MINISTRY OF FINANCE AND NATIONAL PLANNING NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT IDA60390/PI 59330 REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023 ACLJIaS AS C NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 Table of contents Page Key Information 2-4 Statement of Directors' Responsibility 5 Independent Auditor's Report 6-8 Statement of Financial Performance 9 Statement of Financial Position 10 Statement of Changes in Net Assets 11 Statement of Cash Flows 12 Statement of Comparison of Budgeted and Actual Expenditure 13 Notes to the Financial Statements 14-24 Supplementary Information 25-27 1 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 KEY INFORMATION 1. Background information The National Road Fund Agency was established by the National Road Fund Act No. 13 of 2002. According to Part II of the National Road Fund Act, the key functions of the Agency are, among others: a) Administer and manage the Road Fund; b) Prepare and publish audited annual accounts of the Road Fund c) Recommend to the Minister Fuel Levy and other road user charges and tariffs as required. d) Recommend to the Minister projects for funding; e) Allocate resources - - For the construction, maintenance, and rehabilitation of roads based on a percentage of the annual work programme of the Road Development Agency; - For road transport, traffic, and safety management based on a percentage of the annual work programme of the Road Transport and Safety Agency. f) In consultation with the Road Development Agency, recommend funding for the development of new roads; and g) undertake such other activities as are conducive or incidental to its functions under this Act. The Road Fund shall consist of: a) Such monies as may be appropriated by Parliament for the purposes of the Road Fund; b) All fuel levy collected, less the cost of collection which shall not exceed three per cent, in every fiscal year c) Such percentage of licence fees, registration fees and International transit fees payable to the Road Transport and Safety Agency under the Road Traffic Act, as the Minister may determine; d) Such percentage of road user levies including tariffs, taxes and tolls as may be determined by the Minister on the recommendation of the agency in consultation with Road Development Agency; and e) Such monies as may be paid to the Road Fund by way of loans, grants or donations. Pursuant to the Tolls Act No. 14 of 2011 which mandates the Road Development Agency (RDA) to appoint any suitable person(s) as Toll Collector, the Government through the Road Development Agency appointed the National Road Fund Agency (NRFA) as lead Toll Collector in August 2015. In this regard, RDA appointed NRFA as authorized Toll Collector for inland Toll sites in line with Statutory Instrument No. 73 of 2013 (hereinafter referred to as Tolling Regulation) under first schedule (Regulation 3). In addition, NRFA was mandated to collect toll fees at the port of entry in accordance with the provisions of the Toll Act. 2 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 2. Agency Principal Activities The NRFA is a statutory organisation whose function is to plan, manage and coordinate finances for the activities in the annual work plans of the Government Agencies/Institutions in the road sector. 3. Project Information Name of Project Improved Rural Connectivity Project Project Number P1 59330/IDA60390 Financed by World Bank Executing Agency Road Development Agency 4. Agency Operational Funding Source According to Part V, Section 18 (a) of the National Road Fund Act, a GRZ Grant for operations is appropriated to the Agency by Parliament for the purpose of the Agency. According to Part IV, Section 17(c) of the National Road Fund Act, the Agency shall apply the monies of the Road Fund for the Agency, the Road Development Agency and the Road Transport and Safety Agency provided that the money paid out of Road Fund for the operations of the three Agencies shall not exceed ten per centum of the monies paid into the Road Fund. 5. Directors a) The Board of Directors was appointed on 28th March 2023 as follows: i) Mr. Noel Nkoma Chairperson (Appointed on 2 April 2024) ii) Ms Avet Mulonga Chairperson (Retired on 26 January 2024) iii) Mr. Joseph Malisawa Vice Chairperson iv) Mr. Robert Malasha Director v) Ms. Galaxia Mary-Ann Chisenga Director vi) Dr. Edna Kalaba Director vii) Mr. Vincent Linyama Director viii) Ms. Jacqueline Cornhill Jhala Director ix) Mr. Ismail Mullah Director x) Ms. Nsandi Manza Director xi) Mr. Stephen Mbewe Director xii) Mr. Jeremiah Sande Director (Retired on 30 September 2023) xiii) Ms. Wendy Mukape Director (Appointed on 25 October 2023) xiv) Mr. Francis Mundanya Director xv) Eng. Amon Mweemba Ex-Officio xvi) Eng. Grace Mutembo Ex-Officio xvii) Eng. Wallece Mumba Director/CEO (Retired on 31 January 2024) xviii) Mr. Daniel Mtonga Director/CEO (Appointed on 31 January 2024) 3 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 b) Subsequent to the dissolution of the Board of Directors on 8th October 2022, the Minister of Finance and National Planning appointed an Interim Board of Directors on 14th October 2022 to 27th March 2023 as follows:: i) Mr. Danies K. Chisenda Interim Chairperson ii) Ms. Nsandi Manza Director 6. Legal matters There are no significant or material legal or arbitration proceedings (including to the knowledge of the Directors, any such proceedings which are pending or threatened, by or against the Agency or the Project which may have or have had during the 12 months immediately preceding the date of this document a significant effect on the financial position or performance of the Agency or the Project. 7. Events subsequent to year end There have been no facts or circumstances of a material nature that have occurred between the accounting date and the date of this report. 8. Other material facts, circumstances and events The directors are not aware of any material fact, circumstance or event which occurred between the accounting date and the date of this report which might influence an assessment of the Agency or the Project's financial position or the results of its operations. 9. Independent Auditors Acuitas Associates Chartered Accountants of Zambia P0 Box 31362 Lusaka 10101 Zambia 4 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 STATEMENT OF DIRECTORS' RESPONSIBILITY The Loan Agreement requires the Directors to prepare Financial Statements for each financial year that give a true and fair view of the state of affairs of the Project as at the end of the financial year and of its Statement of Financial Position. It also requires the Directors to ensure that the Project keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Project. The Directors are also responsible for safeguarding the assets of the Project. The Financial Statements are prepared in accordance with International Public Sector Accounting Standards (IPSAS) and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The Directors acknowledge that they are ultimately responsible for the system of internal financial controls established by the project and place considerable importance on maintaining a strong control environment. To enable the Directors to meet these responsibilities, the Directors set standards for internal controls aimed at reducing the risk of error or loss in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the project and all employees are required to maintain the highest ethical standards in ensuring the project's business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the project is on identifying, assessing, managing, and monitoring all known forms of risk across the project. While operating risk cannot be fully eliminated, the project endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems, and ethical behaviour are applied and managed within predetermined procedures and constraints. The Directors are of the opinion, based on the information and explanations given by management, that the system of internal controls provides reasonable assurance that the financial records may be relied on for the preparation of the Financial Statements. However, any system of internal financial controls can provide only reasonable, and not absolute, assurance against material misstatement or loss. The Directors have reviewed the project's cash flow forecast for the year to 31 December 2024 and, in the light of this review and the current financial position, they are satisfied that the project has or has access to adequate resources to continue in operational existence for the foreseeable future. The external auditors are responsible for independently auditing and reporting on the Project's Financial Statements. The Financial Statements have been examined by the Project's external auditors and their report is presented on pages 6 to 8. The Financial Statements set out on pages 9 to 27, which h ve been prepared on the going concern basis, were approvedby the Directors on 15 to and were signed on its behalf : Da tonga Noel Nkoma A/Director/Chief xecutive Officer Board Chairperson 5 acuitas associates Chartered Accountants of Zambia PO BOX 31362 Mobile :+260 977 457060 Lusaka, 10101 E al cia@cnetz Zambia. REPORT OF THE INDEPENDENT AUDITOR TO THE BOARD MEMBERS OF THE NATIONAL ROAD FUND AGENCY Opinion We have audited the Project Financial Statements of the National Road Fund Agency - External for the International Development Association IDA 60390,Improved Rural Connectivity Project P159330, which comprise the Statement of Financial Position as at 31 December 2023, the Statement of Financial Performance, Statement of Changes in Net Assets/Equity and Statement of Cash Flows for the year then ended and notes to the Financial Statements including a summary of significant accounting policies are set out on pages 9 to 24. In our opinion the accompanying Project Financial Statements present fairly, in all material respects, the financial position of the Project as at 31 December 2023 and of its financial performance and cash flows for the year then ended in accordance with the International Public Sector Accounting Standards (IPSAS), and the requirements of the International Development Association IDA 60390, Improved Rural Connectivity Project P1 59330. 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 National Road Fund Agency - External, under The International Development Association IDA 6039, Improved Rural Connectivity Project P159330 in accordance with the International Ethics Standards Board for Accountants Code of Ethics (IESBA Code) together with the ethical requirements that are relevant to our audit of Financial Statements in Zambia, and we have fulfilled our other 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. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Other information Management is responsible for the disclosure of other information. Other information comprises the information disclosed in the Financial Statements for the year ended 31 December 2023 but does not include the financial report and our auditor's report thereon. Our opinion on the Financial Statements does not cover other information and accordingly, we do not express 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, 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. Responsibilities of Management and those charged with Governance for the Financial Statements The Directors of the National Road Fund Agency are responsible for the preparation and fair presentation of the Financial Statements in accordance with International Public Sector Accounting Standards and the requirements of the International Development Association IDA 60390, Improved Rural Connectivity Project P159330, and for such internal controls as the Directors determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error. 6 ACuIltaS is a firm registered under the Zamn bia Business Names Act A list of the partners is available at the registered officm acuitas associates Chartered Accountants of Zambia PO BOX 31362 Mobile :+260 977 457060 Lusaka, 10101 Email: .c.ta@creou Zambia. In preparing the Financial Statements, the Directors are responsible for assessing the, Improved Rural Connectivity Project P159330'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 Directors either intend to liquidate the Improved Rural Connectivity Project (IRCP) P159330's or to cease operations or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Improved Rural Connectivity Project (IRCP) P159330's financial reporting process Auditor's Responsibility 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 ISAs 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 judgment and maintain professional skepticism 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 controls. * Obtain an understanding of internal controls 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 controls. * 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 International Development Association IDA 60390, Improved Rural Connectivity Project P159330'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 International Development Association IDA 60390, Improved Rural Connectivity Project P159330 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. * Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Improved Rural Connectivity (IRCP), to express an opinion on the Financial Statements. We are responsible for the direction, supervision, and performance of the International Development Association IDA 60390, Improved Rural Connectivity Project P159330 audit. We remain solely responsible for our audit opinion. 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 controls that we identify during our audit. We also provide the Directors with a statement that we have complied with the relevant ethical requirement regarding independence, and to communicate with all relationships and other matters that may reasonably be brought to bear our independence, and where applicable, related safeguards. 7 Acultas is a firm regkstered under the Zam bla Business Name., Act A list of the partners is available at the registered office acuitas associates Chartered Accountants of Zambia PO BOX 31362 Mobile :+260 977 457060 Lusaka, 10101 Emaii : acultis@Licartrectzrn Zambia. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Supplementary information Without qualifying our opinion, we draw attention to the fact that supplementary information set out on pages 26 to 28 does not form part of the Financial Statements and is presented as additional information. We have not audited this information and accordingly do not express an opinion thereon. Report on other Legal and Regulatory Requirements In accordance with the requirements of the International Development Association IDA60390, Improved Rural Connectivity Project P159330 (the Agreement), we report that in our opinion: a. World Bank -International Development Association funds have been used in accordance with the agreement: b. Goods and services financed have been procured in accordance with the agreement; c. All necessary supporting documents, records, and accounts have been kept in respect of the project activities, and all information and explanations needed for the audit have been obtained; and d. The statement of sources and application of funds prepared in accordance with the agreement and submitted to World Bank -IDA during the period can be relied upon to support the related withdrawal applications. e. Section 8.02 states the borrower shall maintain or cause to be maintained proper records of account, pursuant to Section 9.09 of the General Conditions, and submit, no later than six (6) months after the end of each fiscal year, audited Project's annual financial statements together with the audit management letter, prepared in substance and form acceptable to the Bank and audited by the Office of the Auditor General (OAG) or a private audit firm recruited with the OAG's involvement, in accordance with the Terms of Reference acceptable to the bank. During the period, the Fund did not submit the financial statements during the set period. We report that the Fund has not complied with this requirement. Acuitas Associates Chartered Accountants of Zambia J9sep N Ngulube Partner AUDIF001249 Date: Acuitas Is a firm registered under the zanbia Business Names Act A list of the partners is available at the registered office NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 Statement of Financial Performance Notes 2023 2022 ZMW ZMW Revenue 6 20,541,357 27,050,788 Expenses 7 (24,504,703) (27,127,978) Deficit Before Taxation (3,963,346) (77,190) Taxation 8 - Deficit After Taxation (3,963,346) (77,190) The notes on pages 14 to 24 form an integral part of these Financial Statements 9 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 Statement of Financial Position Notes 2023 2022 ZMW ZMW ASSETS Current Assets Receivables from Exchange and/or Non- Exchange Transactions 9 - 110,069 Cash and Bank 10 71,946,528 201,221,060 Advances to contractors and consultants 11 47,102,782 38,218,713 119,049,290 239,549,842 Non - Current Assets Capital Work - In Progress Rehabilitation Costs 12 1,037,450,291 755,905,729 Property Plant & Equipment 13 4,937,006 7,221,457 1,042,387,297 763,127,186 Total Assets 1,161,436,587 1,002,677,028 NET ASSETS /EQUITY AND LIABILITIES Current liabilities Road Works and Services Liabilities 14 1,417,804 1,230,039 Net assets/equity Non-Exchange Transfers - Capital Grants 16 1,225,070,368 1,099,399,035 Accumulated Deficit 18 (107,800,781) (97,952,046) Translation Reserves 17 42,749,196 _ 1,160,018,783 1,001,446,989 Total Net Assets/Equity and Liabilities 1,161,436,587 1,002,677,028 The responsibilities of the Directors with regard to the preparation of the Financial Statements are set out on page 5. The financial statem on pages 9 and 24 were approve dry th bctors on. and were signed on its be Daniel Mtonaa Mr.Noel Nkoma AlDirectorlChief xecutive Officer Board Chairperson The notes on pages 14 to 24 form an integral part of these Financial Statements 10 х- 07 � Ci гЛ iЛ С} О h�! i0 N GЭ О C�i S� 1� м Q � д�'t Ф � � т '� GЭ Q� � n �,�,.� 'с!^ � � � �. ~ N с�� ��а�° � cii,� ормг��N® ад м'� иас�Nг' � �'� ar�ao�'оз�` о и Gt7 ~- CD �� т т r° mr � lЛ т йi � С] � lt? г.. tЧ Е3? � Ф С7 т О�, Е'l � 1С} � tO � (D ��fэ '�1' �.,` С7 О� О т у� т г*'" � е® r.' L т ,r � т Ш �9 ч✓ f,IJ N .� С !П r i � � � i � � � i � � {�, ,� � °- � � с� Rv о> � rn @ L г т т,r г i Й Й� L{7 Ln L� �'с1' р� � а7 С�? М Г3i � ti � �� Ср tL> S"7! � N У � т � w т ,г, д r � tU L7. � +" r l[) О ' У7 4С� tЛ '[7 ' � СО ' ` ` г с�Л � ti б� G G� О � Q г�'! � г (� � eU � t.� l7э 0 (Тх t!} ,� Qi �- � Ci� � � С*7 г'[f а() N ,.'�. М м'т м СС '� Q..... {q - fЛ 9� G1 т - ..... G-. с!7 м N�� ...... i71 О1 м 01 !!' 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Component 1 - 4,669,200 1,568,851 3,100,349 Work is ongoing in the following Improved Provinces for the next four (4) years: Feeder Roads 1. Central - Two (2) Packages 1 &2 2. Copperbelt-One (1) Packages 13 3. Eastern -Two (2) Packages 3 &4 4. Luapula - Two (2) Packages 9 &10 5. Lusaka - One (1) Package 19 6. Muchinga - Two (2) Packages 14 & 15 7. Northern - Two (2) Packages 7 & 8 8. North-Western-One (1) Package 6 9. Southern - One (2) Package 11 &12 10. Western-Two (2) Package 16 & 17 When the remaining Package in: 1. North Western Province - Packages 5 is yet to be signed and will be completed within five (5) years, as well. 2. Component 2 518,800 388,321 130,478 Most stand-alone projects have been - Institutional completed. Strengthening The remaining funds will cater for the Project Unit's Operations, which run parallel with the Road Projects noted above. 3. Total 5,188,000 1,957,172 3,230,827 1' above. Budget Amounts have been converted into Zambian Kwacha from the Loan Agreement currency of US $ at an Average Exchange rate of ZMW25.94/US $1. The notes on pages 14 to 24 form an integral part of these Financial Statements. 13 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 Notes 1. Principal Activity and Financing by the Improved Rural Connectivity Project (IRCP) The Second Road Rehabilitation and Maintenance Project Phase 11 is financed by the World Bank- International Development Association (IDA). The total credit under this Development Credit Agreement (DCA) P159330 is US$200, 000,000. This amount is split as follows: Amount (US $) Improvement of feeder roads 180,000,000 Institution strengthening in the Road Sector 20,000,000 Total 200,000,000 The Republic of Zambia and the International Development Association (IDA) signed the Project Preparation Advance (PPA) Agreement on 13 September 2017 for total funding of US $3.00 million. The IDA Project P159330 was approved by the Board of the World Bank on 4th May 2017. The Financing Agreement was signed on 13* September 2017 between the Republic of Zambia and the International Development Association (IDA) and the main Credit will become effective in 2018. The closing date of the credit will be in 2026. The objective of the Improved Rural Connectivity Project for Zambia is to: a) Improve the Recipient's rural road accessibility for the communities in selected areas; b) Strengthen institutional capacity for sustainable management of rural roads; and c) Respond promptly and effectively to an Eligible Crisis or Emergency. There are three components for this project. The first component is improvement of feeder roads, support for the upgrading, rehabilitation and maintenance of priority feeder road infrastructure in six top ranked provinces i.e., Central, Eastern, Northern, Luapula, Southern and Muchinga, It will finance about 4300km of feeder roads comprising mainly of roads improved to gravel wearing course standard. The Project will also finance road improvement to low-cost seal standards where projected vehicular traffic would be in excess of 50 to 100 vehicles per day (VPD). The second component is the Institutional Strengthening in the Roads Sector - US20m. It has two sub components: a) Coordination and Implementation support will reinforce the project coordination and implementation roles of the entities concerned; b) Strategic Institutional Capacity Enhancement which will include technical services, physical woks, goods and material for the purpose of institution strategic capacity enhancement within the sector, and human resource development. The third component is contingent emergency response which will allow for rapid reallocation of the project proceeds in the event of natural or man-made disaster or crisis that has caused or likely to imminently cause a major adverse economic and /or social impact. 14 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 2. Basis of preparation a) Statement of compliance The financial statements have been prepared in accordance with the International Public Sector Accounting Standards and the requirements of the International Development Association IDA 60390, Improved Rural Connectivity Project P159330. b) Basis of measurement The financial statements have been prepared on an accrual basis and in accordance with the historical cost basis. All categories of property and equipment are initially recorded at cost in accordance with the accounting policies adopted by the Agency. c) Functional and presentation currency The financial statements are presented in Zambian Kwacha ("Kwacha"), which is the organisation's functional currency. All financial information presented in Kwacha has not been rounded to the nearest thousand. d) Use of estimates and judgements Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The preparation of financial statements is conformity with accounting policies adopted by the Agency as set out in the accompanying notes, requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. 3. Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year: a) Measurement of uncertified contract work at; and b) Measurement of contingent liabilities 4. General improvements to IPSAS Exosr Sraf 80 RPG 1, Reporting on the long-term Indicate in the Basis for conclusions that the sustainability of an entity's finances. conceptual framework and social befits projects were completed. IPSAS 29, financial instruments: recognition Interest rate benchmarking reform and measurements (as applicable prior to amendments. the adoption of IPSAS 41, Financial Instruments. IFRS alignment improvements to IPSAS IPSAS 41, IPSAS 29 (as amended by IPSAS Interest rate benchmarking reform 41 when it was first published in 2018), and amendments. 15 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 IPSAS Summary of the proposed change in Exposure Draft 80 IPSAS 30, Financial Instruments: Disclosures IPSAS 33, First Time Adoption of Accruals Extend the exemption to allow cumulative International Public Sector Accounting translation differences to be based on the Standards (IPSAS) controlled entity's financial statements on the date of adoption of IPSAS. IPSAS 41, Financial Instruments. Clarify the fees to include when applying the 10 percent test to derecognize a financial liability. IPSAS 39, Provisions, Contingent Liabilities Clarify the cost of fulfilling a contract when and Contingent Assets. assessing whether the contract will be onerous. IPSAS 17, Property, plant, and equipment. Prohibits proceeds from selling items produced before the asset is available for use to be deducted from the cost of the property, plant, and equipment. 5. Summary of Significant Accounting Policies The principal accounting policies applied in the preparation of the Financial Statements are stated below. These policies have been consistently applied to all the years presented and comply with International Public Sector Accounting Standards (IPSAS) in all material respects unless otherwise stated. 5.1 Property, plant, and equipment (capital-work-in progress) IPSAS 17 The cost of an item of Property, Plant, and Equipment is recognized as an asset when it is probable that future economic benefits associated with the item will flow to the Improved Rural Connectivity Project (IRCP) and the cost of the item can be measured reliably. The costs include costs incurred initially to acquire or construct an item of Property, Plant, and Equipment, and costs incurred to add to, maintain, and significantly replace parts of it. Routine maintenance of Property is expensed and charged to the Statement of Financial Performance during the period or year they are incurred. Property, Plant, and Machinery are stated at historical cost. All costs include those directly attributable to bringing the assets to working condition for their intended use and include professional fees and contractual costs relating to standing time and interest charges on delayed payment of amounts due to the supplier of the works and services on the Property, Plant, and Machinery. Property refers to Project costs and capital work in progress which are incurred in the construction of the Improved Rural Connectivity Project (IRCP). The cost of an item is recognized as part of Project costs when it is probable that future economic benefits associated with the item will flow to the Improved Rural Connectivity Project (IRCP) and the cost of the item can be measured reliably. Project costs include all costs incurred in the construction or rehabilitation of the Improved Rural Connectivity Project (IRCP). These comprise civil works relating to reconstruction and rehabilitation costs and consultancy costs with respect to Design Review and Supervision of Construction works (including Project Financial Audits and Technical Audits). 16 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 All project costs are capitalized during the construction and rehabilitation period and will ultimately be transferred to the government on completion of the Project, as evidenced by a completion certificate being issued by the implementation institution, the Road Development Agency. Thereafter, the Project will either be expensed to the Statement of Financial Performance on a systematic and rational basis over the useful lives of the Project assets; or written off immediately to the Statement of Financial Performance, depending on the accounting policy adopted by the recipient entity. Therefore, there is no depreciation applied to these construction projects as at the completion stage, they are transferred to the Government of the Republic of Zambia through the Road Development Agency (RDA). 5.2 Project costs recognition All Project costs are recognized when incurred: when goods have been delivered or services rendered, not necessarily when payment is made. 5.3 Non-exchange transactions: Government Grants Government grants are not recognized until there is reasonable assurance that the Project will comply with the conditions attached to it and receive the grant. Government grants whose primary condition is that all funds provided should be used for the construction improved Rural Connectivity Project (IRCP) are recognised as Capital Grant in the Statement of Financial Position; until completion of the Project. A completion certificate will be issued by the implementing institution, the Road Development Agency; after which the Project costs will be expensed to the Statement of Financial Performance on a systematic and rational basis over the useful lives of the Project assets or written off immediately depending on the accounting policy adopted by the receiving entity, in accordance with the requirements of IPSAS 23, Revenue from Non-Exchange Transactions. 5.4 Foreign currencies Transactions in foreign currencies are translated to Zambian Kwacha at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date, which are stated at historical cost, are translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income and expenditure account. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated at the foreign exchange rate ruling at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to the reporting currency at the foreign exchange rates ruling at the dates that the values were determined. 5.5 Financial Instruments - IPSAS 29 a) Initial Measurement Financial assets and financial liabilities are recognized when the Project becomes a party to the contractual provisions of the instruments. Financial Instruments (assets and liabilities) are initially measured at the transaction price (this includes transaction cost except in the initial measurement of financial assets and liabilities measured at fair value, through Project Costs). If the arrangement constitutes a financing transaction, it is then measured at the present value of the future payments, discounted at a market-related interest. Financial Instruments entered into by the Project are mainly classified as loans and receivables and consist of the following financial assets and liabilities. b) Financial Assets - Advances to Contractors and Consultants Advance Payments constitute an interest-free loan provided to a contractor or supplier of goods and services at the commencement of a contract (usually 20% of contract value), for mobilization 17 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 and cash flow support. The advance is repayable over the period of the contract, through percentage deductions from Interim Payments at the amortization rate stated in the contract. Performance guarantees issued against these advances remain in force until the Advance Payments are fully recovered. Advances to Contractors and Consultants are classified as financial assets and measured at amounts disbursed as advances, which subsequently reduce with the recoveries from certified works. c) Financial Liabilities - Road Works and Service Liabilities Road work service liabilities and other accruals are classified as financial liabilities and measured at the cost incurred. d) Contract Work Retentions Withheld Contract work retentions are monies withheld from each invoice submitted for contract work certified by a contractor (usually 10% of invoiced amount) to cater for completion of outstanding work, remedying of any defects attributable to the contractor noted during the Defects Notification Period incorporated in the contract agreements: and is only payable upon certification by the employer's consultant, and upon issuance of a Performance Certificate by the Consultant, stating the date on which the contractor fully discharged his obligations under the contract. Contract work retentions withheld are classified as financial liabilities and subsequently measured at amortized cost using the effective interest method after initial recognition. 5.6 Borrowing Costs Borrowing costs consist of Finance Charges for Delayed Payments; these are monies payable to a contractor or supplier of goods and services where such contractor or supplier does not receive payment according to contract payment terms, and results in a delay of payments. These are added to the cost of those assets until the assets are substantially ready for their intended use. 5.7 Provisions Provisions are recognized when the Project has a present obligation (legal or constructive) as a result of a past event; the Project will probably be required to settle the obligation, and a reliable estimate can be made of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, considering the risk of uncertainties surrounding the obligation. Provisions relate mainly to uncertified contract work as at the reporting date for which the consultant makes an estimate. 5.8 Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at the bank, short-term deposits on call, and highly liquid investments with an original maturity of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Bank account balances include amounts held at the Central Bank of Zambia and at various commercial banks at the end of the financial year. 5.9 Financial risk management The Project seeks to minimize its exposure to financial risk. The only financial assets that it may purchase are cash or cash equivalents. The only financial liabilities that it may have are supplier liabilities, a) Currency risk The Project manages its bank accounts both in USD and ZMW. Furthermore, the project partners transfer funds directly to the suppliers. There have been no significant changes in the foreign currency risk management policies and processes since the prior reporting period. b) Interest rate risk Interest rate risk arises from the possible impact of changes in the interest rates on the value of 18 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 financial instruments. The Project does not have assets and liabilities that are materially dependent on interest rate levels therefore, management believes that the project has no exposure to interest rate risk. c) Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Project has no exposure to credit risk on its debtor accounts. d) Liquidity risk Liquidity risk is the risk of the Project not being able to meet its obligations as they fall due. The Project's approach to managing liquidity risk is to ensure that sufficient liquidity is available to meet its liabilities when due, without incurring unacceptable losses or risking damage to the Agency's reputation. The Project ensures that it has sufficient cash on demand to meet expected operating expenses through the use of cash flow forecasts. 5.10 Comparative figures Where necessary comparative figures for the previous financial year have been restated to comply with International Public Sector Accounting Standards (IPSAS). 5.11 Current versus noncurrent classification The Project presents assets and liabilities in the Statement of Financial Position based on current/non-current classification. An asset is current when it is: * Expected to be realised or intended to be sold or consumed in normal operating cycle. * Held primarily for the purpose of trading. * Expected to be realised within twelve months after the reporting period; or * Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. * All other assets are classified as non-current. A liability is current when: * It is expected to be settled in normal operating cycle. * It is held primarily for the purpose of trading. * It is due to be settled within twelve months after the reporting period; or * There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Project classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities. 19 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 Notes (Continued) 6. Revenue 2023 2022 ZMW ZMW Bank Interest Income 395,290 267,783 Exchange Gains - Unrealised - 6,357,129 Profit on Sale of Fixed Asset - 505,486 Revenue Grant from Non-Exchange Transactions 20,146,067 19,920,390 20,541,357 27,050,788 The Revenue Grant represent all expenses paid out of the received Capital Grant amounts as shown in Note 16 below, While the approved Project description allows payment of Operations Expenses, the amounts are received in Lumpsum as Capital Grant and are expended for both capital and operational expenditure. 7. Expenses 7.1 Revenue Grant Expenses 2023 2022 ZMW ZMW Advertising 37,028 143,320 Audit Financial - External 292,370 140,292 Bank Charges 244,460 183,312 Building Repairs - 5,044 Functions & Meetings 31,719 76,132 Information Systems & Development 4,917 269,747 Motor Vehicle Expenses 1,795,109 1,813,998 Office Expenses 270,487 21,579 Printing & Stationery 387,630 281,722 Professional & Legal Fees 38,860 1,187,276 Staff Salaries and Other Related Costs 13,975,798 10,852,271 Telephones Postage Courier 113,048 103,919 Workshops, Seminars & Training 2,954,641 4,343,588 Total Revenue Grant Expenses 20,146,067 19,920,390 7.2 Other Expenses Depreciation 4,358,636 7,207,588 Total 24,504,703 27,127,978 8. Taxation The Project is exempt from income tax. 20 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 Notes (Continued) 9. Receivables from Exchange andlor Non-Exchange Transactions 2023 2022 ZMW ZMW Local Road Authorities - 110,069 This is unretired fuel Imprest advanced to the Local Road Authorities, which was not fully utilised by year end. 10. Cash and Bank Balances Bank of Zambia - Designated A/c US $ 11,449,190 63,549,492 Indo Zambia Bank - Operational A/c ZMW 29,360,024 29,649,090 Indo Zambia Bank - Operational Alc US $ 31,137,314 108,022,478 Total 71,946,528 201,221,060 11. Advances to Contractors and Consultants Advances to Contractors 47,102,762 38,218,713 12. Capital Works In Progress - Rehabilitation Costs CWIP Rehabilitation 999,939,795 721,486,727 Feasibility Studies and Designs 33,533,571 33,533,571 Road Safety 288,462 288,462 Resettlement and Compensation 3,220,745 129,251 Supervision and Consultancy 467,718 467,718 1,037,450,291 755,905,729 21 ... i� � tV Lf7 (у lf} �.. l.l7 Ф tfl Cf7 Ф г � f`- й3 ЯQ tt? '� iD t� ��.г � 1` � IX] .-- г йЗ Cii �У N SY' 1'� г� 00 а0 �{V iV м tC7 О lf3 Q � N�,.. (�D г м�`�' V h- [V �У" t�J tA м lC') L1Э т О д fi1 (�! О`� F N+л ср ai й� с� т cv c�i �r о® м м сп сгл о� h- t�: т и'�' ,� м со rn cn h- cta о ct� с� '� rn о N tг� cQ и tw м гч N.,�м. � аб N СЧ f�- h- V N 69 N г� LГ1 N� �.С) U� с47 О) iЛ CV ...._. г _ lГ1 г CD ССё Г� т- W i"] ' SV f� � ГЛ 61 �' м 'CI` Е�- v'� гл м г7 с� rз м� с� cv сч м q�j Vl cD �t '� ' й7 t�0 ! с0 N с7 г 47) 1�- ! 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'� � 4 � � м - г � � � � � Q г � � т т т д F- �`` г� г О г гз Q- ra т сз т т� cn s�..� о г� а- м г• гi м м сл Z??�а��.. ti � м °"�` тз•�+ ...�`.�.°о +-. N.-.�c 4�.� аг � r U 4[L Q 4L СЭ Q д Ct сС rtt <С �Э Q i1 �L ❑ С� rtL Q{7 � �4 Q NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 Notes (Continued) 14. Road Works and Service Liabilities 2023 2022 zMW ZMW AIC Progetti SpA - 409,054 Acuitas Associates 140,292 140,292 LEA Associates South Asia Pvt Ltd - 385 952 National Pension Scheme Authority 26,840 - News Diggers Media Limited - 5,200 Shorthorn Printers Limited - 10,236 Zambia Revenue Authority 1,214,247 279,305 Zambia Telecommunication Company 36,425 - Tota 1 1,417,804 1,230,039 15. Retention Costs Payable to Contractors There is no provision made for retention on all Road Projects on this Project because all Road Contracts have been signed on the basis of the Output and Performance Based Contracts (OPRC) for each for a maximum period of five (5) years. % Non-exchange transfers-World Bank - Capital Grant 2023 2022 Withdrawal Application Date zMW ZMW Initial Deposit 16/06/2017 28,980,000 28,980 000 Front Load Commitment Fee 15/02/2018 5,215,000 5,215,000 PPF Charge 15102/2018 156,450 156,450 Reimbursement of Funds 12/0412018 5,181,606 5,181,605 First Disbursement 12/06/2018 110,635,875 110,635,875 Second Disbursement 18/11/2019 66,500,000 66,500,000 IRCP- Third Disbursement 23103/2020 83,600,000 83,600,000 IRCP- Fourth Disbursement 01/12/2020 109,055,928 109,055,928 Direct Payment- IRCP-014 15/10/2020 2,156,110 2,155,110 IRCP Direct Payment 01/01/2021 1,128,157 1,128,157 IRCP- Fifth Disbursement 10/0512021 238,616,980 238,616,980 IRCP- Sixth Disbursement 31/01/2022 266,851,046 266,851,046 IRCP- Seventh Disbursement 21/09/2022 84,654,090 84,654,090 IRCP- Eighth Disbursement 21/12/2022 143,394,564 143,394,564 IRCP-Ninth Disbursement 26/06/2023 145,816,304 - Direct Payment IRCP-14 31112/2023 1,095 Total 1,291,942,204 1,146,124,805 Less: Revenue Grant (66,871,836) (46,725,770) Total 1,225,070,368 1,099,399,035 17. Translation Reserves Opening balance - - Prior Year Adjustment 6,357,129 - Restated Opening balance 6,357,129 - Exchange Gains 1,153,952,190 - Exchange Losses (1,117,560,123) - Closing balance 42,749,196 - These Reserves arises from the translation of the United States Dollar assets and liabilities into Zambian Kwacha at the year end and accounted as the separate component of net assets as required by IPSAS 4. 23 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 Notes (Continued) 18. Prior Year Adjustments - IPSAS 3 18.1 Translation Reserves The Translation Reserves balance was understated by K6,357,129 as the same amount was erroneously posted as part of revenues in 2022. In compliance with IPSAS 3 paragraph 54, the Financial Statements for 2023 have been restated to correct this error as summarised below. The effect on the Financial Statements for 2023 is as shown below. 31 December 2022 Initial Amount Adjustment Restated Position ZMW ZMW ZMW Translation Reserves - 6,367,129 6,357,129 Accumulated Reserves (97,952,046) (6,357,129) (104,309,175) 18.2 Fixed Assets The Desktop Computers and Printer balance was understated by K471,740 as the same amount was erroneously expensed in 2022. In compliance with IPSAS 3 paragraph 54, the Financial Statements for 2022 have been restated to correct this error as summarised below. There is no effect on the Financial Statements for 2023. 31 December 2023 Initial Amount Adjustment Restated Position ZMW ZMW ZMW Property, Plant and Equipment 13,571,165 (471,740) 14,042,905 Accumulated Reserves (104,309,175) 471,740 (103,837,435) 19. Provisions There is no provision for any certified contract works because the Agency did not receive any information on the same by the date of approval of these financial statements. 20. Capital Commitments 2023 2023 ZMW ZMW Capital Commitments 882,574,005 386,647,649 21. Contingent Liabilities There were no events during the year that would arise and cause the Road Sector to provide for contingency liability. 22. Impairment Assessment Impairment Assessment has not been done because these assets are still under construction and are therefore classified as CWIP thus requiring no impairment as per IPSAS 21. 23. Events occurring after the Statement of Financial Position The Agency is not aware of any matter or circumstances since the financial year end and the date of this report, not otherwise dealt with in the Financial Statements, which significantly affects the financial position of the Project. 24 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 Supplementary Information 1. Information Required by the Financial Reporting Guidelines of the International Development Association IDA 60390/P159330 1.1 Project Implementation Status Summary as at 31 December 2023 - Project Level Loan Total Actual Amount Disbursed Project Costs Project Status at 31 No. Source at December 2023 US $ Million US $ Million US $ Million Works on going 1. IRCP Loan 200.00 78.16 75.451 1.2 Project Implementation Status Summary as at 31 December 2023 - Component Level No. Category of Budgeted Actual Balance Comments Expenditure Amounts Costs US $ US $ US $ Million Million Million 1. Component 1 - 180.00 60.48 119.52 Work is ongoing in the following Provinces Improvement of for the next four (4) years: Feeder Roads 1. Central - Two (2) Packages 1 &2 2. Eastern - Two (2) Packages 3 &4 3. Luapula - Two (2) Packages 9 &10 4, Muchinga - Two (2) Packages 14 & 15 5. Northern - Two (2) Packages 7 & 8 6, Southern - One (2) Package 11 &12 7. North-Western-One (1) Package 6 8. Copperbelt-One (1) Packages 13 9. Western-Two (2) Package 16 & 17 10. Lusaka - One (1) Package 19 Package 5 in North Western Provinces is yet to be signed: All packages will be completed within five (5) years after the date of signing 2. Component 2 20.00 14.97 5.03 - Institutional Most stand-alone projects have been Strengthening completed. The remaining funds will cater for the Project Unit's Operations, which run parallel with the Road Projects noted above. 3. Total 200.00 75.45 124.55 25 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 2. Bank Reconciliation of World Bank Funding US$ Total Disbursements as at 31 December 2023 per World Bank 78,164,679 Total IRCP Grant funding received per Project accounts 78,164,679 Difference . 3. Bank Reconciliation Statement Bank of Zambia Designated Account No Address: Kafue House, Lusaka, Zambia Date US$ US$ Initial deposit 3,000,000 Front End Fee 15* April,2018 500,000 Project Preparatory Charge 151h April2018 15,000 Reimbursement 121h April,2018 492,080 Disbursement 1 11h June,2018 10,715,339 Disbursement 121h June 2018 5,000,000 Disbursement 1 81h November 2020 5,000,000 Disbursement 23rd March 2020 5,672,205 Direct Payment 1It December 2020 106,794 Direct payment 1 January 2021 53,290 Disbursement 101h May 2021 10,685,937 Disbursement 315' January 2022 15,979,104 Disbursement 21s' September 2022 5,357,853 Disbursement 21s' December 2022 8,147,419 Disbursement 26h June 2023 7,439,608 Direct Payment 31 1 December 2023 50 78,164,679 Deduct Payments 75,457,258 (75,457,258) 2,707,421 Other Income 306,715 Balances as at 315t December 2023 3,014,136 Bank of Zambia - Designated Account US $ 441,372 Indo Zambia Bank - Operational Account ZMW 1,372,405 Indo Zambia Bank - Operational Account US $ 1,200,359 Balance per cash books as at 31 December 2023 3,014,136 26 NATIONAL ROAD FUND AGENCY IMPROVED RURAL CONNECTIVITY PROJECT (IRCP) INTERNATIONAL DEVELOPMENT ASSOCIATION DEVELOPMENT CREDIT AGREEMENT PROJECT NO P 159330 LOAN AGREEMENT IDA 60390 Financial Statements For the year ended 31 December 2023 4. Statement of Sources and Application of Funds 1 Year ended Year ended Cumulative to 31 Dec 2023 31 Dec 2022 31 Dec 2023 USD USD USD Sources of Funds Trust Fund Replenishment 7,439,607 29,484,376 77,512,464 Direct Disbursements 50 160,135 Reimbursements _ 492,080 Other Income 20,053 245,560 306,715 otal Incone 7,459,710 29,729,936 78,471,394 Application Improvement of Feeders Roads 14,895,636 19,257,197 60,492,319 Institution Strengthening Coordination and Implementation Support 1,055,668 1,444,434 9,622,700 Strategic Institution Enhancement 75,58 210,284 4,827,239 Front End Fee - 515,000 total 16,026,888 20,911,915 75,457,258 Net inflow of csh (8,567,178) 8,818,020 3,014,136 Opening Cash and Bank Balances 11,581,314 2,763,294 Closing Cash and Bank balances 3,014,136 11,581,314 3,014,13 27