WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 STATEMENT OF PROJECT FUNDS AS AT 30 June 2018 2018 2017 US$ US$ ASSET Current assets Prepaid asset - 70652 Cash and cash equivalents 283 605 297 268 Total assets 283 605 367 920 PROJECT FUNDS AND LIABILITIES Funds Restricted funds 283 605 367 920 Total funds and liabilities 283 605 367 920 Dr. Enos Shumba Godwin Mubaiwa Country Director Finance Manager 14 December 2018 14 December 2018 7 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 STATEMENT OF INCOME AND EXPENDITURE FOR THE YEAR ENDED 30 JUNE 2018 Cumulative Total 2018 2017 2015-2018 12 months 12 months 42 months US$ US$ US$ SUMMARY OF FUNDS RECEIVED World Bank 1 186 806 1 501 033 4 164 763 SUMMARY OF EXPENDITURE Goods and non-consultancy services 506 266 559 957 1 607 252 Consultancy services 209 113 222 733 674 675 Workshops, meetings & consultations 64 872 13 406 121 311 Operating costs 490 870 521 840 1 477 920 TOTAL PROJECT COSTS 1 271 121 1 317 936 3 881 158 (DEFICIT)/SURPLUS FOR THE YEAR/PERIOD (84 315) 183 097 283 605 8 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 STATEMENT OF CHANGES IN FUNDS FOR THE YEAR ENDED 30 JUNE 2018 Restricted Funds US$ As at 30 June 2016 184 823 Surplus for the period 183 097 As at 30 June 2017 367 920 Deficit for the year (84 315) As at 30 June 2018 283 605 9 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 30 JUNE 2018 2018 2017 12 months 12 months US$ US$ Cash flows from operations Net (deficit)/surplus for the period (84 315) 183 097 Operating cash flow before working capital movements (84 315) 183 097 Decrease/ (increase) in prepaid assets 70 652 (70 652) Cash (utilised)/generated from operating activities (13 663) 112 445 Cash and cash equivalents at the beginning of period 297 268 184 823 Cash and cash equivalents at end of the period 283 605 297 268 Comprising: Cash at bank 283 605 297 268 10 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 SUMMARY OF STATEMENT OF EXPENDITURE (SOE) REPORTS SUBMITTED TO WORLD BANK FOR THE 12 MONTH PERIOD ENDED 30 JUNE 2018 2018 2018 Reference - Period to Goods & non Consultancy Training & Operating Total SOE Withdrawal consultancy workshops expenses applications services US$ us $ HSBCMAIN-SOE-021 31 July 2017 73 926 18 225 - 72 782 164 933 - HSBCMAIN-SOE-022 31 Aug 2017 50 206 13 165 24 661 21 770 109 802 406 816 HSBCMAIN-SOE-023 30 Sep 2017 61 469 18 209 25 833 55 673 161 184 161 184 HSBCMAIN-SOE-024 1 Oct to 31 Dec 194 939 67 519 12 933 82 342 357 733 357 733 2017 HSBCMAIN-SOE-025 1 Jan to 31 71 915 57 706 1 445 130 008 261 074 - Mar 2018 HSBCMAIN-SOE-026 30 Apr 2018 36 885 16 501 - 4 119 57 505 261 073 HSBCMAIN-SOE-027 1 May to 30 16 926 17 788 - 124 176 158 890 - Jun 2018 TOTAL SOE's SUBMITTED 506 266 209 113 64 872 490 870 1 271 121 1 186 806 During the year, there were no expenses subject to prior review and approval by the World Bank. 11 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 SUMMARY OF STATEMENT OF EXPENDITURE (SOE) REPORTS SUBMITTED TO WORLD BANK FOR THE 12 MONTH PERIOD ENDED 30 JUNE 2017 2017 2017 Reference Period to Goods & non Consultancy Training & Operating Total SOE Withdrawal consultancy workshops expenses applications services US$ us$ HSBCMAIN-SOE-010 31 July 2016 27 312 15 548 544 31 655 75 059 390 237 HSBCMAIN-SOE-011 31 Aug 2016 30 997 15 548 8 837 47 791 103 173 - HSBCMAIN-SOE-012 30 Sep 2016 9 736 17 798 3 926 89 084 120 544 223 717 HSBCMAIN-SOE-013 30 Nov 2016 388 505 36 571 99 64 735 489 910 489 910 HSBCMAIN-SOE-014 31 Dec 2016 1 140 4 365 - 920 6 425 - HSBCMAIN-SOE-015 31 Jan 2017 9 000 47 583 - 76 819 133 402 HSBCMAIN-SOE-016 28 Feb 2017 9 370 16 594 - 31 514 57 478 - HSBCMAIN-SOE-017 31 Mar 2017 53 699 12 459 - 63 062 129 220 326 517 HSBCMAIN-SOE-018 30 Apr 2017 5 450 32 285 - 63 954 101 689 - HSBCMAIN-SOE-019 31 May 2017 - 11 240 - 45 131 56 371 HSBCMAIN-SOE-020 30 Jun 2017 24 748 12 742 - 7 175 44 665 TOTAL SOE's SUBMITTED 559 957 222 733 13 406 521 840 1 317 936 1 430 381 During the year, there were no expenses subject to prior review and approval by the World Bank. A total amount of $70 652 was paid directly by the World Bank for the acquisition of a motor vehicle during the period. The vehicles were yet to be received by the project at year end. This amount was neither recognized in project expenses nor income as the vehicle had not yet been received in line with the policy to recognize revenue on receipt. 12 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 1. ACCOUNTING POLICIES Accounting convention The financial statements have been prepared under the cash basis of accounting. Basis of preparation The financial statements have been prepared on a cash basis in accordance with WWF International accounting policies and procedures and the World Bank reporting guidelines. Income and expenditure Donations from World Bank and other income are brought to account on a cash basis. Expenditure is brought to account on a cash basis when the risk and rewards of ownership has passed. Interest income and donations from individuals and other organizations are brought to account on the receipts basis. Foreign currency translations The functional currency of the project is the United States Dollar (US$). Transactions in foreign currency are converted at the exchange rates applicable at the time of the transaction. Assets and liabilities in foreign currency are translated at the rates applicable at statement of project funds date. The exchange differences arising are dealt with in the statement of income and expenditure. Property, vehicles and equipment Property, vehicles and equipment purchased are expensed in full in the year of acquisition. Donated property, vehicles and equipment are not accounted for in the statement of income and expenditure but are recorded and controlled in a property, vehicles and equipment register. Payments made directly by the bank Payments for expenditure made directly by World Bank are recognized in income and expenditure when they are recognized and confirmed by World Bank as disbursement to the project. Taxation In terms of paragraph 2 (e) of the Third Schedule of the Income Tax Act (Chapter 23:06) the organization's receipts and accruals are exempt from Income Tax. Cumulative income and expenditure Cumulative income and expenditure amounts are the totals received and incurred by the project from the project effective commencement date of 22 January 2015 to the end of the current financial period. 13 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Summary of expenditure by component 2018 2018 2015-2018 US$ US$ US$ 12 Month Actual Cumulative budget expenditure expenditure COMPONENT 1: PA management & community livelihoods Sub-component 1.1: Improve the Management of Hwange National Park 141 000 130 026 567 622 Sub-component 1.2: Improve community livelihood through wildlife management 247 000 163 004 505 589 COMPONENT 2: Improved forest & land management Sub component 2.1: Improve forest & resource management 263 500 256 247 539 951 Sub component 2.2: Land rehabilitation 232 000 232 119 614 710 COMPONENT 3: Corridor sustainability 420 000 340 435 1 132 209 COMPONENT 4: Project administration & management oversight 185 255 149 290 521 077 1488755 1271121 3881158 14