I I I I GHANA CLIMATE INNOVATION CENTRE (GCIC) I I I I I I I I I FINANCIAL STATEMENTS 31 DECEMBER 2018 I I I I I I I 1 I GHANA CLIMATE INNOVATION CENTRE (GCIC) REPORT AND FINANCIAL STATEMENTS I I INDEX I Page I Project Information 2 I Report of the Management 3-4 I Independent Auditor's Report 5-7 I I Statement of Income and Expenditure 8 I Statement of Changes in Net Assets 8 I Statement of Financial Position 9 I Notes forming part of the Financial Statements 10-15 I I I I I I l 2 I GHANA CLIMATE INNOVATION CENTRE (GCIC) [ PROJECT INFORMATION I BOARD OF ASHESI UNIVERSITY Pearl Esua-Mensah- Chairperson I Patrick Awuah- President Sangu Delle- Member Patrick Nutor- Member Mona Boyd- Member I Charles Cofie- Member Tamar Di Franco- Member Yawa Hansen-Quao- Member I Harriette Amissah-Arthur- Member I ADVISORY BOARD Hon. Ms Patricia Appiagyei, MP Lucy Quist Ebenezer Arthur I Rep. of the Danish Embassy Rep. of the Royal Netherlands Embassy I CONSORTIUM MEMBERS Ashesi University College I Ernst & Young (EY Ghana) SNV United Nations University Institute for Natural Resources in Africa I I SOLICITOR Anna Bannennan-Ritcher AB Executive & Law Offices D58314 So. Liberia Road, Tudu I P. 0. Box MB219 Accra, Ghana I REGISTERED OFFICE Ashesi University 1 University Avenue I Berekuso, Eastern Region I BANKER Ecobank Ghana Limited I AUDITOR KPMG 13 Yiyiwa Drive, Abelenkpe I PO BOX GP 242 Accra I 3 I GHANA CLIMATE INNOVATION CENTRE (GCIC) REPORT OF THE ASHESI BOARD I The Ashesi Board presents their report and the financial statements for the year ended 31 December 2018. I ASHESI BOARD' RESPONSIBILITY STATEMENT The Ashesi Board is responsible for the preparation of financial statements of the Ghana Climate Innovation I Centre (GCIC), comprising the statement of financial position at 31 December 2018, and the statements of income and expenditure and net assets for the period then ended, and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, in accordance with the policies discussed in the note 2 to these financial statements. I The Ashesi Board is also responsible for such internal control as the Ashesi Board determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud I or error, and for maintaining adequate accounting records and an effective system of risk management. The Ashesi Board has made an assessment of the ability of the Centre to continue as a going concern based on I the source of funding below and have no reason to believe that the business will not be a going concern in the year ahead. I FINANCIAL STATEMENTS/BUSINESS REVIEW The financial results of the Centre for the year ended 31 December 2018 is reflected in the Centre's financial statements. The Ashesi Board considers the state of the Centre to be satisfactory. I NATURE OF BUSINESS/PRINCIPAL ACTIVITIES Ghana Climate Innovation Centre (GCIC) is a project funded by the Dutch and Danish Governments through I the World Bank to establish local institutional capacity to support Ghanaian entrepreneurs and new ventures involved in developing profitable and locally-appropriate solutions to climate change mitigation and adaptation. Through its programs, activities and financing, the GCIC and its network of Partners and I stakeholders will provide a country-driven approach to solving climate, energy and resource challenges and support economic development through job creation. The USD 8.5 M program will provide targeted support, mentoring, training and funding facilitation for up to 85 companies in Ghana over 5 years. I The Centre's business model and associated services are dependent on, and tailored to, the local market. To identify market needs, opportunities and challenges from a local perspective, infoDev developed the GCIC I business plan through a detailed analysis and an extensive in-country, multi-stakeholder engagement process. Over 250 stakeholders from the region were convened for a series of workshops, focus groups, surveys and interviews to explore the key barriers to climate technology innovation and entrepreneurship in Ghana and the design of appropriate solutions to these barriers in the form of the GCIC's programs, services I and support. Based on the design process of the GCIC model, the GCIC offers the following Service Lines: I Entrepreneurship and Venture Acceleration • Business advisory, mentoring, access to professional services I • • Technical training and skills development Seminars, events and networking opportunities • Provision of office space and services for entrepreneurs and start-ups I • A women's entrepreneurship and transformation program I I 4 I GHANA CLIMATE INNOVATION CENTRE (GCIC) REPORT OF THE ASHESI BOARD (CONT'D) I NATURE OF BUSINESS/PRINCIPAL ACTIVITIES (CONT'D) I Access to Finance • Awarding Sub-grants to support SMEs to test the market potential of a promising technology, product or process. I • Facilitation of commercial investment through investor introductions, matchmaking, and investment advisory services. I Market Growth and Access • • Research and analytics on markets, competitors and sector trends Carrying out of export promotion program I • • Preparation and installation of technology performance information database Carrying out country-wide networking events for climate technology SMEs and entrepreneurs I Technology and Product Development • Provision of access to technical facilities and services to design, prototype, and test and demonstrate products I • • Linking of SMEs with technology suppliers Commercialization program for universities and research institutes involved in climate technology research and development I Policy and Regulatory Support • Advocacy on climate technology policy issues I • Research on sector policy trends, policy implementation and effectiveness, and best international • practices Policy dialogues, roundtables and events to engage policy makers I Areas • of focus: Energy Efficiency (Industrial and Household) I • • • Domestic Waste Management Solar Energy Water Supply Management and Purification I • Climate Smart Agriculture SOURCE OF FUNDING I The project is financed by the Dutch and Danish Governments grants through World Bank to the tune of USO 8,500,000. I COMPLETION The project begun in February 2016 and is scheduled to come to an end on the 301h of June 2020. ' I APPROVAL OF FINANCIAL STATEMENTS The financial statements were approved by the Ashesi Board on .... l..t~. £?..~.=: ... , 2019 and were signed on I their behalf by: I ............ . _;]A.- DIRECTOR DIRECTOR 5 I INDEPENDENT AUDITOR'S REPORT TO THE ASHESI BOARD OF GHANA CLIMATE INNOVATION CENTRE (GCIC) I Report on the Audit of the Financial Statements E Opinion I We have audited the financial statements of Ghana Climate Innovation Centre (GCIC) ("the Centre"), which comprise the statement of financial position at 31 December 2018, and the statements of income and expenditure and changes in net assets for the year then ended, and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, as set out on pages 10 to 15. E In our opinion, the financial statements of Ghana Climate Innovation Centre for the year ended 31 December 2018 are prepared, in all material respects, in accordance with the basis of accounting described in Note 2 of the I financial statements. Basis for Opinion I 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 I section of our report. We are independent of the Centre 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 E obtained is sufficient and appropriate to provide a basis for our opinion. Other Information I The Ashesi Board is responsible for the other information. The other information comprises the information included in the Annual Report and the Ashesi Board's Report but does not include the financial statements and . I our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. I 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. I Responsibilities of the Ashesi Board for the Financial Statements The Ashesi Board is responsible for the preparation of financial statements in accordance with the basis of I accounting described in the Note 2 to the financial statements, for determining that the basis of accounting is acceptable in the circumstances, and for such internal control as the Ashesi Board determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. I [ C 6 E INDEPENDENT AUDITOR'S REPORT TO THE ASHESI BOARD OF GHANA CLIMATE INNOVATION CENTRE (GCIC) - CONT'D E In preparing the financial statements, the Ashesi Board are responsible for assessing the Centre'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 Ashesi Board either intend to liquidate the Centre or to cease operations, I or have no realistic alternative but to do so. The Ashesi Board are responsible for overseeing the Centre's financial reporting process. I Auditor's Responsibilities for the Audit of the Financial Statements I 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 I 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 scepticism throughout the audit. We also: E • 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 E 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. I • 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 Centre's internal control. E • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. I! Ii • Conclude on the appropriateness of the Ashesi Board'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 Centre'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 • I I • on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Centre 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. I We communicate with the Ashesi Board 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. E r £ 7 E INDEPENDENT AUDITOR'S REPORT I TO THE ASHESI BOARD OF GHANA CLIMATE INNOVATION CENTRE (GCIC) - CONT'D ! Basis of Accounting and Restriction on Distribution I Without further modifying our opinion, we draw attention to Note 2 of the financial statements which describes the purpose of the financial statements and sets out the basis of accounting. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for the donors and Ghana Climate I Innovation Centre (GCIC). The engagement partner on the audit resulting in this independent auditor's report is Nathaniel D. Hartley E (ICAG/P/1056). l For and on behalf of: I KPMG: (ICAG/F/2019/038) CHARTERED ACCOUNTANTS 13 YIYIWA DRIVE, ABELENKPE I E r 8 '-5 ~ ............................ , 2019 I E I E I I I E I 8 I GHANA CLIMATE INNOVATION CENTRE (GCIC) STATEMENT OF INCOME AND EXPENDITURE I FOR THE YEAR ENDED 31 DECEMBER 2018 I Note 2018 US$ 2017 US$ 2016 US$ Cumulative US$ I INCOME Funds received 3 2,455,370 920,624 999,990 4,375,984 I ------------ ------------ 2,455,370 920,624 ---------- --------------- 999,990 4,375,984 ------------ ------------ ---------- --------------- I EXPENDITURE Salaries and Benefits 4 371,110 226,887 66,324 664,321 I Access to Finance Other Operational Cost 5 6 509,832 338,933 163,716 202,578 10,000 345,843 683,548 887,354 Marketing and Promotion 7 278,207 85,430 22,962 386,599 I Entrepreneurship and Venture Acceleration Monitoring and Evaluation 8 9 425,925 91,691 140,275 35,256 14,500 56,874 580,700 183,821 I Market Growth and Access Technology and Product Development 10 11 12 103,854 137,392 5,765 42,558 29,700 258,614 12,500 3,000 29,006 158,912 170,092 293,385 Purchase of Fixed Asset I Policy and Regulatory Support 13 132,024 36,135 ------------ ------------ --------- 168,159 ------------ 2,394,733 1,221,149 561,009 4,176,891 I ------------ ------------ --------- ----------- (DEFICIT) /SURPLUS OF EXPENDITURE ----------- ---------- --------- I OVER INCOME 60,637 (300,525) ------------ 438,981 --------- 199,093 --------- I STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 DECEMBER 2018 I 2018 US$ 2017 US$ I Balance as of 1 January 2018 Surplus/ (Deficit) of Expenditure over Income 138,456 60,637 438,981 (300,525) ---------- ---------- I Balance as of 31 December 2018 199,093 ====== 138,456 ====== I The notes on pages 10 to 15 are an integral part of these financial statements. I I 9 I GHANA CLIMATE INNOVATION CENTRE (GCIC) STATEMENT OF FINANCIAL POSITION I AS AT 31 DECEMBER 2018 2018 2017 I Note US$ US$ Cash and Bank balances 14 199,093 138,456 I TOTAL ASSETS ---------- 199,093 ----------- 138,456 ====== ====== I REPRESENTED BY: I NET ASSETS 199,093 138,456 I I . . . . . . . . . . . 2~. . . . . . .. DIRECTOR DIRECTOR I . l (t,.. 0 l,- The financial statements were approved by the Ashesi Board on .......... ·D· ..................., 2019 I The notes on pages 10 to 15 are an integral part of these financial statements. I I I I I I I I I 10 I GHANA CLIMATE INNOVATION CENTRE (GCIC) NOTES FORMING PART OF THE FINANCIAL STATEMENTS I 1. REPORTING ENTITY I Ghana Climate Innovation Centre (GCIC) is a project funded by a Dutch and Danish Government grant through the World Bank to establish local institutional capacity to support Ghanaian entrepreneurs and new I ventures involved in developing profitable and locally-appropriate solutions to climate change mitigation and adaptation. The project is being hosted by Ashesi University, begun in February 2016 and is scheduled to come to an end on 30 June 2020. I 2. SIGNIFICANT ACCOUNTING POLICIES I The principal accounting policies adopted by the programme's management in the preparation of the financial statements are set out below: I a. Basis of preparation The financial statements have been prepared under the historical cost accounting rules, grant agreement and the standard conditions for grants made by the World Bank. I b. Income recognition Income is recognized when cash is received. Income comprises mainly funds received from the International I Bank for Reconstruction and Development and International Development Association (World Bank). c. Expenditure recognition I Expenditure are recognized when cash payments are made. d. Reporting currency I The financial statements are presented in United States Dollars. e. Foreign exchange I Transactions denominated in other currencies are translated into United States Dollars (US$) and recorded at the rate of exchange ruling at the date of the transactions. Balances denominated in other currencies are I translated into US$ at the rate of exchange ruling at the reporting date. Resulting gains or losses arising from such transactions are taken into consideration in arriving at the surplus or deficit for the period. f. Capital expenditure/ Fixed assets I Capital items are expensed on acquired. I 3. GRANTS RECEIVED 2018 2017 I US$ US$ Funds received from World Bank 2,455,370 920,624 I I I 11 I GHANA CLIMATE INNOVATION CENTRE (GCIC) NOTES FORMING PART OF THE FINANCIAL STATEMENTS (CONT'D) I 4 SALARIES AND BENEFITS I 2018 US$ 2017 US$ I a. Salaries and Wages Employer SSF (13%) Contribution 189,823 24,677 133,307 17,590 Consultants' Fees 136,290 75,990 I Other Staff Costs 20,500 371,290 226,887 I b. Chief Executive Officer's Remuneration 108,846 79,789 I 5. ACCESS TO FINANCE I This relates to providing support of early stage financing to GCIC entrepreneurs led by EY. SNV Netherland Development Organisation also provides a supporting role. The activities include awarding sub-grants to support SMEs to test the market potential of promising technology, product or process, and facilitation of commercial investment through investor introductions, matchmaking, and investment advisory services. I 2018 2017 US$ US$ I External Support 51,582 Awareness creation & Capacity building 5,361 3,914 I Proof of Concept (POC) Grant POC Grant verification checks 249,231 3,087 54,723 Technical Assistance EY and SNV 200,571 105,079 I ---------- 509,832 ====== --------- 163,716 ----- I 6. OTHER OPERATIONAL COSTS This expense line relates to all the Operational Costs of GCIC such as rent, utilities, security and office I consumable costs, Corporate Governance costs which relate to audit and consultancy fees, training and travel expenses incurred for the consortium group, Office establishment and Operation expenses which relate to the overheads of GCIC and any Exchange difference arising from the effect of changes in foreign exchange rates. I 2018 US$ 2017 US$ I Other Operational Cost Corporate Governance 141,925 15,314 64,303 12,469 Consulting Fees 1,291 I Office Establishment and Operations Exchange Difference 171,847 9,847 94,312 30,203 ---------- ---------- I 338,933 ====== 202,578 ====== I 12 I GHANA CLIMATE INNOVATION CENTRE (GCIC) NOTES FORMING PART OF THE FINANCIAL STATEMENTS (CONT'D) I 7. MARKETING AND PROMOTION I These are costs associated with activities set out to market the project, below the line and above the line costs. These costs include advertising costs to market the project, advertising costs for bids to be made, web designing costs as well as all costs relating to social media marketing. I 2018 US$ 2017 US$ I Creative Designs and Art Works Advertising and PR 46,822 29,539 16,268 15,343 Social Media Marketing 23,209 I Brand Colateral Below the line - Road Show 7,083 171,554 53,819 ---------- I 278,207 ====== 85,430 I 8. ENTREPRENEURSHIP AND VENTURE ACCELERATION This expense line is part of the five major work streams of GCIC. It embeds fee charges for professional I services, portfolio management services, provision of one on one mentoring services for entrepreneurs, coaching, workshops, and networking events for entrepreneurs led by GCIC staff base at Ashesi. I 2018 US$ 2017 US$ I Portfolio Managers Mentoring and Workshop 59,712 20,755 10,483 Technical Training I Entrepreneurial Master Class Executive Coaching 31,828 2,092 18,815 17,672 Alumni Services 809 I GCIC Thought leadership series Services for Entrepreneurs 25,521 20,350 13,542 Women Entrepreneurship Transformation Program. 21,542 5,068 I Peer to Peer Exchange for Entre Executive Education for GCIC staff 55,004 17,156 3,058 19,572 Wellbeing 36,588 24,156 I Needs Assessment Student Entrepreneurship Program. GCIC Outreach 10,607 14,551 29,500 6,524 I SNV Technical Assistance 61,095 425,925 40,200 140,275 I I I 13 I GHANA CLIMATE INNOVATION CENTRE (GCIC) NOTES FORMING PART OF THE FINANCIAL STATEMENTS (CONT'D) I 9. MONITORING AND EVALUATION I Monitoring and Evaluation (M&E) is a GCIC service line that is aimed at monitoring and evaluating both direct and indirect effects that the Centre's programs and services has on beneficiaries and surrounding communities. M&E will be achieved through the use of an internal database and data collection, GCIC annual reports, focus groups and stakeholder follow-ups, survey and other quantitative measures where possible, and I infoDev project supervision and assessments. 2018 2017 I US$ US$ Data Collection Quality Control 3,315 I EY Technical Assistance Fees 88,376 35,256 91,691 35,256 I 10. MARKET GROWTH AND ACCESS I This expense relates to all costs incurred in equipping the Entrepreneurs in research, marketing, branding and packaging of their products and services to enhance their ability to penetrate the market and carve out a niche for their businesses. This work stream is led by SNV Netherlands development Organisation. I 2018 2017 US$ US$ I Market Access Manager Market growth Access and export 38,541 3,598 19,532 5,439 I Research & Analytics on Markets SNV Technical Assistance 18,743 42,972 17,587 I 103,854 ====== 42,558 ----- 11. TECHNOLOGY AND PRODUCT DEVELOPMENT I This relates to all expenses incurred in advancing funds to entrepreneurs for the acquisition of equipment for their businesses. This work stream is Jed by SNV Netherlands development organisation, thus consultancy fees I paid to SNV for services rendered in relation to this line is charged to this expense line. 2018 2017 US$ US$ I Technology and Product Development Manager 42,133 19,425 Technology and Product Development Grant 72,425 224 I Community Program for Universities & Research Technical Fees 3,512 19,130 10,051 Technical Development and Due Diligence 192 I 137,392 29,700 I I I 14 I GHANA CLIMATE INNOVATION CENTRE (GCIC) NOTES FORMING PART OF THE FINANCIAL STATEMENTS (CONT'D) I 12. PURCHASE OF FIXED ASSETS I This expense relates to the purchase and installation of fixed assets for GCIC's operations. I 2018 US$ 2017 US$ Office Furniture & Fittings 119,071 I Computers and Accessories Plant and Equipment 5,765 12,062 10,337 Vehicles 117,144 I 5,765 258,614 I 13. POLICY AND REGULATORY SUPPORT This work stream is part of the 5 major work streams and is led by United Nations University- Institute for Natural Resources in Africa. This expense is related to advocacy with government and other stakeholders on I climate and clean technology issues, which is geared towards engaging the government to dialogue on climate issues. 2018 2017 I US$ US$ 9,394 Policy Fellow- GCIC 33,409 I Advocacy on Tech Climate Policy Sector Policy Trends and Best Practices Policy Dialogues and Roundtable 28,924 37,030 17,661 11,741 15,000 15,000 I United Nations University Technical Assistance 132,024 36,135 ====== I 14. CASH AND CASH EQUIVALENTS 2018 2017 I US$ US$ Ecobank Offshore Dollar Account 122,073 73,134 I Ecobank GHS Current Account 77,020 65,322 199,093 138,456 I ====== I I I I 15 I GHANA CLIMATE INNOVATION CENTRE (GCIC) NOTES FORMING PART OF THE FINANCIAL STATEMENTS (CONT'D) I 15. COMPREHENSIVE LIST OF UNPAID LIABILITIES AS AT 31 DECEMBER 2018 I Below is a list of the total unpaid liabilities outstanding as at 31 December 2018. However, subsequent to the year end, these liabilities have been paid in 2019. I a. Employee-related statutory payments US$ I SSNIT Petra Advantage Pension scheme SSNIT Tier 1 contribution for December 2018 SSNIT Tier 2 contribution for December 2018 1,210 1,906 I Ghana Revenue Authority Ghana Revenue Authority Total Unpaid Liabilities Withholding tax for December 2018 PA YE for December 2018 5,329 3,594 12,039 I b. Project related liabilities payable to SNV Netherlands development Organisation I Work streams Entrepreneurship and Venture Acceleration (US$) 3,341 Access to finance 3,687 I Market Growth and Access Market Access Manager 2,880 10,253 Technolo!!V and Product Development 1,613 I Technolol!V Development Manager Total 10,253 32,027 I 16. ACTUAL-BUDGET ANALYSIS I Budget Lines Actual Amount Budgeted Amount Variance% (US$) (US$) I Grant Income 2,455,370 2,842,653 14 I Expenditure: Personnel Expenses Other Operating Costs 371,110 338,933 412,602 325,346 13 -4 I Marketing and Promotions Entrepreneurship & Venture Acceleration 278,206 425,925 200,150 564,886 -39 25 I Access to Finance Market Growth and Access Technology and Product Development 509,832 103,854 137,392 649,712 141,016 255,016 22 26 46 I Monitoring and Evaluation Policy and Regulatory Sup. 91,691 132,024 95,060 189,865 4 30 Capital Expenses 5,765 9,000 36 I Total 213941733 218421653