l為斗舞鷗I江誡t ItIV曆日I翅工t,r『l屆喂參既1&I&Y l?I、、、、權‘I‘、lj州rI&：、rl&l二》震l二州rl’細 I？遺》l藝rl&11離C Yl二、、日亂ICXI》I二1參 ：露I、“&l)I二領煙l江》tl審匯C ltZ權）離J ,VMBEzi RA-ER AUTHORITY AN:,ý u.m R L, A ND 1?1 NA.N (1 At, STATEM ENTS Fou T i i Yz,\1, PIN i) vr)31 L) Bf.ý iý 2015 CONJTENTS PAGE Report, he Dirc-et ors St: I ý "I T Of i hi Ii tic ý, for 1,1 ic Financual Statemc nt s lýk,rj(trt (Xthe Independent Auditong S1 at(- 111c lit of Cutnj) re he ris ive I ncoine stýýicmenc oC in Furilj 10 Stýitý-,inc,i)t of C-iAi Fkjw.ý 11 Sý;1t,t!lllc"llt ol, Fillancial Position 12 sklillninry ofsiglliflcýnlt ýA(ýlýLYIýi-iiiiig Policicý 13 C, iliv Financinl Statements ZAmEzi RVER AuTnouiy ANNUAL REPORT AND FINANCIAL STATEMENTS FoR THE YEAR ENDED 31 DECEMBER 2015 REPORT OF THE DIRECTORS The Board of the Zambezi River Authority ("the Authority' or "ZRA") submits its report together with the financial statements of the Authority for the year ended 315 December 2015. 1. Establishment and Functions The Zambezi River Authority was established as a corporate body on 1t October 1987 by parallel legislation in the Parliaments of Zambia and Zimbabwe under the Zambezi River Authority Acts No.17 and 19 respectively. It was tasked with the management of the Zambezi River, which flows between the two countries' common boarder. ZRA is also mandated to maintain the Kariba Dam Complex (Kariba Complex) and to construct and maintain other dams or infrastructure on the river forming the border between the two countries. 2. Principal Functions The functions of the Authority are set out in the schedule to the Zambezi River Authority Acts of 1987 as follows: (a) Operate monitor and maintain the Kariba Complex ("Kariba complex") means (i. The Kariba Dam and reservoir (Cu). All telemetering stations relating to the Kariba Dam (iii). Any other installations owned by the Authority (b) In consultation with the National Electricity Undertakings, investigate the desirability of constructing new dams on the Zambezi River and make recommendations thereon to the Council of Ministers ('the Council"); (c) Subject to the approval of the Council, construct, operate, monitor and maintain any other dams on the Zambezi River; (d) Collect, accumulate and process hydrological and environmental data of the Zambe.i River for the better performance of its functions and for any other purpose beneficial to the Contracting States; (e) In consultation with the National Electricity undertakings, regulate the water level in the Kariba reservoir and in any other reservoir owned by the Authority; (f Make such recommendations to the Council as will ensure the effective and efficient use of the waters and other resources of the Zambezi; (g) Liaise with the National Electricity Undertakings in the performance of its functions that may affect the generation and transmission of electricity to the Contracting States; (h) Subject to provisions of Article 13, recruit employ and provide for the training of staff as may be necessary for the performance of its functions under the Agreement; (i) From time to time and subject to the approval of the Council, make such revision of salaries, 1 ZAmEzI RwER AUTHORITY ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 wages and other remuneration to its employees as it considors appropriate; (j) Submit development plans and programmes to the Council approval; (k) Give effect to such directions, as may from time to time, be given by the Council; and (1) Carry out such other functions as are provided for in the Agreement or are incidental or conducive to the better performance of its functions. 3. Place of Business (a) Head Offce: Kariba House, 32 Cha Road, P.O. Box 30233, Lusaka, Zambia (b) Harare Office: Club Chambers, Nelson Mandela Avenue, P.O. Box 630, Harare, Zimbabwe (c) Kariba Office: Administration Block, 21 Lake Drive, Pvt- Bag 2001, Kariba, Zimbabwe 4. Capital The Authority has no subscription capital; its capital resources comprise mainly of accumulated funds. 5. Operating Surplus (in ZMW000 and US$'000) The operating surplus for the year amounted to ZMW73,937 (US$6,673) ((2014: ZMW31,502 (US$4,923). 6. Capital Expenditure (In ZMWOOO and US$'000) The capital expenditure for the year amounted to ZMW63,027 (US$5,688) ((2014:- ZMW22,341 (US$3,491). 7. Risk Factors The Authority faces a number of operational, legal and financial risks in its operations: (a) Operational Risk Operational risk is the risk of losses from inadequate or failed internal processes and systems, caused by human error or external events. It has a broad scope and includes transaction authorisation and processing; completeness of income recording paymonts processing and the management of information, data quality and records. The following are the main risks noted under this classification: (i). Fnancial Oime Risk - Financial crime risk is the risk that the Authority suffers losses as a result of internal and external fraud or intentional damage, loss or harm to people, premises or its moveable assets. The risk in the Authority is directly attributable to its people risk. (ii). People Risk - People risk arises from failures of the Authority to manage its key risks as an employer, including lack of appropriate people resource, failure to manage 2 ZAMEzi RIVER AuTHoRITY ANNUAL REPORT AND FINANCiAL STATEMENTS FoR THE YEAR ENDED 31 DECEMBER 2015 performance and reward, unauthorised or inappropriate employee activity and failure to comply with employment related requirements. (W Legal Risk The Authority is subject to a comprehensive range of legal obligations, mostly covered by the Zambezi River Authority Acts of 198Z As a result, it is exposed to many forms of legal risk, which may arise in a number of ways: its business may not be conducted in accordance with requirements of the Act; contractual obligations may either not be enforceable as intended or may be enforced against the Authority in an adverse way; the Authority may face risk where legal proceedings are brought against it, in the course of carrying out its mandate, etc. Regardless of whether such claims have merit, the outcome of legal proceedings is inherently uncertain and could result in financial loss. Defending legal proceedings can be expensive and time-consuming and there is no guarantee that all costs incurred will he recovered, even if the Authority is successful. (c) Reporting Risk (i) Financial Reporting Risk - Financial reporting risk arises from a failure or inability to comply fully with regulations or codes in relation to the preparation, presentation or disclosure of financial information. Non-compliance could lead to damage to reputation or, in extreme cases, withdrawal of external funding. (ii). Accounting Risks - The Authority's future performance and results could be materially different from expected results depending on the outcome of certain potential risks and uncertainties, details of which are discussed above. The reported results of the Authority are also sensitive to the accounting policies, assumptions and estimates that underlie the preparation of its financial statements. Details of its critical accounting policies and key sources of accounting judgments are included on pages 13 to 23. (iii). Financial Risks - The Authority through its normal operations is exposed to a number of risks on its financial instruments, the most significant of which are credit and liquidity. Market (currency and interest) risks are generally low. The two main risks on its financial instruments are generally deemed to be within manageable limits. The Authority's financial risk exposures are discussed on pages 37 to 42 in Note 15 to the financial statements. 8. Risk Management and Control As explained on Statement G above, the Authority through its normal operations is exposed to a number of risks, the most significant of which are operational, legal and financial risks. The Board is responsible for establishing and ensuring maintenance of adequate internal controls over financial reporting. However, all internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 9. Governance Structure (a) Council of Ministers 3 ZAMEZI RIVER AUTHORITY ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 Name_ Title lion. Christopher B. Yaluna MP Chairperson (Retired) October 2015 Hon. Dora Siliya MP Chairperson (Appointed) October 2015 Hon. Samuel Undenge MP Co-Chairperson Hon. Alexander B Chikwanda NP Member Hon, Patrick Chinamasa NP Member (b) Board Name Title Airs Charity Mwansa Chairperson (Retired) March 2015 Brig.Gen. E Chola (Rtd) Chairperson (Appointed) March 2015 Mr Partson I Mbiriri Co-Chairperson Mr Willard L. Manungo Member Mr Mukutulu Sinyani Member Dr Ronald Simwiinga Member (Appointed) March 2015 Mr Felix Nkulukusa Member (Retired) March 2015 Eng. Israel Rwodzi Member (c) Directors Name Position Eng. Munyaradzi C. Munodawafa Chief Executive Mr. Peter Kapinga Board Secretary/Corporate Services Director Mr Edward M. Kabwe Director - Finance Eng. David Mazvidza Director - Projects & Dam Safety Eng. Christopher Chisense Director - Water Resources 10. Employees As at 31t December 2015 the number of staff employed at the Authority was 147. 11. Related Party Transactions The Authority has a common enterprise relationship with Governments of the Republic of Zambia and Zimbabwe. Other related party relationships and material balances that the Authority has with its related parties are listed in Note 16 to the financial statements. 12. Poet Balance Sheet Events There have been no significant events between the year-end and the date of approval of these financial statements. 13. Auditors EMM Corporate Partners On behalf of the Board: Company Secretary Date 4 ZAMBEzI RTvnR AunmoRiTY ANNUAL REPORT AND FINANCIAL STATEMENTS FOR TH YEAR ENDED 31 DECEMBER 2015 STATEMENT OF RESPONSIBJUTIES FOR THE FINANCIAL STATEMENTS The following statement, which should be read in conjunction with the Auditors' report on page G, is made with a view to distinguishing the respective responsibilities of the Board of the Zainbezi River Authority ("the Authority") and of the auditors in relation to the financial statements for the year to 31i December 2015. Statement of Responsibility for Financial Statements In conformity with International Financial Reporting Standards ('FRSs'2 the Board are required to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Authority and of the operating result for that year. IFRSs provide, in relation to such accounts, that references to accounts giving a true and fair view are references to fair presentation. The Board considers that, in preparing the financial statements on pages 8 to 12, and the additional information contained on pages 13 to 44, the Authority has used appropriate accounting policies, supported by reasonable judgements and estimates, and all accounting standards which it considers to be applicable. The Board has responsibility for ensuring that the Authority keeps accounting records which disclose with reasonable accuracy the financial position of the Authority and which enable it to ensure that the financial statements comply with generally accepted reporting standards and with the Zambezi River Authority Acts of 1987 The Board has general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Authority and to prevent and detect fraud and other irregularities. The Board accepts responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable estimates, in conformity with IFRSs. In preparing such financial statements, the Board is required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether the applicable accounting standards have been followed; and comply with IFRS. In the opinion of the Board: 1. The statement of comprehensive income is drawn up so as to give a true and fair view of the result of the Authority for the year ended 31i December 2015; 2. Based on current records that it holds (a) The statement of financial position is drawn up so as to give a true and fair view of the state of affairs of the Authority as at 31t December 2015 and (b) There are reasonable grounds to believe that the Authority will be able to pay its debts as and when they fall due. Accordingly, the financial statements set out on pages 8 to 12 were approved by the Board and signed on its behalf by: Chairperson Co-Chairperson OgD &c&2n [b //rpgA:94o/ Date DAte 5 FEMM Corporate Partners mu .in Id KYNni. t iIiNii\New Iok SA. EMiMi ;i y-nc: pr-~u iAd'tt iiT 2iI iLL IIhe i'Lrop Mi11:| Ila,-1 d W M r g ß [:(6 95> U thu uver,all presen-ltat1ionl of thfin e statfemunis, MW( bulievo i'tt r1he auItI1 evidencc we, hI]v obulined issufrintld aIppro priate to, provide- ji ba4 for moal,kpii1n. O pinixtn on Financial Sitatemnens i our kipi nin. i b-e fiinaLcil steitients pi