T: +1721 543 0614 BDO St. Maarten B.V. 1BDO F: +1 721 543 0615 E: info@bdo.sx www.bdo.sx P.O. Box 5347, St. Maarten, Philipsburg Sparrow Road 4, Philipsburg St. Maarten To the Supervisory Council and Management of Foundation Sint Maarten General Hospital Welgelegen road 30 unit 1 Cay Hill St. Maarten St. Maarten, 29 June 2023 Ref: A23.067/nm/PL Subject: 2022 Special Purpose Project Special Purpose Project Financial Statements of Foundation Sint Maarten General Hospital Dear members of the Supervisory Council and Management, Please find enclosed one copy of the Special Purpose Project Special Purpose Project Financial Statements of Foundation Sint Maarten General Hospital (SMGH) for the year ended 2022. We have enclosed two copies of our auditor's report. The auditor's report with the original handwritten signature is meant for your own filing purposes. The other copy of our auditor's report state the name of our firm and the name of the responsible audit partner and director, but without a handwritten signature. We kindly request you to use the copies of the auditor's report without handwritten signature in the version of the Special Purpose Project Financial Statements that will be published. We confirm our permission to publish our auditor's report without a handwritten signature, as included in the enclosed Special Purpose Project Financial Statements, subject to adoption of the Special Purpose Project Financial Statements, without modification, by the Supervisory Council Meeting. Publication of our auditor's report is only allowed together with the corresponding complete set of the Special Purpose Project Financial Statements. If you wish to publish the Special Purpose Project Financial Statements and our auditor's report on the Internet, it is your responsibility to ensure proper separation of the Special Purpose Project Financial Statements from other information on the website. For example, by presenting the Special Purpose Project Financial Statements as a separate, read-only file, or by issuing a warning if readers switch the web page containing the Special Purpose Project Financial Statements ("You are now leaving the secure page containing the audited Special Purpose Project Financial Statements."). A copy of the Special Purpose Project Financial Statements is to be signed by the Management and by the Supervisory council. The Special Purpose Project Financial Statements should be adopted by the Supervisory Council Meeting and adoption should be recorded in the minutes. Registered office St. Maarten. Chamber of Commerce registration number 18395. BDO St. Maarten B.V. is a member of BDO International Ltd, a UK company limited by guarantee, and forms part of the worldwide network of independent legal entities, each of which provides professional services under the name 'BDO'. BDO is the brand name for the BDO network and for each of the BDO Member Firms. I1BDO If prior to the Supervisory Council Meeting circumstances arise that require a modification to the Special Purpose Project Financial Statements, please note that such modifications should be made prior to the Supervisory Council Meeting. In this situation, of course, we withdraw our permission granted above. In closing, we kindly ask you to send us a copy of the signed minutes of the Supervisory Council Meeting, showing the adoption of the Special Purpose Project Financial Statements. Yours sincerely, For and on behalf of BDO St. Maarten B.V. -.=/ -"7 CA/ .c. us@u Enclosures: Special Purpose Project Financial Statements Two (2) copies of the auditor's report Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 Special Purpose Project Financial Statements and Independent Auditor's Report For the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/ Grant no. P167532 (TFA8176 and TFB3788) Sint Maarten n B.V. 800 St. Ma~ Initial far identificatit 5es Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 Table of contents Statement of Management's responsibilities for the preparation and approval of the Special Purpose Project Financial Statements for the year ended December 31, 2022......................................................3 Independent auditor's report 5 Designated Account Reconciliation Statement for the year ended December 31, 2022............................. 8 Statement of Sources and Uses of Funds for the year ended December 31, 2022...................................... 9 Statement of Cumulative Investments for the year ended December 31, 2022...................................... 10 Notes to the Special Purpose Project Financial Statements for the year ended December 31, 2022....... 11 Management Report 18 Appendix 1: Commitments i n B.V. 8DO St. Ma~ 2 Initial far identificat ises Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 Statement of Management's responsibilities for the preparation and approval of the Special Purpose Project Financial Statements for the year ended December 31, 2022 Management of Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 ("the Project") financed by World Bank ("WB") Credits Grant no. P167532 (TF0A8176 and TFB3788) implemented by the Sint Maarten Medical Center Foundation during the period 01-01-2022 to 31- 12-2022 acknowledges and understands that it has responsibility: • for the preparation and fair presentation of the special purpose project financial statements in accordance with the International Public Sector Accounting Standard: Financial Reporting Under the Cash Basis of Accounting, Terms of the Grant Agreement and Applicable Laws and Regulations, World Bank Guidelines and the Project Operations Manual, Section 5 Financial Management and Control ("reporting framework"): • for such internal control as management determines is necessary to enable the preparation of the special purpose project financial statements that are free from material misstatement, whether due to fraud or error; and In preparing the special purpose project financial statements, management is responsible for: • selecting suitable accounting principles and apply them consistently; • making judgements and estimates that are reasonable and prudent; • stating whether the reporting framework has been followed, subject to any material departures disclosed and explained in the special purpose financial statements; and • preparing the special purpose project financial statements on a going concern basis, unless it is inappropriate to presume that the Project will continue its activities for the foreseeable future. Management is also responsible for: • designing, implementing and maintaining effective and sound internal controls and for identifying risks in the internal control system; • maintaining proper accounting records that disclose, with reasonable accuracy at any time, the financial position of the Project, and which enable them to ensure that the special purpose project financial statements of the Project comply with the reporting framework; • compliance with laws and regulations applicable in Sint Maarten, accounting system of the Project and the requirements of the World Bank; • taking such steps as are reasonably available to them to safeguard the assets of the Project; and • Detecting and preventing fraud and other irregularities. BDOSt.Mi ~ · nB.V. 3 Initial far identificatit ses Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 The special purpose financial statements for the year ended December 31, 2022 were approved and authorized for issue on June 29, 2023 by the Board of Directors of St. Maarten Medical Center representing, St. Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 (TF0A8176 and TFB3788) Finance and Accounting Manager: Amanda Gumbs 800 St. ~~n B.V. 4 Initial far identificat i: ises T: +1721 543 0614 BDO St. Maarten B.V. IBDO F: +1721 543 0615 E: info@bdo.sx www.bdo.sx P.O. Box 5347, St. Sparrow Road 4B, Philipsburg St. Maarten Independent auditor's report To: Management and Supervisory Council of Foundation Sint Maarten General Hospital I3MK±4$E278,9%2g3 Eg#32ERE,J A. Report on the audit of the Special Purpose Project Financial Statements Our opinion We have audited the special purpose project financial statements of the St. Maarten Hospital Resiliency and Preparedness Project No.P167532 (the "Project"), financed under the International Bank for Reconstruction and Development ("the IBRD", "the World Bank') Grant No. P167532 /TF0A8176 signed on August 22, 2018 and TF0B3788 signed on September 3, 2020, and implemented by Foundation Sint Maarten General Hospital, based in St. Maarten ("SMMC", "SMGH" or "the Foundation") which comprise the Statement of Designated Account Reconciliation, Statement of Sources and Uses of Funds and Statement of Cumulative Investments for the year ended December 31, 2022 and notes, comprising a summary of significant accounting policies and other explanatory information ("special purpose project financial statements"). In our opinion, (V) the accompany ing special purpose financial statements of the Project for the year ended December 31, 202 2 are prepared in all material respects, in accordance with the International Public Sector Accounting Standard: Financial Reporting Under the Cash Basis of Accounting, Terms of the Grant Agreement and Applicable Laws and Regulations, World Bank Guidelines and the Project Operations Manual, Section 5 -Financial Management and Control; (ii) the expenditures reported are eligible for financing; and (iii) grant funds have been used only for the project. Basis for our opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Special Purpose Project Financial Statements section of our report. We are independent of Foundation Sint Maarten General Hospital in accordance with the 'Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO)' and other relevant independence regulations in the Netherlands. Furthermore we have complied with the 'Verordening gedrags- en beroepsregels accountants' (VGBA). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Registered office St. Maarten. Chamber of Commerce registration number 18395. 5 BOO B.V. is a member of BOO International Ltd, a UK company limited by guarantee, and forms part of the worldwide network of independent legal entities, each of which provides professional services under the name 'BOO'. BOO is the brand name for the BOO network and for each of the BOO Member Firms 1BDO B. Emphasis of Matter - Basis of Accounting and Restriction on Distribution and Use We draw attention to Note 2.1to the special purpose project financial statements, which describes that the special purpose project financial statements have been prepared by management in accordance with the International Public Sector Accounting Standard: Financial Reporting Under the Cash Basis of Accounting, Terms of the Grant Agreement and Applicable Laws and Regulations, World Bank Guidelines and the Project Operations Manual, Section 5 - Financial Management and Control). The special purpose project financial statements are prepared to assist Foundation Sint Maarten General Hospital in complying with the requirements of the World Bank and for providing information to the Government of Sint Maarten and IBRD to assist them in evaluating the Project implementation. As a result, the special purpose project financial statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter. C. Report on other information included in the Special Purpose Project Financial Statements Next to the financial statements and our opinion thereon, the special purpose project financial statements consists of the Management Report ("Other information") presented on page 18-30. Based on the procedures as mentioned below, we are of the opinion that the other information: » isconsistentwith thefinancial statements and contains no material deficiencies; ► Includes all information as required by the applicable standards. We have read the other information and based on our knowledge and understanding obtained from the audit of the special purpose project financial statements or otherwise, we have considered if the other information contains material deficiencies. With these procedures, we have complied with the requirements of International Auditing Standard 720. These procedures do not have the same scope as our audit procedures on the financial statements. Management is responsible for the preparation of the other information in accordance with the applicable standard. D. Description of responsibilities for the Special Purpose Project Financial Statements Responsibilities of management of the project and those charged with governance for the special purpose project financial statements Management is responsible for the preparation of these special purpose project financial Statements in accordance with the International Public Sector Accounting Standard: Financial Reporting Under the Cash Basis of Accounting and the World Bank Guidelines, for determining the acceptability of the basis of accounting and for such internal control as management determines is necessary to enable the preparation of special purpose project financial statements that are free from material misstatement, whether due to fraud or error. Those charged with governance are responsible for overseeing the financial reporting process of the Project. 6 1BDO Auditor's Responsibilities for the Audit of the Special Purpose Project Financial Statements Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not have detected all material errors and fraud. Misstatements can arise from errors or fraud 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. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion. We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with International Standards on Auditing, ethical requirements and independence requirements. Our audit included e.g.: ► Identifying and assessing the risks of material misstatement of the special purpose project financial statements, whether due to errors or fraud, designing and performing audit procedures responsive to those risks, and obtaining 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 errors, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; ► Obtaining 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 Foundation's internal control; ► Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management; » Evaluating the overall presentation, structure and content of the special purpose project financial statements, including the disclosures; ► Evaluating whether the special purpose project financial statements represent the underlying transactions and events in a manner that achieves fair presentation; ► Evaluating whether the expenditures reported are eligible for financing; and ► Evaluating whether the grant funds have been used only for the project. We communicate with those charged with governance, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit. Sint Maarten, June 29, 2023 For and on be~ t. Maarten B.V., 7 Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 Designated Account Reconciliation Statement for the year ended December 31, 2022 ACCOUNT NUMBER 81918400 -WIB (Windward Islands BankSintMaarten) (TF0A8176 and TFB3788 expressed in United States Dollars) 2022 2021 -USD- -USD- TOTAL ADVANCED BY WORLD BANK 8,672,995 8,672,995 LESS: ELIGIBLE EXPENDITURE FOR THE CURRENT YEAR ENDED DECEMBER 31, 1,824,832 2022 DOCUMENTED BY WORLD BANK LESS: CUMULATIVE ELIGIBLE EXPENDITURE FOR THE PRIOR PERIODS ENDED 5,492,575 3,667,743 DECEMBER 31, 2021/2020/2019 DOCUMENTED BY WORLD BANK PRESENT OUTSTANDING AMOUNT ADVANCED TO THE DESIGNATED ACCOUNT (1- 3,180,420 3,180,420 2) BALANCE OF USD DESIGNATED ACCOUNT PER BANK RECONCILIATION 1,190,537 1,718,543 STATEMENTAS AT PERIOD END DECEMBER 31, 2022/2021 BALANCE OF PROJECTACCOUNT PER BANK RECONCILIATION STATEMENT AS AT PERIOD END DECEMBER 31, 2022/2021 PLUS: ELIGIBLE EXPENDITURE FOR THE CURRENT YEAR DOCUMENTED AFTER 528,006 1,461,877 THE PERIOD END DECEMBER 31, 2022/2021 PLUS: ELIGIBLE EXPENDITURE FOR THE PREVIOUS YEAR DOCUMENTED AFTER 1,461,877 THE PERIOD END DECEMBER 31, 2022/2021 PLUS: TOTAL AMOUNT WITHDRAWN AND NOT YET CLAIMED REASON: PLUS: AMOUNTS CLAIMED IN PREVIOUS APPLICATIONS NOT YET CREDITED AT DATE OF BANK STATEMENTS SUBTOTAL OF PREVIOUS APPLICATIONS NOT YET CREDITED LESS: INTEREST EARNED TOTAL ADVANCE ACCOUNTED FOR (NO. 4 THROUGH NO. 9) 3,180,421 3,180,421 DIFFERENCE (3-9) 0 0 EXPLANA TlON OF ANY DIFFERENCE SHOWN IN LINE 10 800 St. M& ~ en B.V. 8 Initial far identificati Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 Statement of Sources and Uses of Funds for the year ended December 31, 2022 Current Current period Current period period Source of Financing (TFOA8176 and TFB3788) 2022 2021 Cumulative -USD- -USD- -USD- Actua l Actual Actual RECEIPTS World Bank Designated Account 1,711,390 8,672,995 Direct Payment 3,369,105 4,120,031 15,829,172 Other disbursement methods 265,807 Total World Bank Receipts 3,369,105 5,831,420 24,767,974 Counterpart funds lenders q Total counterpart funds received (SMGH component 1 and 3) 1,198,594 ' 1,049,170 8,858,372 Total project receipts (A) 4,567,700 6,880,591 33,626,346 EXPENDITURES -by source of financing World Bank Component 1: Building and launching ofthe new hospital (WB funding $17 million) 3,369.105 3,587,777 15,490,748 Component 2: Transition and Contingency Plan for Sint Maarten Medical Center (US 510,360 3,221,176 7,566,616 $11.085 million TF) Component 3: Project management (US $525,000 TF, US $500,000 counterpart funds) 17,646 152,743 520,073 Total expenditures World Bank 3,897,111 6,961,697 23,577,437 Counterpart funds lenders Component 1: Building and launching ofthe new hospital (Us $75 million) 129,198 4,7441 6,744,549 Total expenditures counterpartfunds 129,198 4,744 6,744,549 Total Expenditures (B) 4,026,309 6,966,441 30,321,986 RECEIPTS LESS EXPENDITURES Net Change in Cash (A- B) 541,390 -85,850 3,304,360 Foreign Exchange Adjustment BANK BALANCES Opening Cash Balances Designated Account 1,718,543 2,847,870 Counterpart account 1053912.89 -1.46 Total Opening Balance 2,772,456 2,847,869 Closing Cash Balances Designated Account 1,190,537 1,718,543 1,718.543 Counterpart account 2,123,309 1,053,913 1,053,913 Total Closing Balance 3,313,846 2,772,456 2,772,456 ~ BOO St.~ . n B.V. Initial far identificatit ses 9 Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 Statement of Cumulative Investments for the year ended December 31, 2022 Current Period Current Period Current Year 2022 2021 Cumulative Categories (TF0A8176) -USD- -USD- -USD- Actual Actual Actual 1. Goods, non-consulting services, consulting services, Training and Operating 213,700 238,458 4,425,743 Coss under the Project 2. Works under Part2 (a) (i) of the Project (Civil works for the rehabilitation and 265,807 reinforcement of the existing hospital facility roof) 3. Works under Part 2 (a) (ii) of the Project (Other civil works and equipment needed for the critical rehabilitation and upgrades of the existing hospital facility 626 782,551 1,288,165 during the period of transition to the new facility) 4. Works under Part 1 (b) of the Project (Construction of the new facility to the 3,369,106 3,587,777 14,277,413 said redesigned requirements Total 3,583,432 4,608,786 20,257,127 Current Period Current Period Current Year 2022 2021 Cumulative Categories (TF B3788) -USD- -USD- -USD- Actual Actual Actual 1. Goods, non-consulting services, consulting services, Training and Operating 4,878 189,803 613,383 Costs under Parts 2 (a) (ii) and Part 3 of the Project 2. Works under Part 2 (a) (ii) of the Project 308,802 2,163,108 2,706,927 Total 313,680 2,352,911 3.320.310 Current Year end World Bank Cumulative Investments for the year ended December 31,_2022_in USD Total amount Cumulative % of Categories (TF0A8176) of the Grant current period total -USD- 2022 1. Goods, non-consulting services, consulting services, Training and Operating 4,715,000 4,425,743 94% Costs under the Project 2. Works under Part2 (a) (i] of the Project (Civil works for the rehabilitation and 300,000.00 265,807.00 89% reinforcement of the existing hospital facility roof) 3. Works under Part2 (a) (ii) of the Project (Other civil works and equipment needed for the critical rehabilitation and upgrades of the existing hospital facility 4,485,000 1,288,165 29% during the period of transition to the new facility) 4. Works under Part 1 (b) of the Project (Construction of the new facility to the 15,500,000 14,277,413 92% said redesigned requirements Total 25,000,000 20,257,127 81% Total amount Cumulative % of Categories (TF B3788] of the Grant current period total -USD- 2022 1. Goods, non-consulting services, consulting services, Training and Opera ting 2,970,000 613,383 21% Costs under Parts 2 (a) (ii) and Part3 of the Project 2. Works under Part 2 (a) (ii) of the Project 640,000 2,706,927 423% Total 3,610,000 3,320,310 92% During 2023 a reallocation process was started with the World Bank to update the total category budgets for both grants based on the funds spent and the updated project forecasts. This is expected to be completed in July 2023. BOO St. ~~n B.V. 10 Initial far identificati es Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 Notes to the Special Purpose Project Financial Statements for the year ended December 31, 2022 1.Project Background Project agreement Sint Maarten, represented by its Minister of the Ministry of Public Health, Social Development and Labor ("VSA"), and the SMGH, represented by its Director, concluded a bilateral agreement, titled Agreement Trust Fund Sint Maarten General Hospital, that: a. recognizes the Government of Sint Maarten's authorization of SMGH to sign a grant agreement for a new hospital building following the approval of the Council of Ministers of Sint Maarten; b. specifies the supervisory role of the Government of Sint Maarten, through its Minister of VSA, in the development of the new hospital building and specifically the Project; c. provides authority to the Secretary General of VSA to appoint a member of the Supervisory Board; and d. recognizes that the SMGH will use the grant only 1. for the development of the new hospital, 2. to provide works necessary for the current hospital to provide essential services during the transition phase towards opening the new hospital, and 3. the management of the Project The Project consists of the following parts Part I. Building and launching of the new hospital TFA8176 US $17 million and US $75 million counterpart funding lenders Provision of support for the design update, construction, and launching of a new hospital facility, including: (a) updating the design of the new facility to withstand category 5 plus hurricane level winds; (b) construction of the new facility to the said redesigned requirements; (c) provision of medical and non-medical equipment and related training; and (d) provision of maintenance services. Part 2. Transition and Contingency Plan for Sint Maarten Medical Center TFA8176 US $7.475 million and TFB3788 $3.61 million (a) Provision of: (i) civil works for the rehabilitation and reinforcement of the existing hospital facility roof; and (ii) other civil works and equipment needed for the critical rehabilitation and upgrades of the existing hospital facility during the period of transition to the new facility, including, inter alia: • provision of an electric generator and generator care complex, a fire detection system, a water control plan, new storage for medical supplies, an access control system, a medical gas distribution, an information, communication and technology system, and link to fiber optic cables; • expansion of the dialysis capacity, and the care complex; • adjustment of the general facilities; • construction and relocation of support services building and the medical surgical ward; and • upgrading of the operating theater complex. 800 St. Ma ~ en B.V. 11 Initial far identificat i: ises Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 (b) Provision of technical assistance to support the updating and implementation of clinical guidelines and quality control mechanisms and internal technical audits. (c) Establishment of arrangements with strategic partners, acceptable to the World Bank, for the provision of training of human resources. (d) Provision of support to the Recipient in its accreditation process with the Joint Commission International. Part 3.Project Management US $525.000 and US $500.000 counterpart funding SMGH Provision of equipment and Operating Costs needed for timely and efficient implementation of the Project, including the provision of experts in technical areas. The project was initiated by the collaborative efforts of the Tri-Party Committee in which St Maarten Government after being faced with the devastations of Irma and the aftermath embarked on and prepared a National Recovery and Resilience Plan ("NRRP") outlining the recovery needs across the socio-economic sectors of the country. The NRRP describes the Government's vision, principles and a proposed approach for rebuilding a "better and stronger Sint Maarten" following Hurricane Irma. Project background The Government of Sint Maarten aims to quickly restore economic, community and governance infrastructure and service delivery. The proposed project is well aligned with the NRRP. These goals are also reflected in the design 'Of the Single-Donor Trust Fund ("SDTF"), which will support this and other emergency projects. This project addresses the needs for immediate recovery and rehabilitation of the health sector through restoration of the existing hospital, as well as strengthening future resilience by building back better, through construction of a new category 5 plus resistant hospital which will ensure continuity of services and improve the preparedness and capacity of the health sector going forward. The USD 25 million trust fund is leveraging USO 75 million in counterpart funds already mobilized and allocated to build the new hospital. The project is aligned with the World Bank's twin goals of ending extreme poverty and boosting shared prosperity. It will target the most in-need and vulnerable population immediately affected by the hurricane, help the country to recover and resume growth, and contribute to strengthening the economic and social resilience of the country in the future, thus contributing to sustainable and inclusive growth. Sint Maarten is a high-income constituent country of the Kingdom of the Netherlands in the Caribbean. It occupies the southern half of an island shared with the French overseas collectivity of Saint Martin. It is the most densely populated country in the Caribbean with a population of roughly 40,000 and a per capita Gross Domestic Product (GDP) of USO 25,381. Sint Maarten is currently rebuilding after damages caused by Hurricane Irma that claimed lives and deteriorated the socio-economic environment on the island. Sint Maarten is highly vulnerable to natural disasters and adverse climatic events due to its location within the hurricane belt. For the past decades, the country has been exposed to numerous high winds and hurricanes, including notably intense storms; Donna in 1960 (Category 3), Luis in 1995 (Category 4), and Irma 2017 (Category 5 plus). Due to the size of the country, a BOO St. Ma.~ B.V. 12 Initial far identificat ises Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 single storm has the potential to directly impact the entire population. High winds, excessive rainfall and flooding are the principal risk factors, while the country is also vulnerable to earthquakes. Coastal areas are exposed to flood risk from storm surge and tsunamis. Increased urbanization along with climate change and limited country capacity to build with resilience add to the country's vulnerability to natural hazards. Natural hazards have catastrophic impacts on the country's economy which is essentially tourism-based. The restaurants, hotels, and other tourism-related sectors, including the wholesale and retail trade, the real estate, renting and business activities sectors account for approximately 45 percent of Sint Maarten's GDP. Activities in the transport, storage and communication sector, 11 percent of GDP, are also related to the tourism sector. The tourism sector contributed 73 percent to the country's total foreign exchange income in 2016. Sint Maarten's harbor is a significant port for cruise tourism in the Caribbean, with 1.7 million cruise passengers visiting per year. The airport is an important hub for regional travel with a large network of connecting flights across the Caribbean. However, the economy has seen limited growth in recent years and the economy remains exposed to tourism trends and weather shocks. A pressing need to strengthen hospital services in Sint Maarten was recognized as early as 2015 by the Ministry of Public Health, Social Development and Labor (VSA), the Health and Social Insurance Fund (SZV) and the SMGH (together referred to as the Tripartite). Given that the only existing hospital in the country was unsuitable for a complete re-design over the long-term, it was decided that a new general hospital would be built A new business model of care was developed, private financing was secured, a firm was selected and the initial structural design for the new hospital was completed just before Hurricane Irma. In terms of the impact of Hurricane Irma on the existing hospital, services were limited for several days and the hospital gradually regained part of its service capacity. However, precarious conditions remain. For example, the fire detection system and generator are still not functional. Out-of-country referrals have increased as well as the increased use of containers for storage and work spaces. These impacts further underline the critical need for the new hospital to be designed with a structure and features that will increase the hospital's ability to withstand category 5 plus hurricane level winds (200mph+) and to adequately prepare for and mitigate disaster impacts so as to provide continuity of care in the context of disasters. Based on the urgent need of assistance, a grant of USD 25 million has been made available to the SMGH for the Hospital Resiliency and Preparedness Project. The grant, financed by the Government of Netherlands from the Sint Maarten Hurricane Irma Reconstruction, Recovery and Resilience Trust Fund, was approved by the World Bank on August 16, 2018, and became effective on September 6, 2018. The World Bank and Sint Maarten recognized the urgency of initiating emergency response efforts in light of the risks presented by future hurricane seasons and prepared the project in an expedited manner. In 2020, additional financing was received for an amount of US $3.61 million under TFB3788 for COVID-19 support. This additional financing was approved circa mid-March 2020 when St. Maarten Medical Center Foundation requested additional financing as documented in the Additional Financing Grant Agreement between the International Bank for Reconstruction and development ("World Bank"), and the Sint Maarten Medical Center Foundation ("SMGH"), BDO St. ~~ n B.V. 13 initial far identificat i: ises Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 regarding the additional financing to the grant for the Sint Maarten Resiliency and Preparedness Project ("the Project"), with grant number TFB3788 for the financing to 'Improve the preparedness and capacity of hospital services' in Sint Maarten respective preparedness to cover a cost over-run created by the impact of COVID-19 demands on the Sint Maarten Hospital Resiliency & Preparedness Project. The COVID-19 pandemic has resulted in a substantial increase in demand for hospital services and the price of medical goods following the onset of the pandemic. The beforementioned was made available to SMGH by World Bank based on letter dated September 25, 2020 ref. 17351, where the Minister of Public Health, Social Development and Labor of Sint Maarten confirmed in writing that the Council of Ministers has given the approval for SMGH to sign the Addition Financing Grant Agreement. The Additional Financing Grant Agreement on behalf of SMGH was received in the form of the World Bank's no objection letter for USD$ 3.61 million support on March 21, 2020. The categories that were identified and budgeted for are: 1. Equipment & Oxygen/ Resp. equipment 2. Facilities 3. Communication 4. Isolation rooms NEW and In-House isolation 5. Pharmacy 6. Patient Care - related consumables 7. Administra tive - related consumables 8. Operational costs Specific to the PMU of this agreement, SMGH identified a new process and a specific COVID Procurement and Evaluation Team (PET) was created, consisting of several different disciplines as representatives of the HIC department, Quality department, Patient Care manager, Manager Facilities responsible for Medical Equipment, Finance department and Store room supervisor. In this process the PET is responsible for requesting quotations to all SMGH's established alliances throughout the process and evaluating and approving respective quotations (POS) for the purchasing and ordering of goods. Evaluation of goods process identified the following main areas in criteria 1. pricing, 2. quality, 3. Availability and proximity, 4. shipment time and 5. PET resourced PPE equipment by various vendors to reduce the risk. In June 2020 the funds that were budgeted for category Medical Equipment & Oxygen/Respiratory equipment and Patient Consumables have overrun and the team stopped procuring these items via the Trust Fund. The pharmacy budget has been used to finance these categories that have overrun and is reallocated as an allowance for unforeseen. en B.V. 8D0 St. ~~ 14 Initial far identificatit 1ses Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 As part of the facilities budget for Covid-19 care, an agreement for the construction of the Auxiliary care facility was signed with Banned on June 30, 2020. The building facilitates 16 beds in total, whereas 6 are ICU designed beds and 10 for medium care. The facility is supported by 2 doctors/nurse stations, a sanitary facility, and storage. The 2x 40 foothospitainers received from the Dutch government were integrated into the design and layout of the building. The construction of this facility started in the first week of July 2020 and took approximately 10 weeks to complete and is deemed storm resilient The final hand over of the project was done September 21, 2020 and the now to know Auxiliary Care Facility became operational October 2020. Due to the impact of Covid-19, the war in Ukraine and overall increases in pricing the design & build component of component 1 has increased by USD 40M. This additional cost will be financed by three financiers, facility loan agreement, World Bank and SMMC. A Letter of intent was signed with the contractor on September 27, 2022 which included the agreed upon increased amount of USD 40M. This was further detailed in the 4mh amendment to the design, build and maintain agreement signed on February 274, 2023. The World Bank no objection to the 4d amendment was received on June 228, 2023. The project document for the additional USD 7M grant from World Bank is expected to be completed before the end of 2023. The below tables show the updated financing per component. More information can be found in the management report. Proposed Counterpart Trust Fund additional Project --- - - funds Project Components - -- financing (US$ million) (US$million) [USS million) Cost + AF (US$million) Component 1. Building and launching of the new hospital 17 84.43 40 141.43 Component 2. Transition and Contingency Plan for Sint Maaren Medical Center 11.09 0.00 11.09 Component 3. Project Management 0.53 0.50 1.03 Total 28.62 84.93 40 153.55 Amount Additional Total Project Financing Component 1 -USD- -USD- -USD- million million million Counterpart Funding 84.43 33.00 117.43 Borrower 75.00 25.00 100.00 SMMC 9.43 8.00 17.43 Trust Funds 17.00 7.00 24.00 Free-standing Single Purpose Trust Fund 17.00 7.00 24.00 Total 101.43 40.00 141.43 Due to the project management services required to execute the projects budgeted under the additional funds, two budget overruns have been approved by World Bank for component 3, allowing a shift in funding per component from component 2 to component 3. An additional $150 thousand (2020) and $75 thousand (2021) was allocated to component 3. 1.2 Comparative figures The figures published in this report for the year 2022 represent the fourth published reporting BDO St. Mi~ n B.V. 15 Initial far identificat i' ses Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 period of St. Maarten Hospital and Resiliency project The comparative figures show the fourth projectyear 2021. 1.3 Activities The activities of the Projects consist mainly of the following classified components of financing World Bank Grant. • Component 1- Building and launching of the new hospital (USO 17 million and counterpart USO 75 million). • Component 2 -Transition and Contingency Plan for Sint Maarten Medical Center (USO 7.475 million + USD 3.61 million) • Component 3- Project Management (USO 525 thousand and counterpart USO 500 thousand) 2. Presentation of the Special Purpose Project Financial Statements 2.1 Basis of preparation These special purpose project financial statements have been prepared in accordance with the International Public Sector Accounting Standard: Financial Reporting Under the Cash Basis of Accounting, Terms of the Grant Agreement and Applicable Laws and Regulations, World Bank Guidelines and the Project Operations Manual, Section 5 - Financial Management and Control ("reporting framework"). 2.1.1 Statement of compliance These special purpose project financial statements consist of: • Statement of Designated Account • Statement of Sources and Uses of Funds· Statement of Cumulative Investments • Significant accounting policies and other explanatory information The reporting currency of these special purpose project financial statements is US Dollars "USD"). 2.1.2 Basis of measurement These special purpose project financial statements have been prepared on the historical cost basis. 2.1.3 Functional and presentation currency The functional currency is United States Dollars (USD). The amounts expended in Netherlands Antillean Guilder ("NAF") are converted to United States Dollars ("USD") at exchange rate of 1.8 NAF for 1 USO. The reporting currency of the project is USD. 2.1.4 Going concern The Special Purpose Project Financial Statements have been prepared on a going concern basis, which assumes that the Project will continue in the foreseeable future. 2.2. Significant Accounting Policies 2.2.1 Funds received n B.V. 800 St. Ma:tt 16 Initial far identificati I5es Special Purpose Project Financial Statements for the year ended December 31, 2022 Sint Maarten Hospital Resiliency and Preparedness Project/Grant no. P167532 Funds received are recognized on the cash basis that is at the time when are received. 2.2.2 Expenses Expenses are recorded on cash basis that is at the time of payment instead of when incurred. 2.2.3 Rounding-off The figures have been rounded off to the nearest whole digit. 2.2.4 Sources of funds The funds were provided by the World Bank to the Project by replenishment of designated Account, reimbursements, or when possible, through direct payment to the end supplier of goods and/or services. 2.2.5 Restricted use of funds and other assets The Credit, Loan and Grant agreement require that the funds available in the Designated Account be restricted to the Project use only. Any project funds available at the end of the Project should be returned to the World Bank. 2.2.6 Cash and cash equivalents Cash and cash equivalents include cash on hand and due from banks, which can be converted to the corresponding amount of cash in the short term. Cash and cash equivalents consisting of the designated account (8400) held by The Windward Island Bank Ltd and the counterpart funding account(150001) held by Banco Di Caribe. Account Number Bank Currency Closing Balance USO Equivalents 81918400 The Windward Island Bank USO 1,190,537 1,190,537 50257950000150001 Banco Di Caribe ANG 3,821,956 2,123,309 2.2.7 Taxes The Project related taxes and mandatory payments are calculated and paid in accordance with tax regulations applicable in St. Maarten. 2.2.8 Covenants According to the Section IV of the Grant Agreement, SMGH is required to comply with certain conditions. Management is of the opinion that the Project complies with all conditions included in the Grant Agreement. 2.2.9 Commitments For more details about the project commitments please refer to Appendix 1. 2.2.10 Subsequent Events Management has evaluated the subsequent events between December 31, 2022 and June 28, 2023, the date when the Special· Purpose Project Financial Statements were available to be issued and there are no subsequent events that would require adjustment or disclosure. Management opted to disclose additional information on pages 18-30 as part of the Management Report. 800 St. ~~ en B.V. 17 Initial far identificati ses