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 2017 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 objective is to develop the technical and institutional tools for the sustainable management of HSBC, The project will support (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, (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 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 2017 Contents Page Statement of management's responsibility 2 Report of the independent auditor 3-4 Statement of project funds 5 Statement of income and expenditure 6 Statement of changes of funds 7 Statement of cash flows 8 Summary of statement of expenditure's (SOE's) submitted 9-10 Notes to the financial statements 11 Summary of expenditure by component 12 1 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 3 -4. 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 2017 set out on pages 5 to 12 were approved by management on 31 co0ber 2a1 and signed on its behalf by: - Country Director Dr. E. Shumba Finance Manager Mr. G. Mubaiwa 2 DIUgg PO Box 267 Deloitte & Touche Harare Registered Auditors Zimbabwe West Black we lwit e 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 5-12, which comprise the statement of project funds as at 30 June 2017, and 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 for the year then ended. 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 2017, 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 to assist the entity in fulfilling its reporting responsibilities in terms of the project agreement with the World Bank. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the entity and the World Bank and should not be distributed to or used by other parties. Our opinion is not modified in respect of this matter. Other Information The Management is responsible for the other information. The other information comprises the Management's Responsibility Statement. 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. 3 Responsibilities of the Management for the Financial Statements The Management is responsible for the preparation and fair presentation of the financial statements in accordance with its accounting policies and the World Bank Reporting Guidelines 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, the 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 the 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 ISAs, 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 entity's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's 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 entity'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 entity 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 the World Bank World Reporting Guidelines. I-- Deloitte & Touche Registered Auditor Per: Stelios Michael Partner PAAB Practice Certificate Number 0443 Date: IS(4 4 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 2017 2017 2016 US$ US$ ASSET Current assets Prepaid asset 70652 - Cash and cash equivalents 297 268 184 823 Total assets 367 920 184 823 PROJECT FUNDS AND LIABILITIES Funds Restricted funds 367 920 184 823 Total funds and liabilities 367 920 184 823 Dr. Enos Shumba Godwin Mubalwa Country Director Finance Manager 5 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 2017 Cumulative Total 2017 2016 2015-2017 12 months 18 months 30 months US$ US$ US$ SUMMARY OF FUNDS RECEIVED World Bank 1 501 033 1476924 2977957 SUMMARY OF EXPENDITURE Goods and non-consultancy services 559 957 541 029 1 100 986 Consultancy services 222 733 242 829 465 562 Workshops, meetings & consultations 13 406 43 033 56 439 Operating costs 521 840 465 210 987 050 TOTAL PROJECT COSTS 1 317 936 1 292 101 2 610 037 SURPLUS FOR THE PERIOD 183 097 184 823 367 920 6 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 OF FUNDS FOR THE YEAR ENDED 30 JUNE 2017 Restricted Funds US$ As at 22 January 2015 Surplus for the 18 month period 184 823 As at 30 June 2016 184 823 Surplus for the year 183 097 As at 30 June 2017 367920 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 CASHFLOWS FOR THE YEAR ENDED 30 JUNE 2017 2017 2016 12 months 18 months US$ US$ Cash flows from operations Net surplus for the period 183 097 184 823 Operating cash flow before working capital changes 183 097 184 823 Increase in prepaid assets (70 652) - Cash generated from operating activities 112 445 184 823 Cash and cash equivalents at beginning of the period 184 823 - Cash and cash equivalents at end of the period 297 268 184 823 Comprising: Cash at bank 297 268 184 823 8 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 YEAR 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 - 11240 - 45 131 56371 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 not recognised in project expenses but was recognized in income in line with the accounting policies (refer to note 1). 9 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PRO3ECT (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 18 MONTH PERIOD ENDED 30 3UNE 2016 2016 2016 Reference Period to Goods & non Consultancy Training & Operating Total SOE Withdrawal consultancy workshops expenses US $ applications services US$ HSBCMAIN-SOE-001 19 Aug 2015 73 329 59 857 17 021 157 543 307 750 500 000 HSBCMAIN-SOE-002 30 Sep 2015 94 698 27 233 5 766 32 783 160 480 307 750 HSBCMAIN-SOE-003 31 Oct 2015 146 629 18 783 3 288 12 194 180 894 - HSBCMAIN-SOE-004 31 Dec 2015 215 315 36 856 2 773 28 450 283 394 341 374 HSBCMAIN-SOE-005 31 Jan 2016 - 15 548 - 28 858 44 406 - HSBCMAIN-SOE-006 31 Mar 2016 - 36 650 3 293 149 675 189 618 327 800 HSBCMAIN-SOE-007 30 Apr 2016 - 15 548 1 950 5 545 23 043 - HSBCMAIN-SOE-008 31 May 2016 - 15 548 8 942 20 214 44 704 HSBCMAIN-SOE-009 30 Jun 2016 11 058 16 806 - 29 948 57 812 TOTAL SOE's SUBMITTED 541 029 242 829 43 033 465 210 1 292 101 1 476 924 Included in the expenditure above under "Goods & non consultancy services" is a total amount of $200 011 that was subject to prior review and approval by the World Bank. 10 WORLD WIDE FUND FOR NATURE HWANGE SANYATI BIOLOGICAL CORRIDOR PROJECT (40000419) FUNDED BY GLOBAL ENVIRONMENT FACILITY VIA WORLD BANK GRANT NUMBER TF017713 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 1. ACCOUNTING POLICIES Accounting convention The financial statements have been prepared under the cash basis of accounting. Basis of preparation The financial statements have been prepared on a cash basis In accordance with WWF International accounting policies and procedures and the World Bank reporting guidelines. Income and expenditure Donations from World Bank and other income are brought to account on a cash basis. Expenditure is brought to account on a cash basis when the risk and rewards of ownership has passed. Interest income and donations from individuals and other organizations are brought to account on the receipts basis. Foreign currency translations The functional currency of the project is the United States Dollar (US$). 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. Assets are recognised in prepaid assets in the statement of financial position on payment and are expensed to the income statement when received. Payments made directly by the Bank Payments for expenditure made directly by the Bank are recognised in income and expenditure when they are recognised and confirmed by the Bank as a 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. LA 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 PERIOD ENDED 30 JUNE 2017 Summary of expenditure by component 2017 2017 2015-2017 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 300 000 241 387 437 596 Sub-component 1.2: Improve community livelihood through wildlife management 250 000 170 397 342 585 COMPONENT 2: Improved forest & land management Sub component 2.1: Improve forest & resource management 300 000 197 751 283 704 Sub component 2.2: Land rehabilitation 250 000 198 322 382 591 COMPONENT 3: Corridor sustainability 374 500 339 040 791 774 COMPONENT 4: Project administration & management oversight 195 500 171 039 371 787 1670000 1317936 2610037 12