U I I I I GOERNMENT OF LFSOUIO I I AUDIT REPORT ON THE ANNUAL FINANCIAL STATEMENTS OF I 4 PRIVATE SECTOR COMPETITIVENESS AND ECONOMIC fDIVERSIFICATION PROJECT PHASE II MINISTRY OF TRADE AND INDUSTRY FOR THE YEAR ENDED 31 MARCH 2019 I N I I I I I MINISTRY OF TRADE AND INDUSTRY PRIVATE SECTOR COMPETITIVENESS AND ECONOMIC DIVERSIFICATION PROJECT - PHASE II FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2019. INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT: P144933 CREDITNO. IDA 53090-LSO AND GOVERNMENT OF LESOTHO INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) CREDIT NO. 53090-LSO AND GOVERNMENT OF LESOTHO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDEDMARCH 31s" 2019 TABLE OF CONTENTS A uditor's R eport .................................................................................... 1-4 Consolidated Source and Uses of Funds Components ($) ................................... 5 Consolidated Source and Uses of Funds Components (M) .................................. 6 Consolidated Source and Uses of Funds Categories ($) .................................... 7 Consolidated Source and Uses of Funds Categories (M) .................................. 8 IDA Only Com ponents ($ and M ) ............................................................... 9 IDA Only Categories ($ and M ) ................................................................. 10 GOL Only Components ($ and M ) .............................................................. 1 GOL Only Categories ($ and M ) ................................................................. 12 Schedule of W ithdrawal Applications ............................................................ 13 N otes to the Financial Statem ents .................................................................14-15 APPROVAL OF THE FINANCIAL STATEMENTS The attachciaiamLai statements set out on page 5 to 15 were approved by the management of the Project on and signed on its behalf by: PRINCIPAL SECRETARY PRO ECT MANAGER MINISTRY OF TRADE AND INDUSTRY PRIVATE SECTOR COMPETITIVENESS PROJECT OFFICE OF THE AUDITOR - GENERAL P.O. BOX 502, MASERU 100 LESOTHO REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OF PRIVATE SECTOR COMPETITIVENESS AND ECONOMIC DIVERSIFICATION PROJECT PHASE II - MINISTRY OF TRADE AND INDUSTRY FOR THE YEAR ENDED 31 MARCH 2019 Opinion I have audited the financial statements of Private Sector Competitiveness and Economic Diversification Project Phase II ("Project") set on pages 5 to 15, which comprise sources and uses of funds as at 31 March 2019, Comparison of Budget and Actual Performance for the year then ended, and other explanatory notes. In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Project as at 31 March 2019, and its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSASs). Basis for Opinion I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs). My responsibilities under those standards are further described in the Auditor's Responsibilities for independent of the Organisation in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to audit of the financial statements in Lesotho, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. There were no key matters identified during the course of audit. 4th floor * Finance House * High Court Road * Maseru * Lesotho Telephone (+266) 22323904/22314247 * Fax (+266) 22310366 Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with IPSASs, and for such internal control as management determines 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, management is responsible for assessing the Project'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 management either intends to liquidate the Project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements My 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 audit report that includes my opinion Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs 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 ISSAIs, I exercise professional judgment and maintain professional skepticism throughout the audit. I 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 my 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 Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my audit report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my audit report. However, future events or conditions may cause the Project 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 communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my audit report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. MONICA BESETSA (MS) D* . For AUDITOR-GENERAL Private Sector Competitiveness and Economic Diversification Project - Lesotho CONSOLIDATED SOURCES AND USES OF FUNDS BY COMPONENTS AND SUB-COMPONENTS IN US DOLLARS FOR THE YEAR ENDED 31st MARCH 2019 Designation 201712018 201812019 Cumulative Opening Cash Balances PPA IDA Special Account Phase I IDA Maloti Account Phase I Petty Cash GOL Current a/c Sub total PPA IDA Special Account Phase I IDA Maloli Account Phase I GOL Counterpart Funds refunded to Consolidated Fund Sub total IDA Designated Account Phase II 25359190 19Oso.52 1905052 IDA Maloti Account Phase II 12291727 25314.66 2531466 Petty Cash 105 1817 18,17 GOL Current a/c 2721 54 1 81402 1814.02 GOL Counterpart Funds refunded to 000 Consolidated Fund Sub - total 378 231,75 46137,37 45197,37 Add Sources of Funds IDA Credit 1 341 440 10 1 019 225.57 9461293.70 Direct Payments from IDA 298 707 4 000 1190 628,16 GOL Funds 7483296 124201,85 63048823 Sale of fruits /other revenue 20709 5 324 6 8 502.15 GOL Refund from EDSP 1271822 0.00 12718,22 GOL Refund to IDA 258314 0.00 2583,14 PPA - IDA Credit 900 000.00 PPA Refund (271 874 21) 1 730 488,92 114875228 11 934 339,39 Total Financing 2 109 720,68 1194 949,65 11 980 536,76 Less Uses of Funds by Component Improving Business Environment Business Regulation Industry Licencing & 205370,80 1 466970,20 Construction Permit Reform 1os 468,91 Improving Access to Finance 233 964.80 83226,00 1 30206379 Unallocated activities a 491 77 Sub total 435 335,60 In1 694,91 2 777 525,76 Support Economic Diversification Skills Development Garment Industry 13466 Support Investment Promotion 291 603.97 39648.32 1 078165,12 Support Tourism Sector 169 451 03 130 S04.24 1 322 738.27 Expand Commercial Horticulture 507 323.40 476 008 39 3287 134.41 Lesotho Enterprise Assistance Programmi 156 36828 94 162,64 71227904 Sub total 1124 746,68 748 323,69 6400451,60 Project Implementation Support Project Implementation Support 251 86519 12669147 285836083 Sub total 251 85,1% 126 61,47 2868360,83 Total Expenditures 1 815 947,47 1 063 709,97 12 036 338,09 Foreign Exchage Difference 247575,84 3035127 l EE >3 74 Closing Cash Balances PPA Account IDA Designated Account Phase I 1000.52 16844,64 16 844 64 IDA Maloti Account Phase II 25314,66 54 845,27 54 645 2 Petty Cash 1817 11748 11748 GOL Current AtC 1814,02 2908102 2908102 Total Closing Cash Balances 40 197,37 100 e8,41 100858,41 GRAND TOTAL 2 109 720,68 1194 949,65 11980 536,76 Page 5 Private Sector Competitiveness and Economic Diversification Project - Lesotho CONSOLIDATED SOURCES AND USES OF FUNDS BY COMPONENTS AND SUB-COMPONENTS IN MALOTI FOR THE YEAR ENDED 31st MARCH 2019 Designation 201712018 201812019 Cumulative M M M M M M Opening Cash Balances PPA IDA Special Account Phase I IDA Maloti Account Phase I Petty Cash GOL Current alc Sub-total PPA IDA Special Account Phase I IDA Maloti Account Phase I GOL Counterpart Funds refunded to Consolidated Fund Sub - total IDA Designated Account Phase I 3 408 275 14 225 00950 225 009.50 IDA Maloti Account Phase II 1 65200808 29899646 298 996.46 Petty Cash 1277 214.61 214.61 GOL Current alc 3657748 21425.74 21 425 74 GOL Counterpart Funds refunded to 0,00 Consolidated Fund Sub-total 509s873,45 sSse.31 545646,31 Add Sources of Funds IDA Credit Phase II 17411 106.14 13884 14765 124 543 743,54 Direct Payments from IDA 376904631 0.00 16 497 0076 GOL Funds 9396 O 1780 743.38 7807 523.72 Sale of fruitstother income 2 53000 75 266.90 11600250 GOL Refund from EDSP 165714.55 0.00 16571455 GOL Refund to IDA 33 406.50 000 33406,50 PPA - IDA Credit 928890000 PPA Refund -275136356 Sub - total 22 321 469,50 115740159,13 155 701 017.71 Total Financing 27 418 342,95 16 285 804,44 156 246 664.02 Less Uses of Funds by Component Improving Business Environment Business Regulation industry Licencing & 2 727 8a847 14529360 19 679 Its 29 ConsIr Permit Reform Improving Access to Finance 2936 73790 1 14088756 17 184 832.89 Unallocated activities 000 92717.28 Sub - total 5 684626.37 2593 824.36 36 956 655,46 Support Economic Diversification Skills Development Garment Industry 2696.00 Support Investment Promotion 3768273,65 512 132.18 1404744411 Support Tourism Sector 21377414s 1 964533.43 16 410 016.67 Expand Commercial Horticulture 651997821 6466796.68 44 593 093 BB Lesotho Enterprise Assistance Programme 2006469.19 1 310 528.15 9 516 62.12 Sub - total 14432462,51 10 253 990,44 8 78 414,78 Project implementation Support Project implementation Support 331401257 192 47t.45 34 502 o 34 Sub - total 3 314 012.57 1 692 471.45 34 52 00.34 Total Expenditures 23 411 101,45 14 540 286,25 156 037 092,58 Foreign Exchage Difference 3461 595.19 27420202 -1 261 74473 Closing Cash Balances PPA Account 000 IDA Designated Account Phase II 225 o9o50 245 655.49 24565549 IDA Maloti Account Phase II 2989 9.46 7996e414a 79954148 Petty Cash 214.61 1 71329 1 713.29 GOL Current alc 21 425 74 424 10591 424 10591 Total Closing Cash Balances 545s46,31 1471316,17 1471316.17 GRAND TOTAL 27 418 342,95 16 285 804,44 156 246 664,02 Page 6 Private Sector Competitiveness and Economic Diversification Project CONSOLIDATED SOURCES AND USES OF FUNDS BY CATEGORIES IN US DOLLARS FOR THE YEAR ENDED 31ST MARCH 2019 Designation 2017/2018 201812019 Cumulative Opening Cash Balances PPA IDA Special Account Phase I IDA Maloli Account Phase I Petty Cash GOL Current Account IDA Special Account Phase I IDA Malott Account Phase I PPA GOL Funds Refunded to Consolidated Fund Sub total IDA Designated Account Phase II 253 5-:1, :4 52 1905052 IDA Maloti Account Phase 11 122 91 '.21 25 3'4 66 25 314.66 Petty Cash 1.J 18.17 18,17 GOL Current Account 2721.54 814,02 1 814,02 GOL Funds Rounded to Consolidated Fund Sub total 379 231,76 46 197.37 46 197,37 Add Sources of Funds IDA Credit 1 341 440.10 1 019225.57 9461 293,70 Direct Payments from tDA 298 707,41 0.00 1 190 628.16 GOL Funds 74 832,96 124 201.85 630 488.23 Sale Of Iruitlolher income 207.09 5 324,86 850215 GO. Refund fro EDSP 12718,22 0.00 12718.22 GOL Refund to IDA 2 583,14 0.00 258314 PPA 900 000.00 PPA R-afund -271 874.21 Subtotal 1 730 488,92 1148762,28 11 934 339,39 Total Financing 2109 720,68 1194949,65 11 980 536,76 Less Uses of Funds by Category Goods 10603.93 11017,50 1 244 965,23 Works 000 20667.09 40 58336 Non Consulting Services 000 000 35689 Consulting Services 997 13892 414 149,75 6 347 720 01 Training & Workshops 277 926,53 188 884,72 1 697 727 26 Operating Costs 447 459,78 337 04997 2 372 780 31 Matching Grants 82 818 31 91 940,94 33220503 Sub total 1 915 947,47 1 063 709,97 12 036 338,09 Total Expenditures 1 815 947,47 1 063 709,97 12 036 338,09 Foreign Exchange Difference 24757584 30: :51 156689 74 Closing Cash Balances PPA Account IDA Special Account Phase II 19050.52 16844.64 ' 844.64 IDA Matoti Account Phase II 25314.66 54845.27 54845,27 GOL Current alr 1 814.02 29081,02 -9 8 .02 Petty Cash 1817 11748 11'.48 Total Closing Cash Balances 46 197,37 100 688,41 100888,41 GRAND TOTAL 2 109 720,68 1 194 949,65 11 980 536,76 Page 7 Private Sector Competitiveness and Economic Diversification Project CONSOLIDATED SOURCES AND USES OF FUNDS BY CATEGORIES IN MALOTI FOR THE YEAR ENDED 31ST MARCH 2019 Designation 201712018 201812019 Cumulative M M M M M M Opening Cash Balances PPA IDA Special Account Phase IDA Matotp Account Phase I Poty Cash GOL Current Account Subtotal PPA DA Special Account Phase I DA Maloti Account Phase I GOL Funds Rerunded to Consolidated Fund Sub total IDA Designated Account Phase II 3408275.14 225 009,50 225009 50 IDA Malati Account Phase II 1 652 008.08 298 996,46 298 996.46 Petty Cash 1277 214.61 214.61 GOL Current Account 36 577.46 21 425 74 21 425,74 GOL Funds Refunded to Consolidated Fund 0.00 Sub total 5 096 873,48 545 646,31 545 646,31 Add Sources of Funds IDA Credit 17411 10614 13884 14785 124 543743,54 Direct Payments from IDA 3769 046,31 000 16 497090,76 GOL Funds 939 666,00 1 780 74338 7807523.72 Sate of fruitstaomer income 2 530.00 7526690 115 002,50 GOL Refund from EDSP 165 714.55 0,00 165714.55 GOL Refund to IDA 33406.50 0,00 33406.50 PPA 9 288 900,00 PPA Refund -2 751 363.86 Sub total 22 321 469,50 15740 168.13 155 701 017.71 Total Financing 27 418 342,95 16 285 804,44 156 246 66402 Less Uses of Funds by Category Goods 13640773 15443430 17 498 273,16 Works 0.00 291 582 44 552 089.44 Non Consulting Services 000 000 3 921 60 Consulting Serwces 12761 63222 557209634 81422 919.00 Trainng & Workshops 3 651 52696 2 634 153 74 21 799 33806 Operating Costs 5 801 579,31 4 O09 857.20 30473 796 72 Matching Grants 1 059755,21 1 278 162.23 4286 752.58 23 411 101.45 14540286.25 Total Expenditures 23 411 101.45 14 540 286,25 156 037 092,58 Foreign Exchange Difference 3461 595 19 27420202 1 26174473 Closing Cash Balances PPA Account IDA Designated Account Phase It 225 009,50 24565549 24565549 IDA Maloti Account Phase 29899646 79984148 79984148 Petty Cash 214.61 1713,29 1 713.29 GOL Current Account 2142574 424 1D5r91 42410591 Total Closing Cash Balances 54S646,31 1471316,17 1 471 316.17 GRAND TOTAL 27 418 342,95 16 285 804,44 156 246 66402 Page Private Sector Competitiveness and Economic Diversification Project - Lesotho SOURCES AND USES OF FUNDS BY COMPONENTS FOR IDA ONLY IN US DOLLARS AND MALOTI FOR THE YEAR ENDED 31ST MARCH, 2019 2017/2018 201812019 Designation M M M M Opening Cash Balances PPA Account IDA Special Account Phase I IDA Maloli Account Phase I Petty Cash sub total PPA Account IDA Special Account Phase I IDA Maloto Account Phase I sub total DA Designated Account Phase Fl 253 591 90 3408 275 14 19050.52 225 00950 IDA Maloti Account Phase It 122 917.27 1 652 008.08 25 314L66 298 99646 Petty Cash 1 05 12.77 1817 214.81 376 510,22 5 060 295.99 44383.35 524 220,67 Add Sources of Funds IDA Credit Phase II 134144010 17 411 106.14 101922557 13884 147,85 Direct Payments from IDA 29870741 376904631 Sale of fustsother income 207 09 2 530,00 5324.86 75 26690 GOL Refund to IDA 2503,14 3340650 Sub total 1 642 937,74 21 216 088,96 1 024 550,43 13 959 414,75 Total Financing 2 019 447,96 26 276 384.94 1 06B 933,78 14 483 635,32 Less Uses ot Funds by Component Improving Business Environment Business Reg industry Licencing & Constr Permit Reform 205 370.80 272788847 105468.91 145293680 Improving Access to Finance 233 964.80 2936 73790 63 226.00 1 14088756 Subtotal 439335,60 6664626,37 188694,91 2593824,36 Support Economic Diversification Support Investment Promotion a Inc 291 603.97 3768273.65 39648,32 512 132.18 Support Tounsm Sector 169 451,03 2 137 741,46 13310778 1 887 351,24 Expand Commercial Horlculture 507 030.35 6 516 097.21 476 008,39 6 486 796,68 Lesotho Enterpnse Assistance Programme 69243,01 895 022 14 2 258.60 32747.22 Sub total 1 037 325.36 13 317134,46 661 023,09 B899 027,32 Project Implementation Support Project Implementation Support 250 695 10 3298 800 35 126 464 30 I-' : 38 Sub total 250 95,10 3298 800,35 126464.30 1 669 379,36 Total Expenditures 1 727 369,06 22 290 661,18 966102,30 13 182 231,04 247 705,55 3 471 603.19 254 194,02 Foreign Exchage Difference 311944,09 Closing Cash Balances IDA Designated Account Phase it 1905052 225 00 50 1684464 245 655,49 IDA Maloti Account Phase 2531466 29899646 54845.27 799841,48 Petly Cash 18 17 21461 11748 1 713.29 Total Closing Cash Balances 44 383,35 524 220,67 71 807.39 1 047 210.26 GRAND TOTAL 2 019 447,96 29 276 384,94 t 068 933,78 14 483 635,32 Page 9 Private Sector Competitiveness and Economic Diversification Project - Lesotho SOURCES AND USES OF FUNDS BY CATEGORIES FOR IDA ONLY IN US DOLLARS AND MALOTI FOR THE YEAR ENDED 31ST MARCH 2019 Designation 201712018 201712018 2018/2019 201812019 $ M M M M Opening Cash Balances PPA IDA Special Account Phase I IDA Maloli Account Phase I Patty Cash Subtotal PPA IDA Spe,.a Account Phase IDA Miit A.,-unt Phase Sub total IDA Designated Account Phase 25359190 340827514 1905052 225009.50 IDA Mai= Account Phase 122 917.27 1652 008.08 25314.66 298 99646 etty * a.h 105 1277 1817 214.61 Sub total 376 510,22 5 060 295,99 44353,35 524 220,67 Add Sources of Funds IDA Credit Phase i: 1 341440,10 17411 10614 101922557 1388414785 Direct Payments from DA 29870741 3769046,31 0,00 0,D0 Other revenue 20709 2 530,00 5324 86 75 266,90 GoL Refund to DA 2 583,14 33406,50 0,DD 0.00 Sub total 1 642 937,74 21 216 053,96 1 024 550,43 13959414,75 Total Financing 2 019 447,96 26 276 34,94 1 061i 933,78 14 483 635,32 Less Uses of Funds by Category Goods 10 603 93 13640773 1101750 154 434,30 Works 000 0.00 2066709 291 52,44 Non Consulting Services 0.00 0,00 0.00 0.00 Consulting Services 99713892 12 761 832.22 41414975 5572096,34 Training & Workshops 273619,57 359983514 18348626 2 558 971.55 Operating Costs 445 99664 5782 486.09 336 48881 4601 954,41 Malthing Grant 0 00 000 37089 5192.00 1727 359,06 22 280 561.18 966 182,30 13 182 231,04 Total Expenditures 1 727359.06 22 280 561,13 966 182,30 13182 231,04 Foreign Exchange Dintrence 247 -.5 41 .. - 3094409 254194,02 Closing Cash Balances IDA Designated Account -ae II 19 050.52 225 009.50 16844 64 245 655.49 IDA Malot Account Phas 1 25 314.66 298 996.46 5464527 799 841,48 Petty Cash 18 17 214.61 11748 1713.29 Total Closing Cash Balances 44 383,35 524 220,57 71 007,39 1 047 210,26 GRAND TOTAL 2019447,96 26 276 384,94 t 069 933,78 14 229441,30 F'3e 1IC Private Sector Competitiveness and Economic Diversification Project - Lesotho SOURCES AND USES OF FUNDS BY COMPONENTS FOR GOL ONLY IN US DOLLARS AND MALOTI FOR THE YEAR ENDED 31ST MARCH 2019 2017/2018 201812019 Designation M M j M M Opening Cash Balances GOL Current AC 2721 54 3657746 181402 2142574 Petty Cash GOL Counterpart Funds refunded 0.D 0.00 to Consolidated Fund 0.00 Sub total 2721,64 36 177,46 1 814,02 21 425,74 Add Sources of Funds GOL Funds 74 832 96 939 666,00 124 201 85 1 780743.38 Sale of ruitsfoier income 0.00 GOL Refund from EDSP 12718.22 16571455 sub total 87 551 18 1105 380,55 124 201,85 1780 743,38 Total Financing 90272,72 1141 958,01 126 015,87 1 802 169,12 Less Uses of Funds by Component rproving Business Environment Business Reg Industry Lencing & Construction Permit Reform Improving Access to Finance 0 0.00 Sub total 0.00 0,00 0,00 0.00 apport Economic Diversification Support Investment Promotion & Increasing Linkages Support Tourism Sector 5396.46 77 182 19 Expand Commercial Horticult 293.05 3 881 00 Lesotho Enterpnse Assistance Programme 87 125,27 1111 447 05 91 904 04 1 277 780,93 Sub total 87 41B,32 1115 132,05 97 300,50 1 314 163,12 Project Implementation Support Project Implementation Suppi 1 17009 15212.22 227 17 i- Sub total 1170,"0 15 212,22 227,17 3092,09 Total Expenditures 88 58,41 1130 540,27 97 627,67 1 358 056.21 Foreign Exchage Difference 12971 10008,00 592,82 0:OE 0:: Closing Cash Balances GOL Current AC 1 81402 21 425.74 29 081 02 424 1 - Petty Cash Total Closing Cash Balances 1 814,02 21 425.74 29011.02 424105,91 GRAND TOTAL 90 272,72 1141 958,01 126 015,87 1802 189,12 Page 11 Private Sector Competitiveness and Economic Diversification Project - Lesotho SOURCES AND USES OF FUNDS BY CATEGORIES FOR GOL ONLY IN US DOLLARS AND MALOTI FOR THE YEA R ENDED 31ST MARCH 2019 Designation 201712018 201712018 201812019 2018/2019 I I M M M M Opening Cash Balances GOL Current Account 2721.54 36577.46 1814.02 2142574 Petty Cash GOL Funds Refunded to 000 0.00 Consolidaled Fund 2 721.54 36 577.46 1 814,02 21425.74 Add Sources of Funds GOL Funds 74832,96 939 666.00 124 201,85 1 780 743,38 Sale of aruts/other income 0.00 0.00 GOL Refund from EDSP 12718.22 165 714,55 87551,18 1 105380,55 124 201,85 1 780743.38 Total Financing 90272.72 1141 958.01 126 015,87 1 802 169,12 Less Uses of Funds by Category Goods 0,00 000 Works 0.00 000 Non Consulting Services 0.00 0,00 Consulting Services 0.00 0.00 0.00 0.00 Trainng 8 Workshops 430696 51691.84 5 396.46 77 182.19 Operating Costs 1 463 14 19 093.22 561.16 790279 Matching Grant 82818.31 1 059755.21 91 570,05 1 272 970,23 Total Espenditures 88 588,41 1130 540.27 97 527,67 1 358 055,21 Foreign Exchange Difference -129.71 10 008.00 592.82 20 008 0: Closing Cash Balances GOL Current AIC 1814.02 2142574 29081.02 424 10591 Petty Cash Total Closing Cash Balances 1 814,02 21 425,74 29 081,02 424 105,91 GRAND TOTAL 90 272,72 1 141 958,01 126 015,87 1 802 169,12 Paq:i -.2 WITHDRAWAL APPLICATION SCHEDULE FOR THE FY ENDED 31ST MARCH 2019 DATE OF WITHDRAWAL AMOUNT REQUESTED EXCH PAYMENT APPLICATION NO. USD RATE AMOUNT PAID COMMENTS 2018-04-10 PSC 11 52 103 030.37 103 030.37 DA-A 2018-05-24 PSC II 53 126 867.37 - 126 867.37 DA-A 2018-07-09 PSC II 54 110 656.52 110 656.52 DA-A 2018-08-08 PSC II 56 89 596.10 89 596.10 DA-A 2018-09-25 PSC II 57A 126 235.08 - 126 235.08 DA-A 2018-09-05 PSC II 58 118 085.50 - 118 085.50 DA-A 2018-12-10 PSC II 59A 61 697.16 - 61 697.16 DA-A 2019-12-19 PSC II 60 54 916.16 - 54 916.16 DA-A 2019-02-05 PSC 1161 84479.11 - 84479.11 DA-A 2019-02-13 PSC Ii 62 143 662.20 - 143 662.20 DA-A TOTAL 1 019 225.57 1019225.57 13 MINISTRY OF TRADE AND INDUSTRY PRIVATE SECTOR COMPETITIVENESS AND ECONOMIC DIVERSIFICATION PROJECT CREDIT No. 53090 - LSO NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31sT MARCH 2019 1. BACKGROUND The Private Sector Competitiveness and Economic Diversification Project (PSCEDP) Phase 11, aims to build on reforms initiated under the first phase of the Project, as well as reforms in new areas to support Government priorities that would lead to greater private sector development. This will be achieved through improved business environment, greater access to finance; supporting investment promotion activities in new sectors and enhancing linkages to domestic SMEs and improved economic diversification in the economy through targeted support to new growth sectors such as horticulture and tourism that have tremendous potential to create sustainable jobs and improve livelihoods. The Project design has been informed by the recent World Bank (2012) technical assistance note that analyzed policies to increase economic diversification through FDI and improved backward linkages to the local domestic economy. In addition, the project design is also closely coordinated with the ongoing Financial Sector Development Strategy (FSDS). PROJECT DEVELOPMENT OBJECTIVE The objective of the Project is to contribute to the development of non-textiles sectors resulting in increased private sector investment, firm growth and job creation. 1.1 SCOPE The period covered by the financial statements is from I" April 2018 to 3 1" March 2019. The Project Management Unit (PMU) is mandated to oversee the day-to-day operations and therefore maintains accounts in respect of funding provided for the Project. The accompanying financial statements cover funding provided by International Development Association (IDA) under the Credit number 53090-LSO and Government of Lesotho. 2. BASIS OF PREPARATION AND ACCOUNTING POLICIES These financial statements have been prepared on the cash receipts and disbursement basis; in accordance with the International Public Sector Accounting Standards (IPSAS-Cash Basis) and the Financial Accounting Reporting and Auditing Handbook of the World Bank, and these incorporate the following accounting policies. 2.1 Presentation Currency These financial statements are presented in both Maloti (which is the functional currency for the Government of Lesotho) and US Dollars (which is the reporting currency for the Donor). 2.2 Foreign Currency Transactions * All transfers from the Designated Account to Local Currency Account are translated into Maloti at the rate ruling on the date of the transaction. * All revenue and expenditures earned and incurred in local currency are translated into US Dollars at the daily closing rate on the date of the transaction. 14 * The closing cash balances at the end of the inancial year (31" March 2019) are reported using the closing rate: I USD - M 14, 5836 as provided by the Central Bank of Lesotho. 3. PROJECT FINANCING The total financing for the Project is US$ 15 Million, with IDA providing US$ 13.1 Million and the Government of Lesotho contributing US$ 1.9 Million. During the financial year under review, IDA disbursed US$1 019 225.57 (M 13,884,147.85); while the GOL provided counterpart funds amounting to M 1 780 743.38 (US$ 124 201.85). 4. Equipment and other fixed assets Equipment and other fixed assets procured with Project resources are recorded at their acquisition cost at the date of purchase. 5. OTHER DISCLOSURES i) Included in the financial statements is an amount of M 602,393.76. This comprises of M 301,196.88 which was for PMU staff salaries for April 2018 paid from phase 11 instead of AF. When reimbursement of that amount was processed, it was erroneously paid from phase II account again which resulted in excess expenditure under phase 11. ii) Budgetary Performance the annual work plans are prepared for the financial year. Performance per Components and Sub-Components is analyzed as per table below: Components Annual Current year Difference % Spent % budget Actual Expenditure between budget vs Differe and actual Budget nce / M M M% IA: Improving Business 577226490 259382436 1 Environment 5 3 178 440.54 45% -55 4-. IA.: Business Regulation, Industrial Licensing AND 2323 129.20 1 452 936.80 870 192.40 63% -37 Construction Permit Reform IB:1Improving Access to- + Finance + 3449 135.70 1 140887.66 2308248.14 33% -67 Financ + + 4- + 2: Supper Economic 16 092 647.84 10 253 990.44 5 838 657.40 64% -36 Diversification 2.1: Supporting investment promotion & increase linkages 604 487.70 512 132.18 92355.52 85% -15 to loc economy I 2B: Supporting the Tourism ++ Sector . 4041 770.70 1 964 533.43 2077237.27 49% -51 2C: Expanding Commercial 9713524.70 6466796.68 3246728.02 67P -3 Horticulture 2D: Lesotho Enterprise 1 1 Assistance Program 1732864.74 1310528.18 422336.59 76% -24 + + 3: Project Implementation 1 304 982.27 1 692 471.45 -387,489.18 130% 30 Support Project Implementation Support 1 304 982.27 1 I692 471.45 -387 489.18 30% 3 GRANDTOTAL 23 169 895.01 14 540 286.25 8629608.76 63% -37 15