ZAMBIAN FINANCIAL SECTOR DEEPENING LIMITED REPORT...

ZAMBIAN FINANCIAL SECTOR DEEPENING LIMITED

REPORT AND FINANCIAL STATEMENTS

for the period 1 April 2018 to 31 March 2019


(Incorporated in Zambia, limited by guarantee)

REPORT AND FINANCIAL STATEMENTS


CONTENTS PAGES

Management, legal advisors,Bankers, Auditors and registered office 1

Report of the directors 2 - 3

Statement of directors responsibilities for financial statements 4

Independent auditor's' report 5 - 6

Financial statements:

Income and expenditure statement 7

Statement of financial position 8

Statement of cash flows 9

Notes to the financial statement 10 - 19

Appendix I - Detailed income and expenditure statement 20

Appendix II -DFID funds-analysis of Budget vs Actual expenditure 21

Appendix III -SIDA funds-analysis of Budget vs Actual expenditure 22

Appendix III -RUFEP funds-analysis of Budget vs Actual expenditure 23


MANAGEMENT, LEGAL ADVISORS,BANKERS, AUDITORS AND REGISTERED OFFICE

MANAGEMENT

- Chief Executive Officer

Ms. Veyrl Adell - Head Women in Financial Inclusion

Ms. Lillian Chilongo - Head of Operations

Mr.Lemmy Manje - Head Financial Services

Mr.Bruce Mwamba Mushipi - Finance Manager

Mr. Jasper Hatwiinda

-

Floyd Mwansa -

LEGAL ADVISORS

BANKERS

AUDITORS

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

53 Leopards Hill Road

Kabulonga,

Lusaka

KPMG Chartered Accountants

6th floor Sunshare Towers

Cnr Lubanseshi/Katima Mulilo roads,

Olympia Park

Lusaka

Zambia

Ms. Harriet Elizabeth Wilkinson

Isaac and Partners

Plot 3792,Kwacha road

Olympia

Lusaka

Zambia

Barclays Bank Zambia Plc

Elunda Park, Stand Nos 4643 & 4644,

Addis Ababa Roundabout, Lusaka

Zambia National Commercial Bank Plc

Plot 2118/2119 Cairo road

Lusaka

Zambia

Head Measuring and Communicating Results(Resigned 30

November 2018)

Director Analytics

1


REPORT OF THE DIRECTORS

CONSTITUTION

BACK GROUND INFORMATION, PRINCIPAL ACTIVITIES AND OBJECTIVES

FINANCIAL RESULTS

NON CURRENT ASSETS

GBP GBP

2019 2018

Fixtures and fittings 1,675 3,164

Motor vehicles 33,796 0

Office equipment 14,599 26,152

Tangible assets 50,070 29,316

Intangible asset - -

DIRECTORS

The Directors who held office during the year were:

Dr. Caleb Fundanga - Chairperson

Ms. Katebe Monica Musonda - Board Member

Justice Nicola Sharpe Phiri - Board Member

Ms.Chileshe Kapwepwe - Board Member (Appointed 8 November 2018)

Mr.Victor Kanombola Mushala - Board Member (Appointed 10 January 2019)

Ms. Harriet Elizabeth Wilkinson - Chief Executive Officer

Ms.Dolika Banda - Board Member (Resigned 30 June 2018)

Mr.Hennue Bester - Board Member (Resigned 30 June 2018)

EMPLOYEES

The Board of Directors present their report and the financial statements for the year 1 April 2018 to 31 March

2019.

The Company was incorporated on 16 February 2016 under the Companies Act of Zambia and is limited by

guarantee. The guarantors are the Department for International Development (DFID) and Corpus Globe Legal

Practitioners.

Zambia Financial Sector Deepening Limited (FSDZ) is a Zambian nonprofit company providing information,

innovation, and impact to increase financial inclusion. It seeks to expand and deepen the financial market so all

Zambians can benefit from financial services. It works with financial service providers, policy makers and civil

society to make Zambia’s financial sector more robust, efficient and, above all, inclusive.FSDZ enjoys the active

support of financing partners Department for International Development (DFID), Swedish International

Development Cooperation Agency(SIDA), Rural Finance Expansion programme(RUFEP) and Comic Relief.

FSDZ focuses its work in the areas of rural and household financial services, small enterprise finance, digital

financial services, and research and knowledge management.

Refer to pages 7 to 20 of the financial statements.

The additions during the year amounted to GBP 50,070 (2018:GBP 29,316) as disclosed in note 7 of the financial

statements and comprised the following:

The average number of employees during each month of the year was less than 100 (2018:less than 100).The

total remuneration paid to employees during the year was GBP 1,073,691(2018:GBP1,045,197)

2


REPORT OF THE DIRECTORS (CONTINUED)

HEALTH AND SAFETY OF EMPLOYEES

DONATIONS

RESEARCH AND DEVELOPMENT

AUDITORS

The Directors are aware of their responsibilities towards the health and safety of employees and have accordingly

put appropriate measures in place to safeguard the health and safety of employees.

The Company made no donation during the year under review (2019:Nil).

There was no research conducted to advance financial inclusion during the period

The Company's Auditors, Messrs. KPMG Chartered Accountants, have indicated their willingness to continue in

office. A resolution proposing their reappointment and authorising the Directors to fix their remuneration will be

put to the Annual General Meeting.

3


Approval of the financial statements

DIRECTOR DIRECTOR

STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR FINANCIAL STATEMENTS

The auditor is responsible for reporting on whether the financial statements give a true and fair view in

accordance with the applicable financial reporting framework, described above.

The financial statements of Zambian Financial Sector Deepening Limited, as identified in the first paragraph,

were approved by the board of directors on XX June 2019 and are signed on its behalf by:

The directors are responsible for the preparation of financial statements that give a true and fair view of

Zambian Financial Sector Deepening Limited (“the Company”), comprising the statement of financial position

as at 31 March 2019, and the statements of income and expenditure and cash flows for the year then ended,

and the notes to the financial statements, which include a summary of significant accounting policies and

other explanatory notes, in accordance with International Financial Reporting Standards, and the requirements

of the Companies Act of Zambia. In addition, the directors are responsible for preparing the directors’ report.

The directors are also responsible for such internal control as they determine is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud or error

and for maintaining adequate accounting records and an effective system of risk management.

The directors have made an assessment of the Company’s ability to continue as a going concern and have no

reason to believe that the business will not be a going concern in the year ahead.

4

Independent Auditor’s Report

To the members of Zambian Financial Sector Deepening Limited

Report on the Audit of the Financial Statements

Opinion

The directors are responsible for the other information. The other information comprises the Report of the Directors as required by the

Companies Act of Zambia, the statement of directors' responsibilities for the preparation of financial statements and Appendices I – III set

out on pages 22 to 24. The other information does not include the financial statements and our auditor’s report thereon.

We have audited the financial statements of Zambian Financial Sector Deepening Limited (“the Company”) set out on pages 7 to 21,

which comprise the statement of financial position as at 31 March 2019, and the statement of income and expenditure and the statement

of cash flows for the year then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of, the financial position of Zambian Financial Sector Deepening

Limited as at 31 March 2019, and its financial performance and cash flows for the year then ended in accordance with International

Financial Reporting Standards and the requirements of the Companies Act of Zambia.

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 Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants

(IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA code. We believe that the audit

evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of

assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider

whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise

appears to be materially misstated. If, based on the work we have performed, 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 the Directors for the Financial Statements

The directors are responsible for the preparation of the financial statements that give a true and fair view in accordance with International

Financial Reporting Standards and the requirements of the Companies Act of Zambia, and for such internal control 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.

In preparing the financial statements, the directors are responsible for assessing the Company’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 Company or to cease operations, or have no realistic alternative but to do so.

5

Auditor’s Responsibilities for the Audit of the Financial Statements

●

●

●

●

Report on Other Legal and Regulatory Requirements

●

●

KPMG Chartered Accountants June 2019

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 judgement and maintain professional scepticism throughout the

audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform

audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our

opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud

may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence

obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’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 Company to cease to continue as a going concern.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit

findings, including any significant deficiencies in internal control that we identify during our audit.

In accordance with Section 259(3) of the Companies Act of Zambia(the Act), we report that, in our opinion:

There is no relationship,interest or debt we have with the Company; and

there was no serious breaches of corporate governance principles or practices by the Directors.In the absence of the Act specifying

the criteria for purposes of reporting on serious breaches of corporate governance principles or practices by the Directotrs,as

required by section 259(3)(b) of the Act,we express our opinion based on the corporate governance provisions of the Act,Part IIV-

Corporate Govance of the Companies Act of Zambia No. 10 of 2017

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.

6


INCOME AND EXPENDITURE STATEMENT

for the year 1 April 2018 to 31 March 2019

12 Months to

31 March

12 Months to

31 March

NOTES 2019 2018

GBP GBP

Revenue 4 3,961,665 3,639,324

EXPENDITURE

Employee benefits expense (1,073,692) (1,045,197)

Other operating expenses (2,975,418) (2,611,485)

Exchange gains 9 87,445 17,358

Total expenditure (3,961,665) (3,639,324)

SURPLUS OF INCOME OVER EXPENDITURE - -

The notes on pages 10 to 21 form part of these financial statements.

7


STATEMENT OF FINANCIAL POSITION

at 31 March 2019

NOTES 2018 2017

ASSETS GBP GBP

Non current assets

Equipment 7 52,961 42,073

Intangible assets 8 3,453 6,907

Total non current assets 56,414 48,980

Current assets

Receivables 11 204,988 168,301

Cash and cash equivalents 13 1,747,860 966,624

Total current assets 1,952,848 1,134,925

TOTAL ASSETS 2,009,262 1,183,905

LIABILITIES

Current liabilities

Sundry payables 12 676,412 297,964

Deferred income 5 1,332,850 885,941

TOTAL LIABILITIES 2,009,262 1,183,905


DIRECTOR DIRECTOR

The responsibilities of the Company's Directors with regard to the preparation of the financial statements are set

out on page 4. The financial statements were approved by the Directors and authorised for issue on XX June

2019 and were signed on its behalf by:

8


STATEMENT OF CASH FLOWS


12 Months

to 31 March

NOTES 2019 2018

GBP GBP

CASH FLOWS FROM OPERATING ACTIVITIES

Adjusted for:

- Depreciation expense 7 39,183 23,140

- Amortisation expense 8 3,454 3,454

Operating cash flows before working

capital movements 42,637 26,594

Changes in:

- Receivables (36,687) 484,575

- Sundry payables 378,447 (288,428)

Cash generated from operations 384,397 222,741

INVESTING ACTIVITIES

Acquisition of equipment 7 (50,070) (29,316)

FINANCING ACTIVITIESGrants received from Donors 5 4,408,574 3,898,044Deferred income released to income 5 (3,961,665) (3,639,324)

446,909 258,720

Net increase in cash and cash equivalents 334,327 193,425

Cash and cash equivalents at beginning

of the period 966,624 514,479

Cash and cash equivalents at end of the period 1,747,860 966,624

Comprising:

Cash and cash equivalents 13 1,747,860 966,624


9


NOTES TO THE FINANCIAL STATEMENTS


1. GENERAL INFORMATION

2.

•

•

•

3.

Where appropriate, comparative figures have been reclassified to afford meaningful comparison with the

current year.

Zambian Financial Sector Deepening Limited (FSDZ) is a Zambian nonprofit company providing

information, innovation, and impact to increase financial inclusion. It seeks to expand and deepen the

financial market so all Zambians can benefit from financial services. It works with financial service

providers, policy makers and civil society to make Zambia’s financial sector more robust, efficient and,

above all, inclusive. FSDZ enjoys the active support of financing partners Department for International

Development (DFID),Swedish International Development Cooperation Agency (SIDA), Rural Finance

Expansion programme(RUFEP) and Comic Relief

FSDZ focuses its work in the areas of rural and household financial services, small enterprise finance,

digital financial services, and research and knowledge management.

FSDZ supports both public and private sector efforts to develop an efficient and vibrant financial sector that

offers a wider range of financial services through diverse channels to significantly more households and

micro, small and medium enterprises. We do this by facilitating linkages and coordination among

consumers, financial service providers, civil society organizations, government, and other key stakeholders

to support the development of a financial market system that works better for poor urban and rural

communities. FSDZ is not a market actor; it does not provide services directly but rather provides

temporary and catalytic support to market actors.

STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION

The financial statements of the Company have been prepared in accordance with, and comply with the

requirements of International Financial Reporting Standards (IFRS) and the Companies Act of Zambia. The

financial statements are presented in British Pound Sterling (GBP), which is the functional and reporting

currency of the Company. The accounting policies have been consistently applied to the year presented.

In preparing these financial statements, management has made judgments, estimates and assumptions that affect the

application of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expenses.

Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.

Revisions to estimates are recognised prospectively

The financial statements have been prepared on the basis of historical cost, except for certain financial

instruments that are measured at fair value at the end of each reporting period as explained in the

accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and

services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date, regardless of whether that price is

directly observable or estimated using another valuation technique. In estimating the fair value of an asset

or a liability, the Company takes into account the characteristics of the asset or liability if market

participants would take those characteristics into account when pricing the asset or liability at the

measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is

determined on such a basis, except for share-based payment transactions that are within the scope of IFRS

2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities

to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3

based on the degree to which the inputs to the fair value measurements are observable and the

significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that

the entity can access at the measurement date;

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the

asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs for the asset or liability.

The financial statements are presented in British Pound Sterling (GBP).

The preparation of financial statements in conformity with IFRS requires the use of estimates and

assumptions. It also requires management to exercise its judgment in the process of applying the

Company’s accounting policies. The areas involving higher degree of judgment or complexity, or where

assumptions and estimates are significant to the financial statements are disclosed in note 3.

The principal accounting policies are set out on pages 17 to 21.

Use of judgements and estimates

10


NOTES TO THE FINANCIAL STATEMENTS (continued)


4 Changes in significant accounting policies

4.1 IFRS 15; Revenue from Contracts with Customers

4.2 IFRS 9; Financial Instruments

Original

carrying

amount

under IAS 39

New

carrying

amount

under IFRS

9966,624

168,301

966,624

168,301

1,134,925

297,964

1,134,925

297,964

297,964 297,964

(i) Impairment of financial instruments

(ii) Transition

5 REVENUE

Amounts received from:2019 20181073691

GBP GBP

Department for International Development (DFID) 3,232,247 2,786,711

Swedish International Development Cooperation Agency (SIDA) 633,016 852,613

Rural Finance Expansion Programme(Rufep) 96,402 -

3,961,665 3,639,324

IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities.

The Company has applied IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments from

1 January 2018. Whilst the effect on the Company’s financial statements is not material, we have elected to disclose the analysis

performed and considerations made in applying the new standards. A number of other new standards are also effective from 1

January 2018 but they are not applicable to the Company and do not have a material effect on the Company’s financial statements

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced

IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. Under IFRS 15, revenue is recognised when a

customer obtains control of the goods or services. Determining the timing of the transfer of control – at a point in time or over

time – requires judgment.

The Company is non-profit and limited by guarantee providing information, innovation and impact to increase financial inclusion.

The Company has entered into a grant agreement with 4 international donors mainly DFID and they use IAS 20 Accounting for

Government Grants and Disclosure of Government Assistance. Following this review, the Company has concluded that the IFRS 15

has no impact on its revenue recognition and no adjustment in the financial statements is required.

IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell

non-financial items. The standard replaces IAS 39 Financial Instruments: Recognition and Measurement.

IFRS 9 contains three principal classification categories for financial assets: measure at amortised costs, fair value through other

comprehensive income and fair value through profit or loss. The classification of financial assets under IFRS 9 is generally based

on the business model in which a financial asset is managed and its contractual cash flow characteristics.

For assets in the scope of the IFRS 9 impairment model, impairment losses are generally expected to increase and become more

volatile. The Company has determined that the application of IFRS 9’s impairment requirements at 1 January 2018 does not result

in an additional allowance for impairment.

The adoption of IFRS 9 has not had a significant effect on the Company’s accounting policies related to receivables that are

managed on an amortised cost basis.

The following table and the accompanying notes below explain the original measurement categories under IAS 39 and the new

measurement categories under IFRS for each class of the Company’s financial assets and financial liabilities as at 1 January 2018.

GBP Original

Classification

under IAS39

New Classification

under IFRS 9

Financial assets

Cash and Cash

Equivalents

Other receivables

Loans and receivables


Amortised cost

Amortised cost

Total

Financial liabilities

Sundry payables Amortised cost Amortised cost

Total

IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (ECL) model. The new impairment model applies

to financial assets measured at amortised cost, contract assets and debt investments at FVOCI, but not to investments in equity

instruments. Under IFRS 9, credit losses are recognised earlier than under IAS 39.

Changes in accounting policies resulting from the adoption of IFRS 9 have been applied retrospectively. The company has used an

exemption not to restate comparative information for prior periods with respect to classification and measurement (including

impairment) requirements. Accordingly, the information presented for 2017 does not generally reflect the requirements of IFRS 9,

but rather those of IAS 39.

This is income raised by Financial Sector Deepening Zambia (FSDZ) either through responding to calls for proposal or through

donors requiring FSDZ to carry out a specific project. The funding is based on valid contracts in place or agreements stipulating

the terms and conditions for the usage of funds.

11




5.1 DEFERRED INCOME

COMIC

RELIEF RUFEP DFID SIDA TOTAL

Analysed as follows: GBP GBP GBP GBP GBP

Balance as at 1 April 2018 - 170,122 96,006 619,813 885,941

Income received during the year ##### - 3,443,648 784,926 4,408,574

Deferred income released to income (Note 5) - (96,402) (3,232,247) (633,016) (3,961,665)

Balance as at 31 March 2019 180,000 73,720 307,407 771,723 1,332,850

Analysed as follows:Balance as at 31 March 2018 - - 627,221 627,221

Income received during the year 170,122 2,882,717 845,205 3,898,044

Deferred income released to income (Note 5) - (2,786,711) (852,613) (3,639,324)

Balance as at 31 March 2018 170,122 96,006 619,813 885,941

6. INCOME TAX

7. EQUIPMENT

Fixtures Motor Office

& Fittings vehicles equipment TotalGBP GBP GBP GBP

Cost

Balance at 1 April 2017 22,445 35,123 14,228 71,796

Acquisitions 3,164 26,152 29,316

Balance at 31 March 2018 25,609 35,123 40,380 101,112

Balance at 1 April 2018 25,609 35,123 40,380 101,112

Acquisitions 1,675 33,796 14,599 50,070

Balance at 31 March 2019 27,284 68,919 54,979 151,182

Depreciation Balance at 1 April 2017 11,223 17,562 7,114 35,899

Charge for the period 4795 5,854 12,492 23,141

Balance at 31 March 2018 16,018 23,416 19,606 59,040

Balance at 1 April 2018 16,018 23,416 19,605 59,039

Charge for the year 5,354 17,119 16,710 39,183

Balance at 31 March 2019 21,372 40,535 36,315 98,222

Carrying value

At 31 March 2019 5,912 28,384 18,664 52,961

At 31 March 2018 9,591 11,707 20,775 42,073

8. INTANGIBLE ASSETS 2019 2018

GBP GBP

Cost

Balance at 1 April 20,722 20,722

Balance at 31 March 20,722 20,722

Accumulated amortisation

Balance at 1 April (13,815) (10,361)

Amortisation expense (3,454) (3,454)

Balance at 31 March (17,269) (13,815)

Carrying amounts:

Balance at 31 March 3,453 6,907

Accumulated amortisation

The following useful lives are used in the calculation of amortisation:

MicroPay payroll and Sun Systems software 3 years

Significant intangible assets

The intangible assets consists of Micropay Payroll and Sun Systems software.

The Company has applied to the Zambia Revenue Authority (ZRA) for tax exemption under the Public Benefit Organisation status.

At the date of these financial statements, the responses had not yet been provided. However, the Company's tax payable to ZRA if

the exemption is not granted is ZMK 163,502 (2018: ZMK 149,573).

In the opinion of the Directors there are no major components of plant and equipment which have different useful lives that would

require to be depreciated separately and allocated separate residual values. The titles of the motor vehicles are in the name of

DFID.

12




2019 2018

GBP GBP

9. EXCHANGE GAINS

Net foreign exchange gains (87,445) (17,358)

10. CAPITAL COMMITMENTS

11. RECEIVABLES

GBP GBP

Grants receivable from partners 124,789 89,810

Prepayments 23,742 4,697

Staff advances 21,614 15,600

Rental deposit 13,595 12,094

Other receivables 21,248 46,100

204,988 168,301

12. SUNDRY PAYABLES

GBP GBP

Creditors and accruals 581,889 238,212

Employee related accruals 94,523 59,752

676,412 297,964

13. CASH AND CASH EQUIVALENTS

Barclays Bank ZMW account 157,386 47,516

Barclays Bank USD account 46,990 157,652

Barclays Bank GBP account 163,678 133,152

Barclays Bank ZMW account-Pension 55,448 68,656

ZANACO ZMW account 56,284 73,049

ZANACO GBP account 1,266,200 481,347

Credit card Chief Executive Officer 1,874 2,247

Credit card Chief Operations Officer - 3,005

1,747,860 966,624

The exchange gains arises from the translation of the bank and cash balances denominated in

Zambian Kwacha and US Dollar.

The Company had no capital commitments authorised and contracted by the

directors.(2018:Nil)

Receivables principally comprise expenses incurred on behalf of other partners. Grants

Receivable is inclusive of amounts receivable from Catholic Relief Services and Restless

Development Zambia.

No impairment provision was recognized as at 31 March 2019.

Sundry payables principally comprise amounts outstanding in respect of employee related

accruals and accruals in respect of operating costs. The make up of the sundry payables at the

reporting date was as follows:

13




14. CONTINGENT LIABILITIES AND COMMITMENTS

15.

2019 2018

Financial assets: GBP GBP

- Receivables(less prepayments) 181,246 163,604

- Cash and cash equivalent 1,747,860 966,624

1,929,106 1,130,228


- Sundry payables (676,412) (297,964)

Net exposure 1,252,694 832,264

Financial assets

2019 2018

GBP GBP

Zambian Kwacha 270,991 194,474

USD 46,990 157,652

Credit risk management

GBP GBP

Receivables (less prepayments) 181,246 163,604

Cash and cash equivalent 1,747,860 966,624

Net exposure 1,929,106 1,130,228

Financial risk management objectives

The Company had no known material contingent liabilities as at 31 March 2019 (2018:Nil)

FINANCIAL INSTRUMENTS

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria recognition, the basis of measurement and the basis

on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed

in note 21 to the financial statements.

Categories of financial instruments

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting

period are as follows.

Management monitors and manages the financial risks relating to the operations of the Company. These include market risk (including

currency risk, fair value interest risk and price risk), credit risk, liquidity risk and cash flow interest risk.

The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risk

The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The

Company does not enter into any derivative financial instruments to manage its exposure to interest rate and foreign currency risk, including

forward foreign exchange contracts to hedge exchange rate risk.

There has been no change to the Company’s exposure to market risks or the manner in which it manages and measures the risk.

Foreign currency risk management

The Company undertakes certain transactions denominated in foreign currency (such as the Zambian Kwacha and US Dollar). Hence,

exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters as approved by the

Board of Directors.

Credit risk management refers to the risk that a counterparty will default on its contractual obligations resulting in financial

loss to the Company. The Company is exposed to credit risk in respect of amounts due from related parties and trade and

other receivables.

The Company’s maximum exposure to credit risk is analysed below:

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15.

- Receivables (less prepayments) 181,246 - 181,246

- Cash and cash equivalents 1,747,860 - 1,747,860

1,929,106 - 1,929,106

Period ended 31 March 2018

1 - 3 3 months

months to 1 year Total

Financial liabilities GBP GBP GBP

- Sundry payables (297,964) - (297,964)

Financial assets

- Receivables (less prepayments) 163,604 - 163,604

- Cash and cash equivalents 966,624 - 966,624

1,130,228 - 1,130,228

16. FAIR VALUE MEASUREMENTS

2019Carrying

amount Fair value

GBP GBP

Financial assets

- Receivables (less prepayments) 181,246 181,246- Cash and cash equivalents 1,747,860 1,747,860

Total 1,929,106 1,929,106

Financial liabilities- Sundry payables (676,412) (676,412)

2018

Carrying

amount Fair value

GBP GBP

Financial assets

- Receivables (less prepayments) 163,604 163,604- Cash and cash equivalents 966,624 966,624

Total 1,130,228 1,130,228


- Sundry payables (297,964) (297,964)

FINANCIAL INSTRUMENTS (CONTINUED)

The information set out below provides information about how the Company determines fair values of various financial assets and financial

liabilities.

This hierarchy requires the use of observable market data when available. The Company considers relevant and observable market prices in its

valuations where possible.

Fair value of the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis

There were no financial assets and liabilities that are measured at fair value on a recurring basis during the period.

Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair value

disclosures are required)

Except as detailed in the following table, the directors consider that the carrying amounts of financial assets and financial liabilities recognised

in the financial statements approximate their fair values due to their short term nature.

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16. FAIR VALUE MEASUREMENTS (CONTINUED)

Level 1 Level 2 Level 3 Total

GBP GBP GBP GBP

- - 181,246 181,246

- - (676,412) (676,412)

Level 1 Level 2 Level 3 Total

GBP GBP GBP GBP

- - 163,604 163,604

- - (586,392) (586,392)

17. Board of Directors

2019 2018

GBP GBP

307,407 619,813

771,723 96,006

73,720 170,122

180,000 -1,332,850 885,941

18.

Fair value hierarchy as at 31 March 2019

Fair value hierarchy as at 31 March 2018

Financial assets

- Receivables (less prepayments)

Financial liabilities:

Financial liabilities held at amortised cost:

- Sundry payables

Financial assets

- Receivables (less prepayments)

Financial liabilities:

Financial liabilities held at amortised cost:

- Sundry payables

Payment to directors for discharging their duties as directors of the Company amounted to GBP43,233 (2018: GBP38,000)

Donors

Department for International Development (DFID)

Swedish International Development Cooperation Agency (SIDA) Rural Finance Expansion Programme (RUFEP)

Comic Relief

CAPITAL MANAGEMENT

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide the required service on information, innovation and impact to increase financial inclusion as required by the donors.

The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as equity plus net debt.

In the opinion of the Directors, the carrying amounts of the above payables and accrued expenses approximate to fair values.

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19.

20

20.1

IFRS 16 Leases

Other standards (continued)

·IFRIC 23 Uncertainty over tax treatments;

·Prepayment Features with Negative Compensation (Amendments to IFRS 9);

·Long-term Interest in Associates and Joint Venture (Amendments to IAS 28);

·Plan Amendment, Curtailment or Settlement (Amendments to IAS 19);

·Annual Improvements to IFRS Standards 2015-2017 Cycle- various standards;

·Amendments to References to Conceptual Framework in IFRS Standards; and

·IFRS 17 Insurance Contracts.

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21.1 Revenue

21.2 Expenditure

21.3 Taxes

A number of new standards, amendments to standards and interpretations are effective for annual

periods beginning on or after 1 January 2019 and have not been applied in preparing these financial

statements. Those which may be relevant to the Company are set out below. The Company does not

plan to adopt these standards early. These will be adopted in the period that they become mandatory

unless otherwise indicated:

EVENTS AFTER THE REPORTING DATE

There have been no material facts or circumstances that have occurred between the reporting date and

the date of these financial statements that require disclosure in or adjustment to the financial

statements.

New standards, amendments and interpretations

New standards, amendments and interpretations in issue but not yet

effective for the year ended 31 December 2018

The standard is effective for annual periods beginning on or after 1 January 2019. Early adoption is

permitted for entities that apply IFRS 15 Revenue from Contracts with Customers at or before the date

of initial application of IFRS 16.

IFRS 16 introduces a single, on-balance lease sheet accounting model for lessees. A lessee recognises a

right-of-use asset representing its right to use the underlying asset and a lease liability representing its

obligation to make lease payments. There are optional exemptions for short-term leases and leases of

low value items. Lessor accounting remains similar to the current standard – i.e. lessors continue to

classify leases as finance or operating leases.

IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an

Arrangement contains a Lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating the

Substance of Transactions Involving the Legal Form of a Lease.

The following amended standards and interpretations are not expected to have a significant impact on

the Company’s financial statements:

SIGNIFICANT ACCOUNTING POLICIES

Revenue represents funds receivable from Department for International Development and Swedish

International Development Cooperation Agency. Grant income is recognised where there is reasonable

assurance that the grant will be received and all attached conditions will be complied with. When the

grant relates to an expense item, it is recognised as income on a systematic basis over the periods that

the related costs, for which it is intended to compensate, are expensed. When the grant relates to an

asset, it is recognised as income in equal amounts over the expected useful life of the related asset.

These relate to expenses incurred on specific programme activities and are included in income and

expenditure in the year in which they accrue.

These include PAYE and WHT on consultancy fees. The PAYE is deducted from all employees and

consultancy fees are paid less WHT. PAYE and WHT is then remitted to ZRA per the regulations.

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21.4 Equipment

3 years

3 years

Varying by nature (1-3 years)

21.8 Financial instruments

(i) Classification and subsequent measurement

Financial assets – Policy applicable from 1 January 2018

On initial recognition, a financial asset is classified as measured at amortised cost.

Depreciation is charged to write off the cost of property and equipment over their expected useful lives

on a straight line basis.

Equipment are stated in the statement of financial position at cost less accumulated depreciation and

any accumulated impairment losses.

(i) Recognition and Measurement

Fixtures and fittings

Motor vehicles

Office equipment

The estimated useful lives, residual values and depreciation method are reviewed at the end of each

reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of equipment is derecognised upon disposal or when no future economic benefits are expected

to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an

item of equipment is determined as the difference between the sales proceeds and the carrying amount

of the asset and is recognised in the period in which it occurs.

The Company contributes to the National Pension Scheme ("NAPSA") for its eligible employees as

provided for by law. Membership is compulsory and monthly contributions by both employer and

employees are made. The employer's contribution is charged to income and expenditure in the year in

which it arises.

Receivables are initially recognised when they are originated. All other financial assets and financial

liabilities are initially recognised when the Company becomes a party to the contractual provisions of the

instrument.

A financial asset (unless it is a receivable without a significant financing component) or financial liability

is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly

attributable to its acquisition or issue. A receivable without a significant financing component is initially

measured at the transaction price.

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes

its business model for managing financial assets, in which case all affected financial assets are

reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not

designated as at FVTPL:

- it is held within a business model whose objective is to hold assets to collect contractual cash

flows; and

- its contractual terms give rise on specified dates to cash flows that are solely payments of principal

and interest on the principal amount outstanding.

On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the

requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or

significantly reduces an accounting mismatch that would otherwise arise.

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Financial assets at amortised cost

Financial assets – Policy applicable before 1 January 2018 (continued)

The Company classified its financial assets into one of the following categories:

- loans and receivables;

- and at FVTPL, and within this category as:

- held for trading;

- derivative hedging instruments;

- or designated as at FVTPL.


Financial liabilities – Classification, subsequent measurement and gains and losses

iii) Derecognition

Financial assets

(iii) Derecognition (continued)


Offsetting

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified

as at FVTPL if it is classified as held‑for‑trading, it is a derivative or it is designated as such on initial

recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including

any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently

measured at amortised cost using the effective interest method. Interest expense and foreign exchange

gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in

profit or loss.

Financial assets – Subsequent measurement and gains and losses: Policy applicable from 1

January 2018

These assets are subsequently measured at amortised cost using the effective interest method. The

amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and

impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or

loss.

Financial assets – Subsequent measurement and gains and losses: Policy applicable before 1

January 2018

Measured at amortised cost using the effective interest method.


The Company derecognises a financial asset when the contractual rights to the cash flows from the

financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in

which substantially all of the risks and rewards of ownership of the financial asset are transferred or in

which the Company neither transfers nor retains substantially all of the risks and rewards of ownership

and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognised in its statement of

financial position, but retains either all or substantially all of the risks and rewards of the transferred

assets. In these cases, the transferred assets are not derecognised.

The Company derecognises a financial liability when its contractual obligations are discharged or

cancelled, or expire. The Company also derecognises a financial liability when its terms are modified and

the cash flows of the modified liability are substantially different, in which case a new financial liability

based on the modified terms is recognised at fair value

On derecognition of a financial liability, the difference between the carrying amount extinguished and

the consideration paid (including any non- cash assets transferred or liabilities assumed) is recognised

in profit or loss.

Financial assets and financial liabilities are offset and the net amount presented in the statement of

financial position when, and only when, the Company currently has a legally enforceable right to set off

the amounts and it intends either to settle them on a net basis or to realise the asset and settle the

liability simultaneously.

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APPENDIX I - DETAILED INCOME AND EXPENDITURE STATEMENT


2,019

GBP

INCOME

Revenue 3,961,665

FINANCE INCOME

Exchange gains 87,445

4,049,110

EXPENDITURE

Consultancy 693,861

Employee benefits expense 1,073,692

Partners payments and resource fees 1,577,426

Rent 41,806

Board expenses 178,146

Local and international travel 130,772

Staff welfare costs, training and workshop 72,971

Telephone, internet, fax and postage 30,147

Depreciation/amortisation 42,637

Equipment expenses 53,977

Bank charges 10,743

Audit/accountancy 92,521

Printing and stationary 33,340

General expenses 8,279

Legal and statutory fees 8,792

4,049,110

- SURPLUS OF INCOME OVER EXPENDITURE

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APPENDIX II - DFID Funds -Analysis of Budget and Actual expenditure


Budget Expenses

GBP GBPProgramme Budget-DFID

Policy and digital financial services 771,196 772,665

Supply of financial services 1,426,592 1,250,532

Research and knowledge management 212,414 199,566

MRM and communications 406,680 399,448

TOTAL Programme 2,816,882 2,622,211

Governance 120,680 75,755

Operational costs 249,354 444,638

Fiduciary and financial management 248,609 133,042

Capital expenditure 64,475 42,636

Exchange gains - (86,035)

TOTAL Administration 683,118 610,036

3,500,000 3,232,247Total

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APPENDIX I1I - SIDA Funds -Analysis of Budget and Actual expenditure


Budget Expenses

GBP GBPProgramme Budget-SIDA

Financial inclusion and capabilities for women and youth 394,510 358,906

Financial Education through School Curr and Groups 231,337 72,189

Staff, capacity, dissemination, consultant support 232,030 190,725

Overhead contribution 50,000 11,591

Exchange gains - (395)

TOTAL Programme 907,877 633,016

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APPENDIX IV - RUFEP Funds -Analysis of Budget and Actual expenditure


Budget Expenses

GBP GBPProgramme Budget-RUFEP

Support pilots and scale-up of RAF initiatives 148,482 43,424

Build financial capabilities of smallholders and poor rural households 48,476 53,981

Exchange gains - (1,003)

TOTAL Programme 196,958 96,402

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ZAMBIAN FINANCIAL SECTOR DEEPENING LIMITED REPORT...

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