REPORT OF THE DIRECTORS AND FINANCIAL STATEMENTS

Transcription

1 REPORT OF THE DIRECTORS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009 CYMA Chartered Accountants and Management Consultants 4th Floor, Electra house Cairo Road Lusaka P.O Box Tel: Fax:

2 Contents REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 DECEMBER STATEMENT OF DIRECTORS' RESPONSIBILITY OVER THE FINANCIAL STATEMENTS 3 REPORT OF AUDITORS TO THE MEMBERS OF THE 4 STATEMENT OF FINANCIAL POSITION 6 STATEMENT OF COMPREHENSIVE INCOME 7 STATEMENT OF CHANGES IN CAPITAL GRANT AND ACCUMULATED FUND 7 STATEMENT OF CASHFLOWS 8 NOTES TO THE FINANCIAL STATEMENTS 9-16

3 REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 DECEMBER 2009 The Directors present their report together with the audited financial statements for the year ended 31 December 2009 which disclose the state of affairs of the Road Development Agency. Registered office address The Road Development Agency was established in Zambia by the Public Roads Act No. 12 of 2002 and is domiciled in Zambia. The address of its registered office is: Corner Fairley and Government Roads PO Box Lusaka Zambia Principal activities The Road Development Agency is a statutory organization whose function is to plan, manage and coordinate the road network in the country. The agency is responsible for the planning, care, maintenance and construction of public roads in Zambia. It also regulates the maximum permissible weights on roads, conducts studies for the development, maintenance and improvement of the road network and reviews design standards and classification. Taxation The RDA has been exempted from payment of corporation tax and hence no provision has been made for income tax or deferred tax. Operating results K Income 167,885,143, ,599,683,708 (Deficit)/Surplus of income over expenditure (739,904,805) 50,013,884,865 Average number and remuneration of employees The total remuneration of employees during the year amounted to K 28,560,123,704 (2008: K26, 645,330,419) and the average number of employees was 315. Property, plant and equipment The Agency acquired property, plant and equipment amounting to K3, 967,376,319 (2008: K3, 502,522,276) and capitalized road works amounting to K70, 785,165,676 (2008: K415,467,147,964). In the opinion of the directors, there was no significant difference between the carrying value of property and its market value. 1

4 Research and development The Agency did not conduct any research and development activities during the year. Directors The directors who held office during the year ended 31 December 2009 were: 1. Mr. Walusiku Lisulo Chairperson 2. Dr. Dennis Wanchinga National Science and Technology Council 3. Mr. Aggrey Musamba Zambia National Farmers Union 4. Mr. Julius Kazembe Lungu Engineering Institution of Zambia 5. Mr. Martin Chongo Chartered Institute of Logistics and Transport 6. Mr. Fredrick S. Mtamira National Construction Council 7. Lt. Col. Bizwayo Nkunika Permanent Secretary - Ministry of Works and Supply 8. Mr. Peter Lubambo Ministry of Local Government and Housing 9. Mr. Emmanuel Ngulube Permanent Secretary - Ministry of Finance and National Planning Mr. Dominic Y. Sichinga SC Ms. Justina C. Wake Mrs. Anne M. Sitali Mr. George Sikuleka Mr. Fredrick Mwalusaka Mr. Raphael Mabenga Mr. Erasmus Chilundika Permanent Secretary - Ministry of Transport and Communication Ministry of Tourism Ministry of Justice Ministry of Agriculture and Cooperatives Director & CEO - Road Transport and Safety Agency Director & CEO- National Road Fund Agency Director & CEO - Road Development Agency The term of office of the above non-executive directors elapsed and was briefly extended before being terminated by the Minister of Works and Supply who is the appointing authority. The new board of directors was appointed effective August Corporate Social Responsibility The RDA did not engage in any corporate social responsibility activities during the year ended 31 December Auditors The Agency's auditors, CYMA Chartered Accountants and Management Consultants, have indicated their willingness to continue in office and a resolution for their re-appointment will be proposed at the board meeting. By order of the Board Board Secretary 2

5 STATEMENT OF DIRECTORS' RESPONSIBILITY OVER THE FINANCIAL STATEMENTS Section 10 of Part II of The Public Road Act No.12 of 2002 requires the Agency to prepare financial statements for each financial period, which give a true and fair view of the Agency. The Directors are responsible for the preparation, integrity and fair presentation of the financial statements of The Road Development Agency. In preparing such statements, the Directors are required to: a) Select suitable accounting policies and then apply them consistently; b) Make judgments and estimates that are reasonable and prudent; and c) State whether applicable accounting standards have been followed. The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Agency and enable them to ensure that the financial statements comply with generally accepted accounting principles. They are also responsible for safeguarding the assets of the Agency and hence for taking responsible steps for the prevention and detection of fraud and other irregularities. The Directors confirm that in their opinion: a) The financial statements present fairly, in all material respects, the financial position of The Road Development Agency at 31 st December 2009 and the results of its operations and its cash flows for the year then ended; b) At the date of these statements there were reasonable grounds to believe that the Agency will be able to pay its debts as and when they fall due; and c) The financial statements are drawn up in accordance with generally accepted accounting principles (GAAP) and in compliance with the Public Finance Act (2004) and the Public Roads Act No. 12 of 2002 as is applicable to the Road Development Agency as a statutory organisation. The Directors believe that all representations made to the independent auditors during their audit are valid and appropriate. 3

6 4 CYMA Chartered Accountants & Management Consultants LUSAKA 4 th floor, Electra house Cairo Road Lusaka Zambia Postal Address P O Box Tel: Fax: cyma@zamtel.zm LIVINGSTONE Postal Address 2 nd floor, old wing P O Box Musi-O-Tunya House Tel: Livingstone Livingstone Zambia REPORT OF THE AUDITORS TO THE MEMBERS OF THE We have audited the financial statements of the Road Development Agency set out on page 6 to 8 comprising the statement of financial position, statement of comprehensive income, and statement of cashflows and the related notes for the year ended 31 st December, 2009, which have been prepared under the historic cost convention. RESPECTIVE RESPONSIBILITIES OF THE DIRECTORS AND AUDITORS As described on page 1, The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with accordance with generally accepted accounting principles (GAAP) and in compliance with the Public Finance Act (2004) and the Public Roads Act No. 12 of 2002 as is applicable to the Road Development Agency as a statutory organisation. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. It is our responsibility to form an independent opinion on the financial statements based on our audit. BASIS OF OPINION We conducted our audit in accordance with the International Standards of Auditing. Our audit included such tests on a sample basis of accounting records and a review of accounting policies to determine whether they are appropriate to the Agency's circumstances and, were consistently applied and adequately disclosed. We reviewed such other procedures, as we considered necessary in the circumstances. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide assurance that the financial statements were free from material misstatements, whether caused by fraud, irregularity or error. In forming our opinion we also evaluated the overall adequacy of the preparation and presentation of the information. 4

7 LIMITATION IN SCOPE a) The Road Development Agency inherited from the then Roads Department incomplete records and values relating to the works, contractors and consultants, which may lead to an underestimation of the carrying values. Although we have noted a number of errors and omissions and brought them to the attention of management for their action, we are not certain that the records are complete as they are continuously being reviewed and updated for transactions relating to past years. b) There is a balance of K 142,268, in respect of old contractor debts which is managed by the Ministry of Finance and National Planning. The old debts accrue interest and are periodically liquidated by the Ministry of Finance and National Planning who make direct payment to the contractors. For the current year, we have not been able to obtain confirmation on the interest accrual and the payments and thus are not able to obtain reasonable assurance on the accuracy of the amount. There are no alternative tests we could perform to obtain assurance on the completeness and accuracy of the carrying amount of the outstanding balances. AUDIT OPINION In our opinion, except for the effects of such adjustments, if any, had we been certain of the completeness and accuracy of the records in matters cited above, the financial statements fairly presents, in all material respects, the financial position of the Road Development Agency at 31 December 2009 and the results of this operations and its cash flows for the year then ended. The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) and in compliance with the Public Finance Act (2004) and the Public Roads Act No. 12 of 2002 as is applicable to the Road Development Agency as a statutory organisation. CYMA 5

8 6 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2009 NON CURRENT ASSETS Note Property, plant and equipment 5 654,525,712, ,714,038,791 Capital work in progress 6 2,612,503,593,984 1,567,781,755,911 CURRENT ASSETS Stocks 7 187,542, ,920,570 Debtors and prepayments 8 591,911,750, ,863,327,881 Advance payments to contractors 9 116,843,889,118 31,631,510,375 Staff advances and imprests 10 1,757,042,251 1,713,228,925 Cash and cash equivalents 11 10,768,740,630 7,734,404, ,468,964, ,122,392,258 TOTAL ASSETS 3,988,498,271,041 2,486,618,186,960 K K EQUITY AND LIABILITIES CAPITAL GRANT AND ACCUMULATED FUND Accumulated Fund 123,164,006, ,903,911,215 Capital Grants 3,078,158,313,481 1,966,939,673,877 3,201,322,319,891 2,090,843,585,092 LONG TERM LIABILITIES Long term amounts payable to contractors ,268,150, ,268,150, ,268,150, ,268,150,675 CURRENT LIABILITIES Staff liabilities 13 9,783,587,959 8,607,414,542 Short term amounts payable to contractors ,400,029, ,858,505,180 Statutory liabilities ,185, ,530,449 Other creditors and accruals 16 13,757,997,445 8,450,001, ,907,800, ,506,451,193 TOTAL CAPITAL AND LIABILITIES 3,988,498,271,041 2,486,618,186,960 6

9 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2009 Note K K Income Appendix I 167,885,143, ,599,683,708 Administrative costs Appendix II 136,143,858, ,752,202,081 Routine repairs and maintenance works 32,481,190,508 29,833,596,762 Total operating costs 168,625,048, ,585,798,843 (Deficit )/surplus of Income over Expenditure (739,904,805) 50,013,884,865 STATEMENT OF CHANGES IN CAPITAL GRANT AND ACCUMULATED FUND Capital Grant Accumulated Fund Total Balance at 1st January ,074,257,041,725 79,479,165,035 1,153,736,206,760 Prior year adjustment 69,524,025,663-69,524,025,663 Change in accounting policy - (5,589,138,685) (5,589,138,685) Restated balance 1st January ,143,781,067,388 73,890,026,350 1,217,671,093,738 Capital grants received 919,467,829, ,467,829,615 Surplus for the year - 50,013,884,865 50,013,884,865 Amortised during the year (96,309,223,126) - (96,309,223,126) Balance at 31st December ,966,939,673, ,903,911,215 2,090,843,585,092 Capital grants received- works 1,119,474,380,069-1,119,474,380,069 Capital grants received- advance payments 92,728,020,523-92,728,020,523 Capital grants received- DMMU 2,230,387,086-2,230,387,086 Surplus for the year - (739,904,805) (739,904,805) Amortised during the year (103,214,148,074) - (103,214,148,074) Balance as 31 December ,078,158,313, ,164,006,410 3,201,322,319,891 7 The notes on pages 9 to 16 form part of the financial statements

10 STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER 2009 (Deficit)/Surplus of income over expenditure Adjustments Loss/( profit) on disposal of property, plant and equipment Change in accounting policy Amortisation of capital grant Depreciation Changes in stock Changes in debtors and prepayments Changes in advance payments to contractors Changes in staff advances and imprests Changes in long term amounts payable to contractors Changes in staff liabilities Changes in short term amount payable to contractors Changes in statutory liabilities Changes in other creditors and accruals 2009 K 2008 K (739,904,805) 50,013,884,865 2,078,745,274 (103,214,148,074) 102,998,716,138 (7,621,569) (402,048,422,192) (85,212,378,743) (43,813,326) 1,176,173, ,541,524, ,655,309 5,307,996,423 (18,817,520) (11,814,806,601) (96,309,223,126) 96,304,460, ,144, ,804,058,500 5,429,802, ,107,942 (53,282,718,577) 3,767,308,364 (142,721,404,934) (29,131,190) 11,979,600,985 Cash (used)/ generated on operations (94,787,478,014) 6,772,267,118 Investing activities Payments for acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment (1,119,474,380,069) (919,467,829,615) 2,863,406, ,501,680 (1,116,610,973,541) (919,298,327,935) Financing activities Capital grants received from Ministry of Finance and National Planning, and National Road Fund Agency 1,119,474,380, ,467,829,615 Capital grants received- advance payments Capital grants received- DMMU 92,728,020,523 2,230,387,086 1,214,432,787, ,467,829,615 Net increase /(decrease) in cash and cash equivalents 3,034,336,123 6,941,768,798 Cash and cash equivalents at the beginning of the financial year 7,734,404, ,635,709 Cash and cash equivalents at the end of the financial year 10,768,740,630 7,734,404,507 8

11 NOTES TO THE FINANCIAL STATEMENTS 1 Principal Activity The Road Development Agency (RDA) was established by the Public Road Act No.12 of RDA is a statutory organization whose function is to plan manage and coordinate the road network in the country. The agency is responsible for the planning, care, maintenance and construction of public roads in Zambia. It also regulates the maximum permissible weights on roads, conducts studies for the development, maintenance and improvement of the road network and reviews design standards and classification. 2 Statement of Accounting Policies Basis of Preparation The financial statements have been prepared in accordance with generally accepted accounting principles(gaap) and in compliance with the Public Finance Act(2004) and the Public Roads Act No. 12 of 2002 as is applicable to the Road Development Agency as a statutory organisation. The financial statements have been prepared on a historical basis except where some items of land, buildings, roads, bridges and equipment are carried at valuation, and incorporate the following principal accounting policies which have been consistently applied. Going concern The Agency is dependent on Government and its agencies for the funding of its projects and operations. The Directors believe that based on the Road Sector Investment Program (ROADSIP) II ), the Road Development Agency will be a going concern in the foreseeable future and that the Agency will be able to meet all its dues. Therefore, the directors have determined it appropriate that the financial statements be prepared on a going concern basis. Property, plant and equipment Buildings, completed roads and equipment are stated at historical cost less accumulated depreciation. Cost include all costs directly attributable to bringing the assets to working condition for their intended use, and includes professional fees. Capital work in progress Capital work in progress is measured at cost of construction which may include labour, materials and other direct costs attributable in bringing the assets to present condition for intended use. Capital work in progress is ready for intended use when hand over certificate is issued. At the time of handover, the capital work in progress is capitalised in appropriate categories of property, plant and equipment. No depreciation is provided on capital work in progress Depreciation Depreciation is calculated on the straight-line method to write off the cost of each asset over its estimated useful life as follows: Other property, plant and equipment Land and buildings 2% Motor vehicles 20% Furniture and fittings 20% Office equipment including computers 33.33% Plant and machinery 8.3% 9

12 NOTES TO THE FINANCIAL STATEMENTS Roads Maintenance of the existing roads involving performing works required to arrest the deterioration of roads on a continuous basis is regarded as Other works aimed at new roads,expanding the road capacity, provide stronger surface and to significantly change the characteristics of the roads is capitalized and depreciated on the following basis Paved Gravel Earth Periodic maintenance 20% 33.33% 100% Rehabilitation 10% 20% 100% Construction 5% 10% 25% Stocks Inventories and work in progress are valued at the lower of cost, determined on a first-in, first-out basis, and net realisable value. Cost includes supplier's invoice cost and the incidental cost to bring the inventories to their present location and condition. Foreign currencies Balances in foreign currencies have been translated into Zambian Kwacha currency at the transaction rates of exchange ruling at the balance sheet date. Transactions during the year are translated at the transaction rates ruling at the relevant dates. Exchange differences arising from translation are included in operating income Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts are included within short term loans in current liabilities on the balance sheet. Pension Obligations The Agency contributes to the National Pension Scheme Authority at a rate of 5% of pensionable earnings and employees also contribute 5% of pensionable earnings Staff benefits Provisions are recognised when the Agency has a present legal or constructive obligation as a result of past events when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date. Entitlements to gratuities are recognised when they accrue to employees. A provision is made for the estimated liability for accrued gratuities as a result of services rendered by employees up to the balance sheet date, based on rates agreed in the contract of employment. 10

13 NOTES TO THE FINANCIAL STATEMENTS 11 Government grants Government grants are not recognised until there is reasonable assurance that the Agency will comply with the conditions attaching to them and that the grants will be received. Government grants whose primary condition is that the Agency should purchase, construct or otherwise acquire non-current assets such as roads, bridges and pontoons are recognised as deferred income in the balance sheet and amortised to the income statement on a systematic and rational basis over the useful lives of the related assets. Other government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Agency with no future related costs are recognised in profit or loss in the period in which they become receivable. Income recognition Income is recognised when it is probable that future economic benefits will flow to the Road Development Agency and these benefits can be measured reliably. 3 Change in accounting policy There is a change in the accounting policy with regard to the accounting treatment of cash collections from the weighbridges. Previously, cash collections from the weighbridges were being accounted for as income in the books of the Road Development Agency(RDA). Such a practice was based on an erroneous interpretation of the provisions of the Public Roads Act No. 12 of 2006 which empowers the RDA to charge fees for its services. This practice was not consistent with the provisions of the Public Road Act No. 10 of 2006 and the National Road Fund Act No. 5 of 2006 which state that all fines, compensation, penalties surcharges arising from infringement of the weighbridge regulations shall be paid into the Road Fund for use on the Axle Road Programme. As the Road Fund is not under the remit of the RDA, it is not appropriate for cash collections remittable to the Road Fund to be accounted for as income by the RDA. Accordingly, prior period financial statements have been restated and each prior period presented as if the new accounting policy had always been applied. Prospectively, all cash collections from the weighbridges are recorded and reported as amounts payable to the National Road Fund Agency. Income statement 2008 Adjustment Restated 2008 Abnormal Load Fees 1,224,192,778 (1,224,192,778) - Abscondment 103,495,571 (103,495,571) - Compensation 3,872,971,238 (3,872,971,238) - Weighbridge Fines 7,228,188,642 (7,228,188,642) - Inspection fees 85,575,000 (85,575,000) - 12,514,423,229 (12,514,423,229) - Provision for doubtful recoveries 17,273,391,610 (13,101,425,626) 4,171,965,984 Statement of financial position Amounts receivable from NRFA 200,576,265,826 (13,101,425,626) 187,474,840,200 Provision on amounts receivable from NRFA (13,101,425,626) 13,101,425,626 - Amounts payable to NRFA in respect of weighbridge collections 0 5,002,136,288 5,002,136,288 Accumulated Fund 128,906,047,503 (5,002,136,288) 123,903,911,215

14 NOTES TO THE FINANCIAL STATEMENTS 4 Critical accounting judgments and key sources of estimation uncertainty Critical judgments in applying accounting policies Useful lives of the roads and bridges and other items of property, plant and equipment As described in the accounting policy on depreciation, road works are depreciated according to the type of road and type of intervention. The classification of the works is according to management's judgment. Impairment of the road networks Management is responsible for undertaking period condition surveys of the road network and make judgments on the appropriate provision for impairments Key sources of estimation uncertainty Long outstanding amounts due to contractors At the creation of the Road Development Agency, the Agency inherited a situation of incomplete records with regard to amounts payable to contractors for works undertaken prior to its creation. The amounts payable to those contractors accrue interest for the time remain unsettled,and continue to be managed by the Government of the Republic of Zambia. The Agency has depended and continues to depend on Government on the completeness and accuracy of the interest accruals.repayments made and the amounts outstanding. 12

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16 NOTES TO THE FINANCIAL STATEMENTS 6 Capital Work In Cost / Valuation Roads Pontoons and Bridges Land and TOTAL Buildings Opening balance ,609,151,188 52,624,511, ,908, ,759,570,873 Prior year adjustment 66,741,347,316 2,782,678,346 69,524,025,662 Restated balance 1,011,350,498,504 55,407,189, ,908,586 1,067,283,596,535 Additions 701,844,353, ,595,611,226 2,525,343, ,965,307,340 Capitalisation (346,026,523,358) (69,440,624,606) (415,467,147,964) Closing balance ,367,168,328, ,562,176,065 3,051,251,647 1,567,781,755,911 Opening balance ,367,168,328, ,562,176,065 3,051,251,647 1,567,781,755,911 Restated balance 1,367,168,328, ,562,176,065 3,051,251,647 1,567,781,755,911 Additions 1,066,995,851,463 48,503,490,761 7,661,526 1,115,507,003,750 Capitalisation (48,236,602,768) (22,548,562,908) (70,785,165,676) Closing balance ,385,927,576, ,517,103,918 3,058,913,173 2,612,503,593,984 No depreciation is charged on the capital work in progress Progress K 7 Stock 187,542, ,920,570 8 Debtors and prepayments Amounts receivable from - Ministry of Works and Supply Amounts receivable from the National Road Fund Agency and other receivables less provision for doubtful recovery 3,327,538,985 2,388,487, ,584,211, ,474,840, ,911,750, ,863,327,881 9 Advances to contractors and suppliers Amounts advanced to road contractors and consultants less provision for doubtful recovery Suppliers 116,761,541,318 35,764,919,359 (4,171,965,984) 116,761,541,318 31,592,953,375 82,347,800 38,557, ,843,889,118 31,631,510, Staff advances and imprests Advances - Project staff Middle Management Staff Loans, and Advances Project - Special Imprest Salary Advances Senior Staff Loans, and Advances Special Imprest Sponsored Employees 765,000 2,025,196-1,130,556, ,350,056 87,005, ,914,567 1,050,814,280 1,055,766, ,134, ,197,742 Less provision for doubtful recovery (824,258,544) 1,757,042,251 1,713,228,925 14

17 NOTES TO THE FINANCIAL STATEMENTS K 11 Cash and Cash equivalents Cash at hand 253,051, ,790,316 Cash at Bank INVESTRUST ZANACO Long term amounts payable to contractors Amounts payable to contractors Accrued interest on contracts 994,482, ,394,793 9,521,206,703 7,000,219,398 10,515,689,098 7,609,614,191 10,768,740,630 7,734,404, ,280,189,478 16,987,961, ,268,150, ,280,189,478 16,987,961, ,268,150,675 The amount represent obligations to contractors and consultants for work done prior to the creation of the Road Development Agency. The obligations are liquidated periodically by the Ministry of Finance and National Planning who make payments directly to the contractors and consultants. 13 Staff liabilities Salaries and wages payable Staff Leave Staff Gratuities 14 Statutory Liabilities Personal Levy NAPSA PAYE 15 Short term amounts payable to contractors Amount payable to contractors Retentions held 69,788,932 4,436,123,200 5,277,675,827 9,783,587,959 4,762,500 44,457, ,965, ,185, ,577,439, ,822,589, ,400,029,313 73,102,378 3,369,144,000 5,165,168,164 8,607,414, ,156, ,374, ,530, ,945,022,410 78,913,482, ,858,505, Other creditors and accruals Amounts payable to NRFA in respect of weighbridge collections Other creditors Accruals 8,387,486,244 4,762,823, ,687,260 13,757,997,445 5,002,136,288 3,289,431, ,432,753 8,450,001,022 15

18 NOTES TO THE FINANCIAL STATEMENTS 17 Analysis of cash and cash equivalents Cast hand Cash at bank At the end of the year At the beginning of the Changes in cash and cash Year equivalents 253,051, ,790, ,261,216 10,515,689,098 7,609,614,191 2,906,074,907 10,768,740,630 7,734,404,507 3,034,336, Commitments Capital Expenditures Contracted As at 31 December 2009, the Agency had entered into a number of contracts. Due to the accounting arrangements that are in place, management is not able to easily determine the total value of the capital commitments made. The Agency is certain that all such commitments will be fully financed from Government grants through the National Road Fund and from cooperating partners. 19 Taxation The Agency is exempt from the provisions of the Income Tax Act. 20 Comparative figures Where necessary, figures for the previous year have been restated to afford easy comparison with current year figures and to take into account the correction of prior period errors and changes in accounting policies. 21 Financial risk management Interest rate risk The Agency 's exposure to interest rate risk is limited as the Agency does not carry any interest-bearing financial assets or liabilities, save for bank deposits. Credit risk Potential concentrations of credit risk consist mainly of cash and cash equivalents, and receivables. The Road Development Agency limits its counterparty exposures from its cash deposits by only dealing with well established banks. The Agency has a policy of managing credit exposure to contractors and consultants by obtaining bonds and bank guarantees from well established financial institutions. Liquidity risk Liquidity risk arises primarily from an uncertainty in funding and expenditure flows. The Agency manages liquidity risk through the compilation and monitoring of cash flow forecasts. The Agency monitors and controls its expenditures to ensure that they are within budget. The funding for works is done through the Road Fund managed by the National Road Fund Agency, which by its creation collects and maintains a satisfactory level of cash and cash equivalents to meet the funding requirements of all works included in the annual work plan. 16

19 NOTES TO THE FINANCIAL STATEMENTS Subsequent events In May 2010, the Auditor General of the Republic of Zambia released their report following their audit of the Road Development Agency. The report raised a number of issues which have aroused public interest and concern. A number of cooperating partners,who contribute to the basket of funds used to finance the works managed by the Road Development Agency, have also expressed concern to the Government of the Republic of Zambia and have put on hold their financing commitments until the issues they have raised with Government are resolved. As a result of this, the Cooperating Partners have put some of their funding disbursements on hold until further notice. It is not certain what final position will be taken by the cooperating partners. 17

20 K Appendix I - Income Grant Income Project Grants From National Road Fund and Government Revenue Grants From Government Grant from DMMU / RRU Amortisation of capital grant 33,467,687, ,477,542,525 28,712,127,989 29,246,330,361 1,177,889, ,214,148,074 96,309,223, ,571,853, ,033,096,012 Services and charges Equipment Hire Road Infringement Charges Royalties Soil Testing Analysis - Fees Tender Document Sales Supervision income Bill Boards Rental income Private Public Partnership Other 23,256, ,641,000 2,900,000 12,500,000 1,350,000, ,838, ,756,520 91,791,040 1,045,522, ,853, ,670,987 1,231,424,931 11,000,000 45,420,000 3,325,000 66,586, ,276, ,262,095 88,371,964-3,804,079,373 2,405,316,787 Other income Interest Income Foreign exchange differences Profit on disposal of property, plant and equipment 4,086,432 2,155,450 (416,129,914) 1,140,297,939 (2,078,745,274) 18,817,520 (2,490,788,756) 1,161,270,909 Total Income 167,885,143, ,599,683,708 18

21 2009 K 2008 K Appendix II - Administrative Costs Accommodation & Meals Advertising Air Ticket Asset Valuation Cost Assorted Toiletries/Consumables Audit Fees Bank Charges Board Expenses Civil Maintenance. Cleaning Materials and Toiletries Clearance Fees 189,201, ,970,581 12,724,347 20,910,000 1,527,400 63,765, ,088, ,010,385 45,939,278 74,254, , ,663,290 51,479,504 99,184,616 88,455,012 21,008,160 53,000,000 69,197, ,274, ,024,948 63,355,009 Computer Expenses Conference Facilities and Events Consultancy Customs Duty Decorations 636,216,756 1,700,000 93, ,129,546 89,977,634 91,860,000 1,212,000 Depreciation Donation Electricity Equipment Service Freight General Insurance Identity Cards Insurance Interest on long outstanding contractor debts Internet Services Labour Day Celebrations Legal Fees-External Licence Renewals Motor Vehicle Expenses Newspapers Office Beverage and refreshments Other Board Costs Parks and Gardens Participant Fee Photocopying Postage Postbox Rentals Printing-External Professional Membership Protective clothing Provision for doubtful recovery of receivables Other administrative expenses Appendix III 102,998,716,138 6,105,000 55,767, ,997, ,053,267 68,843,904 11,263,500 50,050,000 78,753,348 2,901,832,443 13,379,000 44,785,495 3,080,000 19,700,000 1,618,850 55,737,500 1,950, ,582,979 17,580,649 (3,347,707,440) 29,935,882, ,143,858,106 96,304,460,990 6,720, ,435,774 42,851, ,900 80,478,004 15,365, ,304,746 16,079,154,769 47,275,695 30,150,000 29,413, ,320 3,783,965,525 17,215,000 79,282,614 29,654,668 2,440,000 72,533, ,390 10,555,289 2,460,300 97,950,358 33,867, ,000 4,171,965,984 28,758,585, ,752,202,081 19

22 Appendix III - Other Administrative Expenses K Radio & TV Programmes - 20,228,584 Recruitment Cost 36,523,360 13,900,000 Recruitment Cost- Transportation reimbursements 4,108,000 42,288,500 Sanitary Services 23,771,520 36,957,651 Security Services 438,995, ,559,844 Signs & Posters 7,110,500 2,688,808 Staff Costs 28,560,123,704 26,645,330,419 Staff Training - Local 70,437,169 86,700,050 Stationery 234,315, ,699,279 Stores Stock Adjustment - 342,492,618 Subscriptions - Local 68,425,000 18,954,553 Switchboard Repairs 7,685,000 35,400,000 Telephone Bills 347,695, ,124,704 Telephone Handsets (2,395,453) 7,029,375 Trade Fair Agricultural & Commercial Shows - 180,098,868 Travelling Expenses 40,253,700 71,918,038 Tuition Fees 81,626, ,563,179 Visa Fees 372,500 1,000,000 Water & Sewerage 14,650,535 38,784,643 Women's World Day 2,185,000 6,866,000 29,935,882,939 28,758,585,112 20